Do you have an exit plan? Start with the end in mind. Just like our health you want to start planning and know your exit strategy and plan. Always build your business to sell even if you don’t ever want to sell it. Do you feel like you have struggles or challenges in any of these areas, this episode will help you understand and fill in the gaps and create the life and practice of your dreams.
· Most offices get 1-3 times multiplier when they sell their practice, learn how to get a 8-10 times multiplier.
· Most buildings are worth more than the practice inside learn how to change that.
· Start with the end in mind and plan for your future to create a win-win-win. You win, Your practice wins and your patients and community wins.
Have you been wondering how to move forward in the chiropractic profession and both grow your business and your practices? Dr. Cliff is here to show you how to find your path in this profession.
Get into a conversation with two leaders in the chiropractic profession with eyes on dozens of clinics and become the best doctor, best leader and best human. Join host, Dr. Cliff and co-host, Dr. Joseph Esposito as Align Your Practice helps you understand how to exit profitably. This is the final phase of a practice and we can spend our whole career serving and making a difference and then our practice dies with us. Learn how to maximize your life’s work and minimize the losing and not serving your community at the highest level.
About the Host:
Dr Clifford J Fisher
Dr Cliff Fisher – Owns several offices all over the US and has a coaching business Dream Leadership Institute to help people find the greatest version of themselves. He will help you get to a foundational understanding to create the business and life that align with your being.
Dr. Joseph Esposito, CEO
Dr. Joseph Esposito, D.C., C.C.N. C.N.S., C.C.S.P., D.A.B.C.N., F.A.A.I.M. C.T.N., is the Founder and Chief Executive Officer of AlignLife. As such, he is responsible for the direction of AlignLife as it expands further across a dynamic and rapidly changing health care landscape. Dr. Esposito has more than 20 years of experience in a broad range of businesses, including chiropractic, nutrition, technology and internet marketing.
Dr. Esposito has extensive post-graduate academic accomplishments, as well as 15 years of experience managing successful chiropractic clinics in multiple states. He also is founder and CEO of Aceva LLC, a service-based nutritional company providing products and services to the AlignLife clinics. As the former CFO of an internet publishing company, Dr. Esposito understands the power of leveraging the internet to impact the lives of millions of Americans.
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Align Your Practice podcast with Dr. Cliff Fisher where your best practice and life awaits you. Are you tired of running a practice on your own? We want to come alongside you with experts to help you create your dream practice in your dream life. Here is your host.Dr. Cliff Fisher:
alright tribe Welcome back. Dr. Joe Esposito, here. And I'm Cliff Fisher, and I'm super excited to be here with you guys. We're hitting the fourth leg or vertical of this. So we've talked about launch, we've talked about build, we've talked about scale. And so where does all this lead, it leads somewhere and it's to the space we call exit. And so what I'd love to do is dive into a whole conversation about exit, how do we exit our, our practice, and leave a legacy, and then we leave with value. Because I mean, I think that's one of the biggest spaces in chiropractic that is missed, the legacies lost, and then the value is lost.Dr. Joseph Esposito:
Yeah, we fall down as a profession in this stage of practice, launch is something you have to do, you're forced to do, because you have to survive. So whether you go through it with a chaotic approach in total crisis with not enough dollars, and you force your way through, or whether it's strategic, planned and budgeted, well, either way, launch is something you force yourself through to get the clinic open. And then build is something that you know, to make it profitable, you got to stick to build. So those are innately like survival. Scale takes more strategy and intellect and process and planning to scale something, which means you're not trading time for money, you're actually the visionary and the strategic person behind the scenes that's moving the enterprise forward. Exit is, if you do everything right, and you plan it correctly, and you build the systems and the tools, and the culture and the team, you can exit this, this business in a very fruitful way. And we're going to talk about that. But I think if you do everything wrong, and then you go to exit, it's going to be an unhappy or very stressful situation. So let's talk about the two pieces of exit.Dr. Cliff Fisher:
Cool. So let's, let's break it apart. Let's start with legacy. I think, Joe, I think you and I both have a story on that I'll share my story. Mines actually started when I was in my second or third year in practice. And my mentor passed away. And he was, it was Dr. Muncie. And I'm like, oh, you know, everybody's gonna go to his funeral. And so he had his funeral, I went with his family, cuz I took care of his family. And I got there, and there's like, 25 people in the room for his funeral. And I'm like, Oh, my gosh, for me, one of the most impactful people up to that point in my life, like 25 people were there. And I was the furthest one who traveled and I was like, I was only, you know, maybe 500 miles away if that. And I'm like, Oh, my gosh, like, the people, the doctors, like it made me rethink because the other spaces, then his practice, also kind of died. Like his practice went away with him. And somebody took it over. And they tried to do it, but it wasn't Dr. Muncie anymore. And so at that point, that's when I realized I'm like, Oh, my gosh, this has to be bigger than myself. And so that's when I started bringing in associate doctors. Because, for me, it was like the legacy, like his legacy didn't get passed on, even though he was a teacher. And he taught the technique, he developed the Blair technique. But when I showed up there, I was just like, I was just dumbfounded. And so for me, that's where my legacy journey really started. Because, yeah, so what was your legacy journey, Joe?Dr. Joseph Esposito:
Interesting. My mentor, actually, in the GenStat system, actually converted his clinic to online life clinic and it creates sustainability. So I was really excited to see a longevity of a clinic when my mentor passed. But for me, you know, I my vision is I want to make an impact to this profession, save this profession, make sure it's sustainable, because I think the human race needs this profession. And so I, I want to make sure that I make an impact to the world in providing and leaving behind an amazing profession for hundreds of generations in the future, because the impact had on me and my family. And I just feel the truth is so strong behind chiropractic. So I just want to leave an impact in a legacy anywhere I touch, so any clinic, so I try whenever I am associated with a clinic, I try to use what I learned from CJ Mertz 20 years ago, is he said when you put up a clinic, you want to think of it like a church that's going to be there for three or 400 years. I never thought of it that way. I was like, well, I'll work in the clinic. And then when I'm done, I don't pay the lease and I closed the clinic. And I was very young at that time. When I heard that, and it changed why open clinics, open clinics that should be sustainable and always be a chiropractic office forever. And it just changes your mindset where you approach things. So when I started, I didn't put my name on anything. And I know that's something that's common in our profession that everything's about like, my last name Esposito, Esposito, chiropractic, Esposito, Esposito and all about me, but that's self limiting. And in fact, on a business standpoint, it decreases value. So I want my vision to be bigger than me, and I want to maximize value. So for both reasons, I want a brand that is sustainable, and valuable, valuable to our profession, because our profession suffers with scarcity and poverty. I'm not I'm only knocking my profession, because it's mine as well. So I can do that. And I think we culturally have a scarcity poverty driven profession. And I'm doing everything I can to help show these new doctors coming out in the field, the abundance, powerful abundance, and prosperity and success and living that from day one, when you get into practice, first trying to acquire that from scar tissue 1015 years later, right? I mean, that's what both you and I want to give to this profession. So that's kind of my my overall thought is in legacy. So when we built a line life we built it. Well, I love the name with an A, because it comes up first and everything. That's one of the reasons but align life. Secondarily, in the naming recognition, is because it's not associated with any one person. And thirdly, align life is because without health, you have nothing. So when you align your life for success, meaning our purpose state being to experience greatness in life, which is just means reach your potential experience, greatness is in whatever you want greatness in climbing a mountain, doing laundry, raising your kids running a marathon greatness is reaching your potential. And I want to do that through a highest level of health possible. So that's kind of the context of the framework. And the reason why I'm bringing this up, and I know it feels like a tangent is because that's legacy is the purpose being so deep, you need that when we're looking at exit, because we need purpose, we need to know what the impact and the purpose is businesses, if you want to create sustainable value, if it's Hi, it's Joe's chiropractic clinic, where I want to just take care of people for 15 years, 20 years. That's not sustainable value. So the story does matter. As much as the system and the people and the culture and the profit. Culture does that. What are your thoughts on it? I mean, that's my talking very high level. But I'm yeah, the weeds here in a moment. ButDr. Cliff Fisher:
so yeah, no, I love it. So I think where I was, where I ended up with you is like starting with the end in mind, like so often, we just want to start because we want to get going. But we're not starting with like, where do we want to end up. And then another thing too, is like, something I'm learning is suffer for what you love. Like, there's gonna be suffering, and there's always pain, there's pain and growth, or there's pain and non growth. It's just different pains. And so then one of the things when we talk about value and legacy, like one of my concerns is, and what I've seen a lot is actually the building that the practice is in is worth more than the actual practice. And that just breaks my heart because everything that's in that building is what's what's where the value is.Dr. Joseph Esposito:
Yeah, so we probably won't get able to get really granular on the depth of exit, but if any of you on this call, want to exit, we will give a link so that we can do a consultation, because there's a lot of meat behind this conversation. But let's whet your whistle. Let's create curiosity. Let's start the journey. If you're in that stage, or you're in scaling, you're like, What does exit look like? Let's just begin the conversation here on exit one on one mindset.Dr. Cliff Fisher:
So Joe, like your value, like so, like I know, we've had conversations on EBITA and different values, like what are those words mean? What is you know, what's like the normal exit for a chiropractor? What, what's possible, like, I know, you know these things. AndDr. Joseph Esposito:
so the issue is that the profession isn't as mature as other professions, in valuation. It's just not mature. It's starting to mature lately, immensely over the last few years. So value is starting to climb a little bit. So the issue is when you were to sell a business, like let's say a restaurant, let's say the restaurant makes brings in a million dollars. It could and it makes $200,000 It could be sold for about five Sometimes 10 times the $200,000. So if you take $200,000 times five, that's a million dollars. So if you're at the end of your career owning your restaurant, you could potentially sell that $200,000 profit business for about a million bucks. So it gives you about five years of your salary, which is pretty good. Maybe seven years, your salary, maybe 10 years your salary. So if you can exit, you can invest that money, and you could retire and go live on a beach and play your guitar and have a great exit. Unfortunately, the field of chiropractic that the mall, it's called a multiple, which means how many multiples of profit is the business worth. So the term we use as multiple. So if you make 100,000 a year profit, what's the multiple of your clinic's value? If you were to sell it today, so that's that's the word use what's the multiple. So the field of chiropractic was operating at about a one time multiple for many years or decades, where you would have a clinic that makes 200,000 a year, 400,000 a year, and it's worth 200,000 a year, and it was worth 200,000 sale, or the fort, let's say you made 400,000 That year, that's what you sell it for. Then you sit back and say, Okay, I'm gonna sell this, and it's gonna give me one year of the income I was making. And it's over. There's nothing there, there's nothing left, there's no more, it's just one year of the income you were making last year. That's kind of hard to retire on, especially if you don't have retirement setup. But even if you have retirement set up, you're like, I'm giving away my baby for one year of the income I was making. That's why a lot of Cairo's never retire, or semi retired. They're working in their 70s and 80s, and 90s. Because they can't exit. But the beauty is that now the multiple of the clinics has gone up, it's about 1.5. And if it's a very, very good clinic, it can go to two, two times. So if you make 400 grand a year, you could sell for like 800. If it's a scaling, strong based clinic, with a good staff, a good procedural process, you can get up to two times. Now, if the clinic is run byDr. Cliff Fisher:
a joke. So could you define a good practice? Because I think a lot of times people don't. So you kind of did, but like, what does that look like is like? So I know, like we do a lot of auto debit? What are some other things like what are some of the characteristics of a good practice that could get that two times multiple,Dr. Joseph Esposito:
sustainable continuity of numbers. So if you're averaging 20 new patients, you've had 20 new patients for the last three years, it's 30 new patients, not nine new patients today, 40 new patients next month, six the next month, up and down. So So sustainability of lead gen number one, diversification of payers, so you're not 90% Blue Cross, if 30%, Blue Cross 20% Pie 40% Cash, you're diversified payers builds value. Now, if it's all cash, and you're sustainable, and strong, no one's gonna really fight that with the exception of, if they balance you on a recession coming, they think you're gonna get killed, and you have to fight value that no health care, we will sustain that and look at our history. And then you got to battle the value of look at COVID. Look, we grew 8% over COVID Because and that's where you'll battle is because people that don't know our profession are gonna think cash pay could be a liability. But cash pay means value, you have to you have to build value, because they're paying cash and health care. Most people gain cash in health care. They're using insurance only. And if they don't cover it, they don't do it. If you rash, hey, chiropractic clinic, it's it's weathers recessions, but a buyer on a business may not know that. So hold your conviction and teach that, to me, it's highly valuable to a private equity firm, they may try to battle a little bit, but you can show results on that. So anyway, that's, that's another value proposition which is multiple payers. So we talked about sustainability and Legion, multiple payers.Dr. Joseph Esposito:
Sustainable net profit, that you having a not number, but percentage, you're writing about a 2030 30% margin, it's just sustainable. What they have to see is, if I add more to the top line, we're going to spit out more on the bottom line, because the expenses seem to be pretty fixed and controlled. It just needs more juice to get more money. Like that's what they want. The other way to really jump value and get that multiple ball from 1.5 to two to two and a half to three to maybe. I don't know about four but you could potentially afford is it's run by doctors that are employed. Because the fear by your practice is you're the rock star. You're going to leave I'm going to buy So now all the energy is gone, and now the new person comes in. And if I'm an investor, I'm going to bring a guy out of school to take your place, I'm losing a half my value, I'm not going to give you much for that practice, maybe one to 1.5. Like I said, if it's run by doctors who are employed, oh, that multiple doubles, that could double, which is huge, okay, three, three and a half, maybe, which is amazing. Now that sometimes people are getting a little bit higher, if you get big, bottom line profit, let's say you have a million dollars and net profit, or EBITA, which is earnings before interest, taxes, depreciation and amortization schedule. So it's basically before, you know, like taxes, and I don't want to get too deep on what each one of those things are. But it's really the net profit of the business, how much how many, how many dollar bills is left after expenses. But if the EBIT or the net profits continues to rise on a scale, it increases the multiple, they're looking at the scaling trend, so I just gave you five pieces that will show value. But what we're doing in line life, which is really interesting, and is we're helping doctors that want to exit, like let's say you want to exit, and you want to spend the last five years using your knowledge, your experience your scar tissue, and leverage it. So we have people that are experienced 20 years in practice, join in the limelight, we're alive life takes over the back end systems. We have a call center, we have digital marketing, we have take over your training for you take over your branding and take over all the the heavy lifts that you just focus on the culture, that scoreboards the accountability of the team, and leveraging it for more offices or more doctors. So you just what you're doing is building value fast, the last five years maximize value, could you do three more offices, you couldn't do three offices the first 10 years because you're working on the one. Now reproducing is easy, you just need a back end system and a team to help you. So what we want to help doctors do is exit with maximum value by building value. So let's say you were in you decide to join in the Align life system. And we helped put up four more offices that each have a $200,000 net profit, now you instead of two to three or two to 4000 100,000, you have a million 2,000,004 Well, that's a way different exit, because that's all run by doctors who are employed, your multiple goes through the roof. So you're looking at an exit of three to 5 million versus 406 100. It's just different. It's different on it. You'veDr. Cliff Fisher:
just in a zero, that's oneDr. Joseph Esposito:
beer. So when people are like I'm 72, and I want to retire tomorrow, that's not planning if you want to plan an exit, and you're 20 years in 25 years, and there are ways to 10x your exit, literally 10x your exit. And of course we'd love to have the conversation align like that's one of our expertise. In exit. I've bought and sold many, many practices over the years. I bought, so practices bought in and sold within six months made two 300% margin on an adverse clinic. I've bought and sold 10 years later. But I've done it for over 25 years the the process. And there's a lot of players in the market now that I've helped to mature, I gotta give props to my good friend, Stu Bernsen, Stewart Bernsen, who built an organization that helped create max value for chiropractic brought the multiple up to 1415 times one year's revenue if you have enough value. So last thing I'll say without getting too technical, because we can get technical another call, will we break this down? For those that are like, Oh my god, I'm going to exit in 24 months? What should I do? How do I get that high level of value. The last thing I'll talk about is pooling together EBITA or net profit. You can pull things together and sell to an equity firm, private equity firm which is a group of individuals or companies or investors that want to buy equity in companies and assist in their scale and then sell them for a profit. Private equity is the name of that. That vehicle and private equity. We'll give you the multiple we talked about we talked to multiple for owner operator right like one to one and a half. We talked about multiple for a employed chiropractic organization where the owner leaves but nothing disrupting the business at about two to three and a half, four somewhere around there. But the issue is to get the bigger money from a firm from an organization. They need so many dollars on the bottom line and they're not going to play with you and under $2 million, and a lot of people, even if you grow big business, you may do a $2 million business but not $2 million profit. But $2 million is the lowest table stakes to get in, it's not really going to bring you much, 5 million is really when it starts to get nice. And really a 20 Millions, when you smile really big. There's not many chiropractors that are doing 20 million profit in a clinic or chain of clinics. That's that's a tough deal. But if you were to have bring in 2 million, or 1 million or 500,000, and you bring it into an organization like align life, and we have 30 other clinics that are bringing in 200 300 400,000, collectively as a unified, and I know that works hard for chiropractors there were fragmented. But Unity together this, we can drive value in the 10 time or more, if we put it together under one brand, and then do an exit of a group of clinics. That's another really huge model. And that takes obviously more conversation. But does that make sense? Clifford? Did I lose that?Dr. Cliff Fisher:
Yeah, no, no. And I think for me, like where I landed, for me was like, this exit thing is really critical. And it's really critical for certain population of chiropractic. Most people aren't thinking about it except for think with the end in mind where you want to end up work towards that. But then like, if you're somebody who's in like, in the next two to three to five years wanting to exit, that's a place to have a conversation with Dr. Dr. Joe Esposito. Because he knows that and that's what I know is on your mind, and what you're planning is we you know, we're on schedule to have a, you know, a roll up in probably three to five years. And you know, then then we'll have another one after that. It's not that we're getting out of it, it's just that we want to capture the value that we've created in our clients.Dr. Joseph Esposito:
That's exactly right. So it's going to be probably right in between that three to five, like about a four year process, we're going to have about between 30 and 40 clinics that will join together and do an exit, and then the next three or five years, another group of clinics, that's the model we're moving to, are we going to hit it exactly in four years, we hope so, because there is massive interest. And there's a lot of people exiting and ready to get one time their income. And when they know this, they're going to start thinking my family's worth the 10 times the one years. So yeah, even if we have a conversation to guide you, in just selling your practice. For more by looking at those five principles that I brought up, let us just guide you in that and then maybe you can sell for more dollars, even if you do it on your own in your own way. I just want to make sure you're educated enough to make the right decision. I want to give a plug to our friends that professional practice. Brokers, Kevin meisenheimer and his wife, just magical and masterful in and showcasing as much value and they and the aesthetics of your practice the numbers and whatnot, great group of people for exit as well. So whether you talk with us it aligned life in maximizing the multiple, or whether you just want a one off cell, you know, they're great, she just wanted to give them some props.Dr. Cliff Fisher:
Yeah, I bought a practice from them. And they were awesome. And just high integrity, they're going to like I had another person that he asked him to value it. And it was way less than what he wanted. So he decided to sell on his own, but their number was actually the right number. And so they, they're not going to give you a number to try to sell you, they're going to be honest and have integrity. And Kevin and his wife areDr. Joseph Esposito:
both sides of the coin. They are whether the buyer and the seller, they hold such a high level of integrity. It's just it's awesome. What it was to finish up today's talk, I wanted to say that you know, also the, the the people in their market practice that we use the infrastructure inside of a live life, if some of those doctors listen to this life is geared up to help the exit of of the doctors in the organization that we know and love. Because we have a lot of that infrastructure built in culturally. So it's an easy transition to get the maximum value using the Align life infrastructure and leverage system due to our our love in association with those in the in that organization as well. But any organization that you're part of any organization wants an insight first is about awareness and knowledge. Right? Once you have awareness and knowledge, then you can start making intellectual decisions.Dr. Cliff Fisher:
So awesome. Joe, thanks for the insights on that. That was huge. I think so many people don't think about that. So we just want you guys to start thinking about it with the end in mind. How do we exit which will lead right into our next conversation next week, which is called you know, having a job or having a business like there's a big difference. And so stay tuned for next week. We'll talk to you about that then. But again, know your EBIT and know your multiple know how you want to exit. Again, back to our original thing planning so that you're doing the right thing for you and your My family and honestly like we can talk about all that but at the end of the day, like we can't lose any more chiropractors because we don't have enough chiropractors to serve. And then we need to keep those clinics open serving those people because those people need good quality chiropractic care, and there's not enough out there. So, thank you very much Till next time, have a great day.