July 1, 2012
Interviewed by: David Snow
Video Clip
Login to view full video

How MLCOA and Riverside Partnered For Growth

Meet Robyn Walsh, the CEO of Australian healthcare services company MLCOA and Simon Feiglin, a partner at The Riverside Company. When Riverside acquired MLCOA in 2010, it tapped Walsh to “build the engine to support growth” of the company.

The story told by Walsh and Feiglin begins with outgoing MLCOA founder Dr. Nathan Orbach making clear that he had to approve Riverside’s CEO choice. Enter Walsh, an American woman who convinced Orbach that her deep experience in the healthcare industry and teambuilding skills would help the executives of MLCOA take the company to the next level. For his part, Feiglin supported Robyn in her quest to transform the business and culture of what was a very founder-driven organization. The two discuss the way they worked to professionalize the operations at MLCOA as well as how they pulled off a key add-on acquisition of a competitor that was eating their lunch.

Meet Robyn Walsh, the CEO of Australian healthcare services company MLCOA and Simon Feiglin, a partner at The Riverside Company. When Riverside acquired MLCOA in 2010, it tapped Walsh to “build the engine to support growth” of the company.

The story told by Walsh and Feiglin begins with outgoing MLCOA founder Dr. Nathan Orbach making clear that he had to approve Riverside’s CEO choice. Enter Walsh, an American woman who convinced Orbach that her deep experience in the healthcare industry and teambuilding skills would help the executives of MLCOA take the company to the next level. For his part, Feiglin supported Robyn in her quest to transform the business and culture of what was a very founder-driven organization. The two discuss the way they worked to professionalize the operations at MLCOA as well as how they pulled off a key add-on acquisition of a competitor that was eating their lunch.

Privcap: What is MLCOA?

Robyn Walsh, MLCOA: MLCOA is an Australian-based, independent medical assessment organization. What we do is we provide, or really match, specialty physicians with individuals who need an assessment to really work with their claims manager for protection around either work cover, which is workers’ compensation, motor vehicle, Department of Defense, so Veterans Affairs, personal injury disability. So it’s really an organization that matches doctors, within a specialty, to individuals who need an independent assessment. We do about 30,000 of those nationwide in Australia.

Privcap: Riverside acquired MLCOA from its founder, Dr. Nathan Orbach. What were some of the challenges of that cultural transition?

Walsh: Sure, I think, typically, when Riverside and myself came together, Riverside had let me know that Nathan had been a very successful entrepreneur over a 23 year period and had built a national organization with a brand reputation. However, the opportunity that I saw, once I was there a month or so, was that the team that he assembled, although very, very good and had a lot of potential from the standpoint of expertise and capability.

Were really siloed in their communication. They had not really been in a transparent culture. So the opportunity, one, was to build a team of individuals who were motivated and inspired. And the second opportunity was to build an organization or a platform for growth.

Privcap: What potential did The Riverside Company see in MLCOA? 

Simon Feiglin, The Riverside Company: MLCOA, before we made the investment, was a very typical Riverside company– Riverside investment target. Nathan started the business 23 years ago, owned it, ran it and made all the decisions. And that’s very typical for most small companies and it’s how most small companies are successful. It really takes someone taking the bull by the horns, so to speak, and that’s what Nathan did.

The downside to that is you often don’t empower the next level management and that’s really very much what Nathan had done. And we knew that when we bought this business, in order to create a successful company, we needed a CEO who could come in and break down those walls, and create more of a consensus driven organization.

Privcap: How did you convince the outgoing founder that you were going to do right by the company that he had painstakingly built?

Walsh: I think it was very interesting. It was really how did each of us get comfortable. I think that my first opportunity to meet Nathan, even though I had spoken to Simon about him, was by video conference. So I was in Dallas, at the Riverside office, and Nathan was in his adviser’s office in Melbourne. And the opportunity to really exchange in a very, what I would say in a very open and, which was Nathan’s way, kind of aggressive discussion about why I would even consider taking the job. And why I thought I was the right person.

The job really boiled down to my sharing with him my personal life experiences. And also, what I’d achieved over the 30 years prior. And I think that he got comfortable when he realized that I would treat his people respectfully. That I would honor and really respect the organization that he built. And I think, the clincher for him really, was when I said, Nathan, I view this opportunity as a gift from you to me to take this company where you’d like it to aspire to. And I think we then came to a natural meeting of the minds.

Privcap: How did Riverside come to decide that Robyn was the right CEO to take MLCOA to the next level? 

Feigln: The right CEO for us was someone who, first of all, had credibility, came from the industry. Nathan is a doctor and has a lot of experience in the industry and we knew to find a CEO that he would be comfortable with and be willing to go ahead with the deal with us, had to be someone who came from the industry and understood what it would take to be successful.

Secondly, we knew what we needed was someone who had the right emotional intelligence to be able to connect with a management team, that for years had been not taken particularly seriously. And so we had the pleasure of being introduced to Robyn. Robyn was actually sitting on the board of one of our investee companies in the US. And we were introduced to Robyn through one of our colleagues at Riverside. And had a chance to meet with her.

And we met with probably 30 or 40 different candidates and it was just not a question that as soon as we meet Robyn that she was the right person. Had that combination of EQ, as well as the industry experience. We got along great from the very first meeting and so it was very apparent to us. We didn’t even need to do reference checks. We knew this was the right person for us.

Privcap: What questions did employees have about Riverside’s new role? 

Walsh: Probably the most telling was, probably a week, maybe no, I would say a month into the relationship with the state managers, we’re sitting around a table and they all said to me, OK, Robyn what does Riverside want us to do? And I said, actually, Riverside doesn’t want us to do anything. Riverside wants us to organize ourselves, figure out where we’re going, put together a strategy, and achieve those goals. I said, so it really rests with us. We’re not being told what to do anymore. As a team, it’s our responsibility as the experts.

Privcap: What have been some key growth initiatives at MLCOA?

Walsh: I think the first thing is through the extensive due diligence that Riverside does, which is very, very helpful to a new operator like myself coming in, because a lot of the work is put forth in that due diligence. The first was obviously, the systems and technology capabilities of the organization had been neglected and that was recognized early on in that diligence. So that was my first focus.

The next was obviously, team building and understanding what each individual did. I think another big component of it was making sure that the financial organization and structuring, which it was put together was managed correctly. And I think in the fourth, really biggest thing was, from my perspective, is looking at the products and figuring out how we could leverage those or leverage the specialists in a more growth-oriented way.

Feigln: Yeah, I would say that growth was a big part of this. There was a lot of building the engine, as Robyn talked about, to support growth. But the business that we bought was a flat business. The volumes were very steady for the three or four years prior to our acquisition and we wanted to grow. So focusing on how we did that, including a very meaningful add-on acquisition, that made us probably, at this point, the leading player in each of the states and territories within Australia, was a very important component to our ability, not just to grow in terms of scale, but also to market ourselves as a leader everywhere in the country.

Privcap: Describe the importance of the add-on acquisition.

Feigln: We were sitting in on board meetings and hearing about this one particular competitor that kept sort of eating our lunch out in Western Australia, so Robyn and I talked about what we should do. And we said, OK, Robyn, you run the business. Let me see what I can do. And went out there and met with him, the owner of that business, had Robyn then come out and do her thing, in terms of kind of building that connection.

But Riverside was able to take care of getting the deal done, leading the diligence, working very closely with Robyn’s team, but guiding them, in terms of where the areas to focus. And it really was a team effort with Riverside and Robyn’s team. And then particularly with the integration planning, we have learned, all too often, that lots of add-on acquisitions don’t work well, if you don’t plan properly.

So we went out, we found an expert at integration planning, who understood this industry, and had him work with us and Robyn’s team to develop a plan that we’ve implemented. And it’s been a tremendously successful acquisition. I think it’s those skills and that discipline that we bring that enabled Robyn to have her team run the company. Actually, the company continued to perform very well during this process, and since. And then the integration has gone beautifully, as well.

Walsh: I would just add to what Simon said, in that one of the things that I have found to be in my career in working with Riverside, is the collaboration and that at any time that we’re working on a project, whether it’s an acquisition or any type of other strategic work, Riverside always comes to me and said, Robyn, we really need you to meet with these three firms or meet these three individuals and pick the one that has the best chemistry and the right match for you. Because you’re in charge, you’re the leader, you’re the one that has to make this move forward. And we’ve always found the right person, they’ve always brought me excellent leads or actually, opportunities and that also has worked. 

Privcap: So what have been the results of these growth initiatives and the add-on?

Feigln: The business, when we bought the business, we had $5 million of EBITDA and about $30 million in revenues. We’re about two years in and we’ll be over $12 million of EBITDA this year on about $55 million of revenues. So it’s been a tremendous growth story. Again, for a business that we bought that was flat, through the combination of some of the things we’ve talked about, the add-on acquisitions, and in particular, our changing approach to physician recruiting has really created a capacity to provide a lot more service and led to that tremendous growth.

Operations Analysis From Deepak Agrawal, Co-Founder and Managing Director, Gotham Consulting Partners

Privcap: What is a key challenge of buying a business built by an entrepreneur?

Deepak Agrawal, Gotham Consulting Partners: The challenge becomes that as an entrepreneurial business, entrepreneurs are very strong-willed and they leave a strong imprint on the culture of the company. So when you are walking into an entrepreneurial business you’re going to find a company with a very strong culture, you’re going to find a situation where the founder was making every decision.

It’s almost like the decision making was concentrated on top. And so what happens is that, when you’re bringing in a professional CEO, when you’re in a private equity environment where you have to have a lot more professional way of doing business because this is the first time the business had outside capital so there are reporting requirements. There are financial constraints. So somebody new coming in, has to be respectful of that legacy, respectful of that culture, but while pushing people to move to the next level, in terms of professionalism, in terms of decision making, in terms of risk-taking.

Register now to watch this video and access all content.

It's FREE!

  • CHOOSE YOUR NEWSLETTERS:
  • I agree to the Privcap terms of use and privacy policy
  • Already a subscriber? Sign In

  • This field is for validation purposes and should be left unchanged.