NEMT Experts Podcast Episode 7: How to Buy a NEMT Business with Jeffrey Hoff from Reliant Transport and Bambi CEO Nirav Chheda.
Bambi CEO Nirav Chheda interviewed NEMT expert Jeffrey Hoff on how he bought and took over an existing NEMT business, Reliant Transport in Winston-Salem, NC.
See the full interview at: https://youtu.be/yB0xf6FHZg8
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Podcast Show Notes:
Key Takeaways
- Why Buy an NEMT: Jeff sought a part-time business opportunity that was recession-resistant with recurring revenue. NEMT fit the bill, especially given the aging population demographics.
- Finding Deals: Build a network of business brokers. It's a quality-over-quantity game to find reputable ones.
- Evaluating a Deal:
- Focus on EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. This is a key measure of cash flow.
- Apply a Multiple: A typical multiple in the industry is 3-4x EBITDA to determine the purchase price.
- Scrutinize Assets: Examine the condition of vehicles. Are replacements needed soon? How are the employees and contracts?
- Due Diligence: Thoroughly verify the company's financial information. Jeff hired an accountant to help.
- Transition Period: It's common in smaller deals to have the seller stay for 30 days to ease the transition. Consider a short-term consulting agreement, but be ready to sever it if things aren't working out.
- Financing: Don't be afraid of SBA financing. Jeff used a mix of personal capital (via a ROBS structure) and SBA financing to maintain flexibility in debt servicing.
Important Quotes
- "If you asked me five years ago, what NEMT stood for, I wouldn't have the faintest clue." - Jeff, highlighting how he came into the industry with no prior knowledge.
- "Run Bambi Run!" - both Nirav and Jeff endorsing Bambi software
Additional Notes
- Jeff doubled his business (trip volume-wise) since purchasing it.
- The challenges of COVID-19, market fluctuations (gas prices), and staffing are real in NEMT, but can be overcome.
Here are some time-stamped show notes:
00:00 Introduction
01:13 Why buy a business?
03:18 Figuring out what kind of business to buy
06:33 Finding an NEMT business to buy
08:51 Evaluating the NEMT business
12:13 Determining an offer price
13:57 Setting the takeover plan
15:43 What happened after taking over
18:37 How has the business grown since takeover?
20:41 Would you have done anything differently?
22:45 Financing structure for the takeover deal
