Post-M&A Integration Strategies That Actually Work in Homecare & Hospice

Episode Transcript

Speaker 1 (00:03):
All right, welcome everybody. We're here for another of our
weekly live sessions. We are a little bit earlier than
the normal today, all right, just because well you know,
it's even though it's a Saturday, we still have client
stuff to take care of and we'll be on with
a client in a little while, so I had to

(00:25):
do the video a little bit earlier. All right. So
today we are talking about five strategies you know that's
going to help you get past the integration phase after
you've sold your after you sold your business, after you've
gone through the emergency and acquisition process. All Right, We're

(00:47):
going to cover five very specific things. And you know,
even if you are a brand new agency, or if
you're not even thinking at all about selling your business yet,
this is a very important video for you to watch
because we're going to talk about things that you should
keep in mind for when the time of the sale comes.

(01:10):
If if you are in your planning phases still and
you haven't even opened up your doors, or you're just
in the first few months of your business, you're still
in that honeymoon's phase, so to speak, you should still
pay attention to some of the things that we're talking about.
Here because we all exit our business at one point
or another, and we need to be aware of that. Okay,

(01:34):
whether you exit your business because you've unfortunately passed away,
because you're retiring, or because you've sold it or passed
it along to an air you need to be aware
of some of these points. All right. So the first
thing I want to talk talk about is, you know,
when does integration planning actually begin? Okay, that's point one.

(02:00):
The first thing you have to keep in mind is
that integration should be a ninety day process, so at
the very minimum, ninety days before you're closing, once you've
already uncovered all the skeletons, you finalize the negotiations. Now
you're now moving into those final phases before closing on

(02:21):
the deal. You're doing the final due diligence and everything
else is going along. Well, you need to make sure
that you know it starts. Okay. This is incredibly important
because if you wait until after integration is done and
you haven't begun the integration process during the due diligence phase,

(02:42):
diligence phase, that final phase whe you're going through, then
you're not going to have a clear roadmap and you're
going to end up with, you know, a lot of confusion,
and you're going to end up with, you know, a
lot of chaos when when this transaction is over and
you are now the new owner. All right, So having

(03:04):
this roadmap understanding, but that integration planning needs to start
during during the early due diligence phase. What it's going
to do is going to set clear expectations for what
should be happening day one of you being the new owner.
All right. So now this brings us to the next question, Well,

(03:25):
who should be leading integration. That's really gonna depend. Okay,
a lot of times some owners that are very experienced
in doing this, they don't mind getting their hands dirty.
They will come in and integrate the two businesses themselves.
You know, if if you are highly experienced at this

(03:45):
and you've gone through the process and you know, go ahead,
and there's nothing wrong with that as long as again
you have assigned leadership, you have assigned you know, accountability,
and your person or team is able to coordinate between
the departments of the previous company with the merger when

(04:09):
you're merging it in with the new company, and they're
very adamant and very very good about keeping track of
all the KPIs and that the transitional milestones are all met.
You know. So again, sometimes the owners are really good
at doing this. Other times you will have you will
have companies like mine, you know, you'll have how people

(04:32):
will hire consultants to come in and take care of this,
and other times, in larger corporate entities, they will actually
have designated integration teams. Where these are teams that they're seasoned,
they know what they're doing, and they're easily able to
bring in bring together all of all the moving parts.
So you know, this all begins though, once you know,

(04:55):
once you have your post transaction playbook so to speak,
in play all right, and you have all of you
have a roadmap of what needs to happen. Starting day
one of you taking over as the new ownership, you're
starting to make that plan. You've designated who's leading the integration,
whether it's you as an owner, whether you hire a

(05:17):
consulting company, or you're a large corporate entity and you
have a designated team in place to do this, or
even if you're not a large corporate dentity. But let's
say you have a very aggressive growth plan by acquisition,
you want to make sure that all of these things
are in play. You might have a team in place,
so and it all begins by making sure that you

(05:40):
have your priorities straight. So your day one messaging is
absolutely critical for this. All of your staff, your referral sources,
everybody needs to be reassured as to what's going on.
Everybody needs clarity in the process. You want to make
sure that your operations and your communication and that your

(06:01):
workflows are all stable in order to avoid any major disruptions. Okay,
I've been through a couple of transitions throughout my career,
a number of them at this point, but early on
some of my first transitions that I went through, there
was one company that it was just awful. I was

(06:23):
a staff member, I wasn't even a consultant at that point,
and it was probably my first or second transaction that
I've ever been through. The owners did not plan at
all for a solid transition, and I found myself with
the owner standing in an empty room, you know, because
there was no plan, there was no communication. You know,

(06:44):
even the sale itself was dropped as a surprise on
the existing staff. So all of these things became chaotic.
They lost probably about fifty sixty percent of their client
base within the first three months as a result, and
it was all all directly attributed to not having a

(07:05):
clear plan and not focusing in on the priorities of
making sure that communications operations were all stable and that
you had things in place all right. Point number two,
you want to talk. You want to let's talk about
your staff and your culture. You know, if when we're

(07:28):
talking about staff and culture, when it comes to the
m and A process, you know, you're the existing staff
in that company or the staff you're bringing in. They
are the key to retention and maintaining morale. So you
want to make sure that you have strategies in place
to retain the top caregivers and office personnel. They're the

(07:48):
backbone of the business. That may be it may require
simple things like just offering a retention bonus, you know,
in order to get people to stay after the trends
is over. This is particularly found. I found this to
be a particular issue, especial with office staff. They get
a little nervous that they think they're going to lose

(08:09):
their job. You want to reassure them. You want to
have very clear communication. You want them to be involved
to a certain extent in creating or you know, or
communicating the new vision, and you know, to make sure
that everybody that everybody just stays put until you guys

(08:33):
figure every finished figuring everything out. By this point, you
should already know who's staying and who's going, you know,
because let's be realistic. If you're coming in, you're buying
an existing agency, that core staff, that back office staff,
that core group of caregivers. Without them, your quality and
your continuity of care are going to suffer tremendously, and

(08:56):
that's going to impact the reputation of the company in
a number of other things. Okay, So you want to
make sure that you're also able to manage any culture
clashes between existing staff and the new staff. Okay, so differences.
You'll have new people in place, You'll have new people
that are going to have to interact and work with

(09:17):
each other. That but more than likely I've never worked
together before, and that means you have differences in leadership style,
differences in your processes, differences in the values, and that
can cause a lot of friction. Acknowledging and aligning all
of this early on helps prevent disengagement and it helps

(09:40):
prevent what you know, what's commonly referred to today as
the quite quitting process, where people are just they start
doing the bare minimum. You see them performing less than
how the previous ownership maybe said they were accustomed to
those people performing, and they're just quietly using your paycheck
to find another job. These are the things that you
really want to make sure are just avoided at all costs.

(10:05):
And the way you do this is again transparent communications.
Make sure that if you're not planning on firing any
of the staff, that that is absolutely crystal clear, because
there will always be that person that starts spreading fear rumors,
you know, and you'll have sudden resignations as a result

(10:25):
of it. You know, at the end of the day,
you know, silence breeds anxiety. So the best way to
combat that is having honest, open communication to minimize the
rumors and to build trust across the entire organization. Okay,
point number three your systems and your operations. You got

(10:48):
to make sure that your technology and your workflows, that
all of this aligns between your your way of doing
things and the new company. So if if you're buying
an existing company this is your first purchase, it's easier
to do easier to manage. Now, if you're already a

(11:09):
multi multi unit owner and you're coming in and taking
over something or absorbing this other company in this becomes
absolutely critical. There's going to be challenges, you know, integrating
potentially the e m R systems, integrating the billing, the payroll,
different scheduling platforms. You know, you you want to you

(11:32):
got to sit there and figure out if it makes
sense to you know, unify the systems with what you
already have. If you're if this is a merger situation,
or if you just want to temporarily run dual systems
until you get things up and going. You know, it's
not it's not always as easy as as it seems.

(11:56):
Or let's say you're a new owner, single unit and
it you've just purchased an existing and up running business.
You have to take the time to learn what processes
are in place. Uh and if you're not, if you
don't like, for example, the scheduling software and you want
to switch from scheduling software as scheduling software B or
your EMR system, you know, all of these things you

(12:19):
want to you want to do it slowly. You don't
want to come in like a bull in a china
shop and start, you know, wrecking everything and know we're
going to start all over. It just doesn't make sense
and it leads to a bad transition. So, you know,
the you want to make sure while you're doing all

(12:41):
of this and you're aligning all the technology, you want
to make sure that you are upgrading or updating certain systems.
Like for example, if you are buying a business, you
got it at a good price because throughout your process
you found out that they're still running scheduling and payroll
off of Excel files. I mean, hey, that's great if

(13:04):
that's what you want to do, but that's not very efficient.
That's not very effective, and it can really lead to
a clunky transition or it can you know, just generally
mess up the process because now instead of using something
that that will easily integrate with let's say you're invoicing

(13:26):
with your with your payroll company, with other other systems
in place that are going to help you better operate
your business. Instead of doing all of that, now you're
you're sitting there and you're fighting against old technology and
new ways to integrate. And this can lead lead into

(13:47):
you know, a destruction or a serious reduction into anticipated profits,
you know, because now you have to come in and
retrain staff and a whole lot of stuff that that
you just do. You really want to take the time
to do it. That's basically what it comes down to.
So you want to make sure that during your due

(14:09):
diligence process and your roadmap when you're planning all of
this this integration out, that this is part of it
that you have in place or in mind. At least
you know that if you like a particular scheduling software,
make sure that that you know you're you're ready for

(14:29):
the day of the sale to start the migration process,
to start the training on that new software, if it's
one that they're not used to, especially if it's agencies
that are still using you know, pen and paper or
Excel files that are that are a little antiquated. And yes,
for some of you watching this video that are going
to people really still do that absolutely. I actually very

(14:54):
recently took on a client that when my team and
I were going through some of their processes, they have
no CRM for their sales. All they had they handed
me was three boxes of paper where handwritten notes were
kept and in lieu of a CRM. Again, nothing wrong

(15:18):
with that, but it did make the transition very, very clunky,
and it made our jobs as a consultant. It made
my job a little bit harder because now I had
to sit and dig through and make sure that you know,
we didn't miss anything along the way during our processes.

(15:38):
So keep that all in mind. These are things to
keep in mind and be mindful of. Number four. During
during your integration process, you want to take a serious
look at the brand identity and what the market messaging is.
You know, one of the big questions that I actually

(15:59):
get quite a bit from people that are trying to
buy or that are you know, they're trying to merge
or acquire another company as part of their growth process,
is you know, should I rebrand or keep the name? Well,
here here's the thing. Rebranding creates unification if you're taking

(16:22):
something over. So you know, let's say, for example, i
am ABC home Care and you know, I've I've just
purchased X y Z homecare, all right, or I've you know,
or home health or hospice or whatever, or skilled nursing.
I'm Company A and I've bought company B. Company B.

(16:42):
The benefits of keeping their name at least for a
while after the purchase. It can create or maintain that
good will process. It could preserve, you know, referral brand loyalty.
You know, it could cause, it could create a lot
of solutions. And I'm a big believer that it should

(17:06):
always be a slower transition. You don't come in day
one unless okay, the only time you come in day
one and just trash all the branding is if the
company you're buying doesn't have a good reputation. And again
this is part of the due diligence process. You know,
there's there's always a reason why people sell. And one

(17:28):
of the things that I have found and being involved
in these types of these types of things over the years,
is that when people are getting frustrated, tired, or burned
out with the business and they're ready to sell it,
a lot of things go by the wayside, and sometimes
quality can suffer. And when quality suffers, so does reputation.

(17:53):
All right, So these are all these are all things
how that you want to keep in mind when you're
thinking of your integration process. If the company still has
a solid reputation, then you want to make sure that
you know your your rebranding process is a little slower,

(18:14):
all right, so that you can you can make sure
that you get a positive perception from the uh. You
know that people have good outlooks, like clients, the referral partners, caregivers.
You know a lot of times people misconceive a sale
or a merger as instability or as a you know that, oh,

(18:37):
they're going to bring all new people in. I don't
want to deal with new people. I'll just stick to
another referral partner locally. You know, you want to make
sure that when you're introducing this entire concept and bringing
it to market after you've purchased, that you have clear, clear,
clear story, that you have clear messaging, that you're website

(19:01):
marketing materials, your brochures, your community messaging, all of this
has been taking a look at that it's all high quality,
that it's all stable, that it shows some sort of improvement.
You want to make sure that you are the one
controlling the narrative, controlling the perception of others, so that

(19:22):
the brand and marketing message doesn't suffer in the process.
And then finally number five, you want to make sure
that you have very clear success metrics in place, so
that you can properly measure the return on your investment.

(19:46):
So when you take over a new business an existing business,
the KPIs are going to tell the real story whether
or not this acquisition or the merger was worthwhile. All right,
So it's not just about top line revenue, but it's
also about sustainable improvements. Like basically, in if we were

(20:09):
to take take a look at this implementation process of
this timeline, we need to make sure that you know,
what's our ninety day retention after purchase, where we able
to hold on to the majority of the clients, where
we able to hold on to the majority of the
caregiving staff. Once once the merger or once the acquisition
was announced, what's it looked like six months out, three months,

(20:32):
six months, maybe twelve months out. You want to make
sure that you're looking at all of these things. Your
revenue is it steadily growing or did you hit a
brick wall or did you lose so many clients that
you're not really seeing any growth? Is your market share?
You know, is your market share expanding or detracting? Like

(20:54):
if yours was a merger and let's say you were
able to that you took over this company, just to
eliminate a competitor like you just made them an offer
and you didn't want to and you wanted the bigger
market share that they had. Is that actually happening? All right?
So is your caregiver satisfaction increased, decreased or neutral? You know?

(21:17):
And what are the cost synergies between you know, your
expectation and the reality. What about your you know, where
you able to find savings or is it a bigger
drain because of this merger? You know, all of these
things are things that you need to track and take
a look at. You also want to keep an eye

(21:39):
out for common red flags that you know that are
big indicators of post deal inefficiency or something known as
commonly known as post deal drift. Okay, so you want
that is all of a sudden, you see overtime going
through the roof, You see a big spike internal or

(22:00):
from your caregivers. You start hearing calling complaints missed boiling
cycles are being missed. This is especially important if your
revenue management is and it gets gets out of whack,
especially if you're doing like medicaid or medicare building. You know,
it can really impact your operations and you want to

(22:21):
you want to keep an eye on these things. You
want to set up very clear and easy to measure
KPIs that will help you understand these things better, all right,
and that's all going to lead to be able and
this should be part of your plan. You're your so
your your roadmap so to speak, for for your transition

(22:42):
period post purchase. It's how do you correct it when
these things aren't going right? You know? So you want
to make sure the number one is that you're taking
a look at your integration plan. You're you're engaging or
re engaging the leadership, the new leadership, the previous leadership.
You know, don't be afraid to pause or reset parts

(23:04):
of this transition if you have to. Like if you're
seeing great success with your client acquisition but you're not
but you're not seeing big you know, client acquisition is improving,
but old previous client retention is going down, or you
notice an overall dissatisfaction or sharp dissatisfaction. A lot of

(23:27):
times with a legacy client satisfaction, we need to take
a look at this. We may need to pause bringing
in new clients until we figure out what's going on
with our processes and why are clients all of a
sudden unhappy. All right, So all of these things, all

(23:49):
of these things have to be taken into account. And
these are only you know, five of what we consider
some of the most important things to consider and strategies
you know for post for integration, post M and a process.
All right, So just remember, just to recap, all right,

(24:12):
your integration planning does not start the day you close.
The planning should already have happened and been an ongoing,
an ongoing process from the minute you sign that letter
of intent and give give your surety deposit. Right. So,
once that's all done, you should already have or start

(24:33):
looking at how you're going to integrate your processes or
or integrate yourself. If it's a standalone business purchase, right,
you want to make sure that you're doing this at
least ninety days out of if a little bit longer,
if your due diligence process started beforehand. Right, you want

(24:54):
to take a look and make sure that you can
fully integrate or that you have a clear understanding of
what the staffing and culture is in the new purchase.
All right. The key to retention and good morale is
you know, understanding all of this. So you have to
have your strategies and plans in place to retain the

(25:16):
staff and manage any culture clashes that can happen, and
all of that can easily be broken down or remedied
in many cases with clear and transparent communication. You want
to make sure that you're that you have a good
overview and are able to properly align systems and operations.
Is the new company you're taking over using outdated systems?

(25:39):
Are they using systems that are far more advanced than yours?
If you're if it's a merger, how can you marry
them so that you don't so that you don't see
a lot of a lot of clashing there, or that
you don't see the need for a higher learning curve
impact quality. So you want to make sure that if

(26:01):
unification is your strategy, that you have a good plan
in place, and that may mean running dual systems for
a short amount of time. Right. You also want to
make understand very clearly your brand identity and the market
messaging when you go back out to market and it
starts spreading that there's new ownership, whether it's a single

(26:24):
unit purchase or if it's a merger or multi unit expansion,
it's having an understanding of the brand identity and your
marketing message will help you control the narrative. And if
you can control control the narrative, then you will be
able to control people's perception of why this is happening

(26:45):
and what's going on, and that all happens because you
are understanding that success metrics are important to track because
they're going to measure true ROI what is a true return?
And as I said earlier, KPIs will tell the real story. Right,

(27:06):
success is not always going to be measured at top
line revenue. It's about your ability sustainably and continually improve
the business post transaction. Right, keep an eye on the sudden.
If there's sudden spikes in overtime, sudden spikes in turnover,
client complaints. You know if your A and R is

(27:29):
out of whack, you know your your AR is out
of whack. All of this stuff. Make sure that you
also have contingencies in place so that you can course
correct immediately. Yeah, so, thank you guys for joining us,
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(27:49):
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All right, We look forward to seeing you guys on
the next video. Have a great weekend.