How to pursue a sustainable buy-and-build strategy

As part of our OpEx Awards 2019, Neil Lloyd, chief executive of healthcare network Dental Partners, provides five tips to scale up businesses quickly and sustainably and enable ambitious buy-and-build strategies to flourish.

Neil LloydIt’s always an exciting time for a business when it gets investor backing that allows it to take its growth plans to a whole new level. However, to riff on a certain movie quote, with great growth comes great responsibility.

The management team of a buy-and-build platform need to be mindful of avoiding that common pitfall of not having a truly integrated business. At Dental Partners we have grown to 42 clinics and counting in just 26 months. We not only hope to be over 60 clinics in size by Christmas, but to maintain our standard of being the best place to work and the best dental services provider.

Achieving this requires being a fully integrated business. I’m not claiming we are perfect, but we have certainly learned a few lessons along the way.

Here are my five top tips for growth success.

1 Know your market

First and foremost, you should consider if the market you’re thinking of targeting is suitable. One of the attractions of the dentistry sector is that not only is it still hugely fragmented with only just over 20 percent of the market in corporate hands, dental clinics are also largely homogenous entities. In other words, the systems and processes for the services they provide are not hugely different from each other, which makes integration easier.

2 Get on top of your synergies early

With acquisitions there are a lot of costs that may flow out of the business rather than into it – staff may expect a pay rise, and corporate ownership may necessitate management or system costs, for example. To balance this, it’s really important you start taking advantage of those economies of scale you get from size; renegotiate with materials and equipment suppliers, find debt synergies, etc.

3 Invest in management processes early

If you want to grow quickly you need to invest in the right processes straight away, such as practice management and clinical systems in our case. You don’t want to be trying retrospectively moving 100 plus sites onto a whole new system because the
existing one cannot cope with your scale and changing needs.

4 Cultural buy-in 

Don’t forget when you take on a new business you are also taking on new people. Act quickly to win them over – and there are always quick wins to make.

Piece of faulty equipment been bugging them for months under the old management? Get that fixed straight away and you’ll be surprised how much goodwill you get in return because you are seen as a positive force for change.

It’s also worth making sure your bolt-ons follow your ethos and way of doing things very quickly. Initially, we held back a bit, as we didn’t want to scare the horses. However, it makes for a smoother partnership in the long run if certain expectations are laid down right away – eg, the practice management system will need to be changed.

Of course, you shouldn’t go about this in a heavy-handed way. I’ve found making sure there’s a clear line of communication to the management team for all new employees has been key in helping our new staff settle in.

5 Add value 

My final piece of advice is to remember it’s not all about buying; organic growth is hugely important too. Unlocking untapped potential in acquired assets allows you to derive true value from an acquisition.

Our growth opportunity is particularly within the private-pay market, so we have been facilitating clinician training, giving them access to new skills and, importantly, training on how to sell private treatments on top of NHS treatments; an essential component of patient choice.

I acknowledge that all of the above tips require an investment of time, and management teams are time poor.

However, if you work on getting these things right straight away, they will pay multiple dividends in the future.

Neil Lloyd is chief executive of Dental Partners, which is backed by mid-market private equity firm August Equity and was created just over two years ago. He was previously chief exec of Yodel and of NHS Professionals.

For the full list of Operational Excellence Awards 2019 winners, click here.

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