BHB INVEST: Inside a Successful Transaction by MindCare Solutions

This article is sponsored by MindCare. This article is based on a Behavioral Health Business discussion with Rocco Coniglio, Chief Revenue Officer at MindCare (previously CEO and Co-Founder of Psych360), Nicole Coniglio, Chief Clinical Officer at MindCare (previously President and Co-Founder of Psych360), and Stuart Irby, Investment banker at Stephens Middle Market Investment Bank. The discussion took place on October 12, 2022 during the BHB Invest Conference in Chicago. The article below has been edited for length and clarity.

Nicole Coniglio: I am the co-founder of Psych360 with my husband Rocco, but a nurse practitioner by trade. I’ve worked in hospital settings, and then found my way into the long-term care setting, more nursing homes, assisted living, and some intermediate care facilities, as well.

Rocco Coniglio: I’m the Chief Revenue Officer for MindCare. Prior to that, Nicole and I founded Psych360. At the time, I was CEO at Psych360. Then prior to that, my career was basically on the business side of health care, working in the acute hospital setting.


Stuart Irby: I am an Investment Banker of Stephens Middle Market Investment Bank. We actually represented MindCare in the acquisition of Psych360, so we are talking about the deal.

Behavioral Health Business: Could you talk to me a little bit about each organization that was part of this deal? Nicole, why don’t you kick it off and talk a little bit about Psych360?

Nicole: Pysch360 started in 2015 by Rocco and I. Initially, we were just knocking on nursing home’s doors. I was the clinician servicing the accounts, and we were going after contracts with them. Started in 2015, we started seeing some growth through 2018 when we brought on Physician Growth Partners in a minority position. That growth equity really helped us expand. We were able to start hiring a lot quicker.


Fast forward to today, we provide psychiatry to long-term care communities. Throughout the pandemic, we had a lot of growth as well. We were able to start providing telehealth services. We brought in psychology and we started expanding across state lines. Today, we are currently part of MindCare and really excited about the continued growth that we’re going to see.

Irby: MindCare is our client and a private equity-backed firm here in Chicago, WP Global is their sponsor. They came to us and said, “Hey, we’ve got this platform, help us think through growth strategies.” It’s pretty much canvassed the market, we talked to a lot of different groups, probably some of you here. They’re focused on the acute setting, so they’re a leading provider of telebehavioral services in the hospital.

BHB: Could you talk me through the partnership, how it was formed, how it evolved? Rocco, do you want to kick us off?

Rocco: Yes. It was a little unorthodox actually as Stuart stole my thunder here. We did meet through the conference last year and we ran a process in 2021 for Psych360 and learned a lot but didn’t find a deal. We established a relationship with the CEO of MindCare. We got on WebEx in December of 2021 and started talking through what each other’s organization did to see if there was a match. Then we closed the deal on August 16th of this year. We went through a lot of due diligence, we just didn’t run a competitive process in 2022 like we did in 2021.

BHB: One of the important elements of any deal is asking ‘what is the deal trying to solve’. Can you talk about that?

Nicole: I think one of the largest things that probably most of you face is provider shortage. Trying to look at how we can overcome that. With that, we saw a lot of synergies between groups. We saw that we can affect the continuum of care throughout the hospital setting to the long-term care setting, but also just bringing that nurse practitioner model which was something that we very much focused on.

Bringing that NP model through MindCare so that we could continue to expand and grow and use those types of resources as opposed to always looking at bringing on more psychiatrists. Obviously the psychiatrist, I think there’s around 30,000 in the US and about 60% of those are around the ages of 55 or older. We’re starting to see that there’s less and less and it’s more difficult to bring on. In an effort to grow the NP model, which was something very exciting to them and something that we’ve been focused on.

BHB: Now, the title is called ‘Inside Successful Behavioral Health Acquisition’. What made it a good deal? What made it successful?

Rocco: It’s a good question. I think I would say that in 2021 when we went through a more formalized process, we came away from that understanding of what a bad deal would look like. There were a lot of things that we learned through that process and so when we started the conversation more organically with MindCare, there were a lot of things in the conversation that just felt right.

I’ll give you some examples. There were deals that we saw where it was like, “Hey, we’re doing the same thing. We’re in long-term care. Let’s come together.” The challenge with that, especially when we have founders that are going to bring along on the other side of it, is that you may have significant friction on the opposite side whenever you’re trying to run the company post-transaction.

That was something that we found a little bit different with MindCare because we had our own lanes and they were pretty delineated, so operating in an acute care setting and also a long-term care setting, was actually something that attracted us to it. The other piece to that, I think, is that when you’re looking at the continuum of care it makes sense. There’s a continuum of care between acute care and long-term care.

They didn’t really have a psych NP model but they had a psychiatrist model. It was a good marriage from that standpoint because there were very complimentary things that we could bring to the table and we weren’t going to be stepping on each other’s toes. That was something that we looked for and we got it.

BHB: Stuart, I wanted to ask you, I know you’ve experienced a lot of deals, what ingredients are part of that successful transaction in your experience?

Irby: This one specifically. All deals are different. There’s no right way or wrong way to do a deal. I mean, communication, the fact that Rocco and David were already communicating with each other, was of huge importance because there’s always problems with communication and being lost in translation, so being able to get on the phone and talk to each other is important.

Setting expectations is super important on the front end. You want to be organized and have a detailed timeline so that everybody is held accountable and then obviously have a good investment record.

BHB: On the flip side, what are typical characteristics of a bad deal?

Irby: It’s the reverse of all those. I was thinking about it, a good M&A is like a good relationship. Really, you want to be open, you want to be transparent. Like I said, setting deadlines is super important. That way everybody feels like everyone’s moving together and moving in good faith towards getting to the ultimate outcome, which is what everybody wants to do because you don’t want it to drag and drag and drag. You want to get it done.

This deal was super efficient. We signed the initial indication in April and then we closed in August. Got through all the diligence and it was great. They had an advisor on their side too, which I think helped a lot because we could communicate with each other. There’s a ton of diligence, obviously, a ton of collection of information and we were able to do that really efficiently. It was a great deal.

BHB: What did the deal-making process look like?

Nicole: The deal-making process was a lot of due diligence. It did help having that investment banker (Physician Growth Partners) on our side to assist with that. It was very important because if we didn’t have that, the amount of time that we would have to spend on gathering information and the conversation would’ve been so much that I don’t know how we would be able to focus on the business and keeping it running.

Rocco: I would say it’s of utmost importance to have somebody representing you on your side. There’s a lot of things that, especially if it’s a first time selling your company, you’re just not going to know what to look for all the time. Having someone that’s experienced to represent you to point some things out is certainly important. I wouldn’t leave it just to the investment banker.

Their job is to bring material things up so that you can be involved in those decisions. I think it’s important to insert yourself into those conversations so that you get what you want on the other side of it. To Nicole’s point, it would be impossible to go through a process. Even as efficient as this was, some of these can take six months to 12 months, and then in the event that it doesn’t work out, you’ve just neglected your business for six to 12 months. That’s why I would say it’s valuable to have that on your side.

BHB: In terms of their deal-making process, was this par of the course, or was there anything that made this unique?

Irby: It was definitely unique. It was a proprietary deal. The relationship at the CEO level was a huge differentiator. One thing, there was a private equity firm on the other side who was the sponsor for MindCare. They have a significant fiduciary responsibility to their LP to do full diligence. I think that was unique and that Rocco and Nicole responded fast. They had the information.

A lot of times we’re getting these deals and people are like, “What? We don’t have this information.” We went through a formal quality of earnings and it was pretty extensive. They really understood that time was not our friend and responded accordingly.

BHB: Rocco, what have you been able to accomplish since coming together?

Rocco: We just came together on August 16th, so it’s very early. I think from an accomplishment standpoint, Nicole and I have been able to relocate from Ohio down to Nashville where MindCare is based. We felt that it was extremely important to be with the C-Suite. As we mentioned when we introduced ourselves, Nicole’s in the Chief Clinical Officer role, I’m in the Chief Revenue Officer role.

We have other C-suite individuals that are on the team. The conversation was like, “Hey, do we want to remain in Ohio with our existing team that we built over the last seven years, or do we want to go and work with a new team?” Especially with the last couple years with such challenges with remote work, we’ve gotten to know the team that we built really well, and we can work with them in person, we can work with them remotely. They know us very closely.

We felt that we had a strong team that we could rely on back in Ohio that was going to continue and we felt that it was really important to start to build relationships with the C-suite in Nashville and to make it a successful coming together, so to speak.

BHB: That’s so interesting, especially as everyone has adopted virtual to some degree.

Rocco: Remote work in my opinion is an element of the environment that we’re in right now. When you’re talking about people that are going to go through challenges together over the next couple years to the foreseeable future, I really think it’s important to be in the same room.

BHB: That makes a lot of sense. Nicole, what are you focused on now? What’s next?

Nicole: Right now we are focused on our synergies and what we can do to help on each vertical. How can we help not only support, but improve on those verticals? A big piece of that is the NP model. Right now, one of our large priorities is to focus on how we are bringing nurse practitioners to the hospital vertical. Looking at each state individually, scope of practice, working with legal to figure out how we can use them and starting to work and educate the hospital health system on utilizing nurse practitioners as well.

BHB: Let’s dive into some of the challenges. What are some of those challenges that come with a behavioral health acquisition, and how did you work through them?

Rocco: I’ve seen a couple of other acquisitions in the health care industry. I don’t know that behavioral health presented any additional challenges that any other acquisition wouldn’t present. I think you are, again, just going back to some of the things that I’ve already mentioned, you really have to take the time to assess how you’re going to come together. You have to do it before the deal closes.

Everyone wants to talk about the finances, everybody wants to talk about the numbers and everything. Once that box gets checked, I think you have to put that aside and compartmentalize that because the deals are going to look different. If it’s a complete exit and the original founders are not going to continue on with the company, that’s one scenario that you have to assess.

It’s really important to ensure that when you come together, that next step is going to be successful and you have to envision how that’s going to be successful. Can you work with these people? Can you come together as a team? Can you accomplish things together? Where are the weak points? I think that all of those things are part of the due diligence process that needs to happen on both sides.

The acquiring company is certainly going to have a plan for their diligence, but the company being acquired should also have their own plan because if you’re going to exist beyond a transition period, you want to know that it’s going to be a positive and successful transition and outcome on the other side of it.

BHB: Let’s zoom out a little bit. What were some of those macro environments driving this partnership? Stuart, could you give us any insight into that?

Irby: Yes. I think it’s consistent with what everybody’s heard during the day. Behavioral is a space that is changing rapidly at this point. We know there’s a need, but the market doesn’t necessarily match the need. It’s creating a lot of activity in the space. I think what MindCare is trying to do across the continuum of care and in telebehavioral is they’re trying to build a platform. I think a lot of people out there are trying to build a platform and the macro environment is, like ‘hey, you’ve got a supply-demand imbalance’, so we have to figure out how to bridge the two. That’s really what’s driving it.

Debt is going to be an issue. Staffing shortages are an issue. Acquiring is also a way to grow because you can’t hire people.

BHB: Looking ahead, how are you seeing telehealth continue to shape the behavioral health industry now? It’s been a huge driver during COVID. Nicole, could you talk to us a little bit about that?

Nicole: Sure. Telehealth has really been the silver lining of COVID. At least from our perspective, it really pushed out the ability to reach more patients that way. I think at this point, now that that door is open, it’s going to be very hard to close it and I think a lot of people are seeing that you can provide a lot more care through telehealth. I only see that expanding. I think we just need to continue to push legislation and update some of the rules and regulations so that we can utilize it a little bit more.

I think we still need to have that caught up with the times. I do see it as a huge part, especially in the mental health area.

BHB: Great. Now, this is all about consolidation. Stuart, is consolidation a good thing or a bad thing for the industry?

Irby: In an industry where there’s a massive need, you’re going to need to have some providers of scale to be able to figure this out. Behavioral is a unique animal in that it’s very personal. How do you scale that on a national way? I don’t know, there’s companies out there trying to do it. I do think that in order to provide the services that the population needs they will need to be consolidated.

BHB: What are the drivers for consolidation within the industry?

Irby: You have to get scale. There are a lot of companies that are in the middle market in this space and then ones that are even smaller. Cash flow is tough when you have a reimbursement environment. You have a cash flow conversion cycle where you bill the insurers or the payers and they pay you when they want to, but you have to bank your payroll in 30 days.

It’s just really hard to even go to the payers and have any control over that unless you have scale. You have to talk softly and have a big stick. That’s what consolidation will bring.

BHB: What is your biggest piece of advice to companies that maybe are considering a deal or a merger acquisition?

Nicole: From my perspective, I think you should do your due diligence on the company. Make sure that you fully vet them. Make sure that you ask the right questions, don’t be shy about it. Make sure that it feels like a good partnership to you. Then set your expectations right. I would say one of the most stressful things from a personal and professional standpoint for myself, was just having unrealistic expectations of how quickly we would close.

As you heard, we closed very quickly, but you always hear that time can kill deals. We were very focused on wrapping things up. There was also a move involved. We have three children, so you’ve got all of that to add onto as well. Our expectations when you’re missing deadlines that you think that you have set can cause a lot of stress. I think just going into it with the perspective that it can take time, there’s a lot of due diligence going on in the background.

It doesn’t necessarily mean that things are not going in the right direction — it messes with your head a little bit in the standpoint that you could start questioning… Did we just spend this amount of money, this amount of time? Is this really going to happen? Just being in the right mindset and I would just say, reach out to those that have done that before.

It’s always been very helpful for us to bounce things off of other advisors, other acquaintances. I know we’re happy to talk to anyone more about it, but I think the more information that you can gather, it’s going to help set those expectations and set you up for success.

Irby: I might just add, if you’re thinking about selling your business, run it like you would to sell it. Have good controls, have good processes in place. Try to build the business in a way that you will have access to the information that is needed during the diligence process. That is something you can do now. That’s something you can start, and it doesn’t have to be immediate. You can do it– phase it in overtime, but professionalize the business as much as you can, would be my advice.

Rocco: My advice would be to get a psychiatrist while you go through it. Solicit those services because it’s definitely a rollercoaster even when it is smooth because it is very personal to the founders of the company. I would say, this is a reason to have a banker in the middle. They can help take some of the emotion out of it and keep things levels set.

BHB: What should each party bring to the table? We talked about bankers being involved, maybe accountants, what should it look like? Sort of that how to.

Irby: Bankers obviously are good, I believe. I’m sure we could argue that, but I do think that we’ve seen a lot of deals and we can get things done efficiently. We do a lot more than you think. Good legal team. The purchase agreement, negotiation of a purchase agreement until you’re done, it’s a massive undertaking. It’s a massive document. You need good legal counsel, especially depending on who you’re selling to.

They were selling to private equity, they had a sophisticated M&A legal team. You need somebody that can go toe to toe with them and those legal teams work all the time. They have massive teams, so they’re turning documents real-time and you can really slow the process down if you don’t bring someone that can play in the sandbox with that type of firm.

Rocco: I would just add, I agree with everything Stuart said. I would not find the cheapest legal firm. I would definitely make sure that when you talk to various legal firms, that you’re inquiring about how many times they’ve done this. What type of deals they’ve had, what type of outcomes they got, how quickly they were able to turn things around, who their team is, what their backgrounds are. Make sure you have that in line.

I would also say that one of the things I think Nicole and I did really well was, we always thought of our company as a business, not like a medical group. I know that might not sound altruistic, but we thought of it that way because we wanted to make sure that we were running an efficient business. When it comes time to do something like this and we always knew there was going to be a time because of Stuart’s comments around consolidation, you just get to a point where you need to try to meet the demand of the patients.

Once you get there and you find the right partner, it’s extremely difficult to come together if you don’t have the right analytics in place, the right platforms in place, the right technology in place and you’re running it as efficiently as you possibly can. That certainly helps post-transaction because if you have a lot of cleanup work to do afterwards, you’re spending time doing cleanup work rather than trying to accomplish goals that you’ve set.

Nicole: You’re probably not going to get the best valuation either if you don’t have those analytics and that data. That was something that we learned early on and I would also just agree with these two guys and what they said. As far as legal goes, make sure you have somebody solid. There was a negotiation going on between the two of us and we each have our best interest in mind and there are some very small things that if missed, could make a big impact on the deal that you might not realize until after the fact, so definitely make sure that you’re vetting out your legal and you have someone solid.

MindCare is a leading provider of round-the-clock telepsychiatry and behavioral health services to hospitals, emergency departments, outpatient clinics and correctional facilities. To learn more, visit:

Companies featured in this article: