Why I Chose an Equity Partner When I Didn’t Need CapitalBack
In the summer of 2018, Greice Murphy, Founder and CEO of Advanced Care Partners (ACP), began contemplating one of the most significant decisions in her life. As a provider of home-based nursing care for medically fragile patients, ACP had just been identified by Inc. Magazine as one of the fastest growing companies in America for the third straight year. Her company was purpose-driven, profitable, and a place where people loved their work. The ACP team consistently received positive feedback for delivering exceptional clinical care and patient experiences for the families they served. Faced with the challenge of managing continued growth, Greice knew it was time to consider new options to further scale her business. She was determined not to compromise the company culture and was motivated to build upon the strong brand that ACP had already developed. Below, Greice shares how she made the decision to look for a strategic partner and why she decided that a private equity sponsor was the best path forward for Advanced Care Partners.
“I didn’t need capital”
I came to the United States from Brazil in 2003 to pursue my career without speaking English. Juggling a young family with a husband who is also an entrepreneur, we simply didn’t have enough hours in the day to get everything done. I knew I didn’t have the bandwidth to educate a potential investor on the specifics of my industry. The company was already financially successful. However, to become more than a regional provider, I knew I needed specific expertise from healthcare industry leaders who had the right experience to help take ACP to the next level. I was also concerned about private equity coming in and telling me what to do, acting as a “boss” rather than a partner. Obtaining capital is relatively simple when you are profitable and growing. Anyone who was going to be a true strategic partner needed to bring much more than just capital. Finding a thoughtful partner with meaningful healthcare expertise was much more challenging.
I loved everyone who worked with me and knew that no offer, no matter how large, was worth disrupting our company culture or the clinical excellence provided to our patients. However, if I could find someone to help us expand to new markets, facilitate introductions to new payors and referral sources, and ultimately enhance the care delivered to our patients, then selling a part of my business would be worth it. My primary goal was to find a partner that shared my passion for taking care of our young patients and recognized that financial outcomes could not be prioritized over doing the right thing for my team and the families we serve. I learned very early in life that we should never focus on the bottom line, but instead focus on doing the right thing for our stakeholders: that always results in great returns. Other factors – strategic healthcare relationships, valuation, structure, ownership retained, and board composition – were important, but they were secondary considerations.
“Finding alignment with the right PE firm was my highest priority”
I wasn’t interested in the private equity firms that started a conversation with what EBITDA multiple they would pay or immediately asked about our financial performance. I wanted to know that whomever I selected as a partner would genuinely care about our patients and our people.
I quickly found that Council Capital understood both what ACP did and where they could be a true value-add partner. Grant Jackson, Managing Partner of Council Capital, met with me to talk about preserving our culture and clinical outcomes, and to discuss Council Capital’s philosophy on management styles. He told me that Council Capital backs founders and management teams and is in the business of empowering operators, not running companies. Grant said Council Capital’s job is to remove obstacles and open doors I couldn’t otherwise access. Every private equity firm was telling me they had relationships that could help us, but Council Capital actually provided tangible examples of how they systematically support companies like ours.
After sensing general alignment with a small subset of PE firms, I wanted to know the answers to these hard questions:
- What does it mean for me to transfer controlling interest rather than pursuing a non-control deal?
- How does the partner manage their involvement in the company, and how can they demonstrate that they are a true strategic partner, not just a boss?
- How does the firm pick the board, and what say do I have in the process?
- Where specifically can they help me and my business? How can I validate that?
- What changes should I expect and how would they simplify, not complicate, our operations?
“How do I know when I’ve found the right group?”
Asking myself simple questions such as “do I like the investment team?” and “what resources are they actually going to provide to me?” resulted in greater clarity. I spoke with a handful of highly respected Medicaid Directors (Medicaid is our primary payor) to get their perspective on Council Capital. Every private equity firm we considered claimed to have uniquely valuable relationships, but Council Capital was the one that truly proved it by getting me in front of people who were relevant to my business.
Grant recommended three candidates for the position of Board Chairman, but the ultimate decision was up to me. Candidates were carefully selected per their expertise as it relates to scaling ACP, rather than filling the board positions with financial investors as most private equity firms do. The people on our board have run successful organizations in the healthcare industry and provide me with relevant and thoughtful guidance.
“How do I decide if this is a good decision for me?”
The best advice I can give to anyone considering bringing on an equity partner is to define the qualities you desire in a business partnership and to focus on what is most important to you and your company. I valued the preservation of our clinical and cultural soul, as well as having a PE firm focused solely on healthcare. It was important for me to validate this with other CEOs that Council had backed, and it was those peer conversations that convinced me that Council Capital was the right partner for ACP. Since I made the decision to partner with Council, I have found that the relationship has not only made ACP better, but has also made me a stronger CEO.
Now that I have partnered with Council, I have access to valuable resources and a unique network through the CEO Council. The CEO Council Members have built successful organizations, and they possess an expansive healthcare network. These leaders have already worked through just about any challenge I could encounter and act as invaluable mentors to me.
Since partnering with Council Capital, I’ve found that I’ve become more thoughtful in my decision making and ensure that all critical decisions have a strong, defensible rationale. The Council Capital team has willingly rolled up their sleeves with me and embraced my passion for the business and our patients. Furthermore, the resources the Council Capital team has delivered have allowed me to allocate my time to the highest and best use versus trying to be everything to everyone. My ability to execute has increased, my senior leadership team is aligned strategically and financially, and resources have been invested into operations to handle long-term, sustained growth. With our new outlook, we can compete against the giants in our industry and accomplish so much more than we could on our own. I always knew we could execute regionally, but I now feel as though our national growth potential has no limit!