🟠 Finding a CEO for your SMB | $1.95M Weight Control Medical Practice

The SMB Scoop is highlighting a few prices about leadership in SMBs specifically relating to the top dog. Whether this is you yourself…or your want to hire a CEO eventually, it’s a topic worth exploring. The CEO is the navigator of its future - the role is both an art and a science. One of those ‘one way doors’ you just need to get right.

But first, let’s do a quick look at a potential SMB acquisition…

The Deal 🚀: Weight Control Medical Practice

• Listing Link: https://www.bizquest.com/business-for-sale/weight-control-practice-for-sale/BW2117793/

• Purchase Price: $1.95M

• Revenue: $1.69M

• SDE: $1.065M

• EBITDA: not provided 😭

• CapEx: not provided

What I like the deal:

• Fast growing end market 🆙

• Cash pay medical practice (get paid same day, no AR) 💰

• No insurance / private pay customers - no dealing with insurance, no costs of insurance administration. This also suggests that customers are acquired through non-insurance referral means (direct to consumer marketing possibly?).

• Offer other aesthetic services like cool sculpting, there are a million ways to upsell & expand service offerings in clinics like these that are vanity driven.

• Limited owner involvement at 20-30 hours a week, means there is likely management and experienced team members in place

Issues: 

• Rarely do businesses actually generate 63% SDE margins like this. This is a massive red flag to me 🚩. Usually signals that SDE is a ‘marketing tactic’ by the broker (real EBITDA or cash flow is way less) or the owner plays a big part in the operations (actually providing services) that aren’t captured in the SDE figure that you may have to replace. Margins like this in a people heavy industry like healthcare is rare unless they are doing something very special 😺 or very bad 👿.

• Services could be faddy in nature depending on what type of weight control (Ex: hormones replacement therapy is different than a Jenny Craig weight loss center). Uncertain entire scope of services based on business description and what draws in customers initially

• 1 location, limited space. You have to move or open up an additional location to grow 🪴

• This feels like an owner operator business, the ‘ownership’ role will likely be very hands on given it’s size (can be a negative or positive)

1. 12 Simple principles in hiring a great leader.

2. CEO's impact is big, yet frequently intangible, sometimes frustrating for people who need/want immediate feedback. Some great metrics in here too.

3. A fresh perspective on team vs family in business…Think about the CEO role as a head coach of a sports team.

Check out my SMB Junction Capital Connector: Connecting SMB entrepreneurs with the capital they need to acquire and grow their business

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The SMB Scoop 

Ben Tiggelaar

Things I’m currently working on: www.bardocapital.com, www.smbjunction.com, [acquisition made in June 2023 to be announced…]