Sim Goldberg, Vice President at Meridian Capital Group, gives an insider look into the market and the five boxes every deal needs checked to turn into a transaction.  

This episode was recorded at ASHA Mid-Year Meeting.

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Welcome to season six of Bridge The Gap, a podcast dedicated to informing, educating, and influencing the future of housing and services for seniors. Powered by sponsors Accushield, Aline, Hamilton CapTel, Service Master, Patriot Angels, The Bridge Group Construction and Solinity. The contributors are brought to you by Peak Senior Living and produced by Solinity Marketing.

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Lucas 00:56

Welcome to Bridge The Gap podcast, the Senior Living podcast with Josh and Lucas. Another great episode here at the Midsummer ASHA Members show. We're having great conversations here with a lot of different leaders. We want to welcome Sim Goldberg from Meridian Capital. Welcome to the show.

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Sim 1:11

Thank you. Thank you. Honored to be here.

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Lucas 1:14

Yes, yes. So Meridian has been a great supporter of Bridge The Gap at a number of our events and things that we've done. Really appreciate that. Y'all are huge leaders in the space and it's always fun to sit down and talk to people on the front lines of what's happening, because right now the industry is at an inflection point for a variety of different ways. And Sim you have a lot of different ideas about this. You're having these conversations on a day-to-day basis, and you've been evolving into the industry as a leader. Can you talk about your revolution in the space, and then we can dive into more of the daily topics?

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Sim 1:54

Yeah, absolutely. It's an interesting world how I got into healthcare in the first place. Growing up, my parents were always very into giving back, being part of the communities that maybe are underserved, so to speak, but also that aren't necessarily comfortable conversations. So growing up in elementary school, we had kids with all sorts of disabilities in class with us. And when I came out post-college, I was volunteering for a bunch of different organizations that had healthcare components to them. So it really was something that I was very familiar with and I was thinking about going back to school. I wasn't really sure what it was exactly that I wanted to do. And a close friend of mine reached down and said, "Hey, I'm working for a home care agency. We're about to hire someone that I do not like, would you come and interview with us?" So that was an interesting opportunity. I was like, I'm not even looking for a job, but I'll come in for an interview." And I walked in the office and instantly fell in love with it, fell in love with the people that I was working with, fell in love with the concept, being able to provide the care that people need and not necessarily in a community, but actually being able to keep them in their homes, which I thought was critical in all aspects. And it was four some odd years where it was in and out of nursing homes, in and out of hospitals, senior living communities, assisted living communities, anything where someone needed additional help. I mean, that really transformed my life. When it comes down to it, it was just, "Okay, this is what I'm going to be doing in some sort of a capacity for the rest of my life."

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Sim 3:11

And after close to four years, I realized that that part of the business was no longer for me. I needed something that was a little bit more stable, driving in my car every day, I needed a home base. And I reached out to previous head of Meridian Capital Healthcare Ari Dobkin and Ari Adderson, who still sits on the team today. And they were at a point where their growth was just really starting to kick in. And they brought me on board and it was really right when Covid started, right? So I was getting trained in all the financial aspects of our day-to-day work. And they brought me in and they said, "Listen, we've never done this before. We don't have anybody that we've ever trained in as a "broker" or business development person. So this is going to be a learning curve for everybody. Let's see what we can do. Six months later after I finally felt like I was up to speed on what I needed to do, our entire industry was in shock. What's going to happen here? Are we ever going to recover? Is there going to be an industry for us to go back to when this is all over? So it's been interesting. It's been a lot of fun. It's been interesting to be able to see the fruits of our labor, seeing these gorgeous communities going up, that we had a part in building. Relationships that have been developed. I mean some of my closest friends I can say to this day are people that I've met at shows like this. So it's a really interesting time. It's a really different time, but I feel like I was brought into this world and it was the craziest time that this industry has ever experienced. So not really much can throw me off at this point. I've dealt with Covid, I've dealt with massive rising in interest rates, all the things that should make this industry shutter. And we've done it and we've succeeded and we've gone to the other side of it. And this is in my mind where we are today, which is a little interesting and a little scary is just another one of those steps. So that's really my history. That's how I got here. Super happy to be here.

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Josh 4:59

Thanks for sharing some of that backstory for some of our listeners and even myself. I didn't know all that. So that's really cool to hear how that's kind of shaped your trajectory over the last several years. I have seen you at every event I have been to and I go to a lot of events, but I think you go to even more events. I can't imagine how many people doing what you do, you talk to in the industry. So I would imagine you have a pretty good pulse of what people are doing, like what deals are getting done, what deals are not getting done, what people are saying, the challenges. I would like to spend a little bit of our time on this show, Lucas, I don't know what you have cooked up to talk about here, but I want to know kind of from your perspective as a young leader in our industry, what's the pulse of what people are experiencing right now? I know we're not in an easy time, it's not the pandemic, but it's not an easy time. What's going on?

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Sim 5:52

When it comes down to it, I get this question all the time, "When are rates going to come down?" And I've spoken to every single expert in the space and they say it's going to come down, but we have absolutely no control over that. And my response has always been, "If the deal doesn't work for you today, stop looking at the deal." Stop looking at a deal that potentially in the future might make sense if you can't control something that's outside of your control. So why are you even considering that being an option? So what deals are getting done? Deals are getting done that actually have the ability to get done. And that goes as deep as who you're hiring in the building, what the name of that building has in the environment that it's in, what the market is saying, every aspect of the deal now matters. And banks and equity partners and people as a whole are looking at deals so much stronger and they're spending so much more time before they give some level of commitment. So I'd say it's a weird market, it's a different market, but the deals that are getting done are deals that should be getting done. And the age of, "Well, I can get anybody to do this deal. I don't really need to put the work in. I can just find someone quickly and easily." That's not the case anymore. So it's now making everybody work a lot harder, myself included. We're not doing the same numbers that we were last year or the year before that, but we're busier than we ever have been because for the first time we're actually having to have these conversations with people who are actually forcing us to have those conversations. It's more of a dating process now with your potential partners than it ever has been before. To answer your question, I'm at a whole lot of these and I love every second of it. It's a ton of fun. You get to meet such interesting people and some of whom you walk away from and you're like, "I don't think I've ever heard anybody say that in my entire life." And that is so off. But it's just amazing to see that there's people that are seeing opportunities in places that you wouldn't even have imagined. If your deal works and it makes sense for you, do the work, take the time, talk to people, that's one of the biggest things that will help people right now. And to go back to what we were discussing a little bit before we started here, I think that's critical in our space right now. The fact that there's so many people that are struggling through certain aspects of this business. There are people that just got out of that and there are other groups and it could be your direct competitors and they'd be happy to share if you would just reach out. It's part of the game. It's part of business where that's how growth really comes to, like for the industry as a whole. If there's no younger people involved and there's no growth for the actual industry and the big guys just get too big, the industry as a whole is in trouble. So I would say if the deal works and it's a good deal, it can get done. You just got to do the work and really be able to pitch that to the right people. And if you're getting responses that are less than enthusiastic, that doesn't mean that it's the no-go. It just means that people are being a little bit more careful right now and they want to hear from you why you actually believe that this one is the one that they should be doing.

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Josh 8:30

Cool. Well this is the Bridge The Gap show. So to play on that, as a young leader talking to so many people, what is exciting to you about where we are as an industry right now to think about positive opportunity for those that are listening, maybe they haven't even arrived in our industry yet, maybe they're in a parallel industry and we need their talent in this industry. What do you think the key opportunities are for our industry at this time?

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Sim 9:03

There's so many levels of opportunity when it comes down to it, right? I mean if you look at our industry as a whole, there's probably people from 15 different sectors at this conference alone and they do wildly different things. Yet every single one of those people can talk to any single person here and they have what to talk about. Our industry is so intertwined that something as simple as your website, that person's here, the person designing your crm, they're here, the person who's helping you bring people into your community or your home, whatever the situation may be, they're all here. The equity partners, the banking partners, everybody is here. And it's not just, "Well, we do this one thing and these are all the people that do it." It's, here's a million different things that we do and we all cover all those bases. So if you're in an industry like that, that is so insulated and so close, because really in this country as a whole, how many industries can you go to that you can say, "Yeah, I think I know 50% of the people that work in this industry." It doesn't exist. There's so many opportunities that are surrounding our world. If we can focus on one or two of those things and you're capable of doing those things, you'll be golden. I have people that started out as staffing coordinators that are now operating full buildings. That's two completely different levels of experience and expertise. But there's opportunity and there's people that are willing to give people those opportunities if they earn it and if they show that they're actually willing to work and work for the right reasons. Unfortunately, like every industry, there's people that are in it to make a quick buck. Because if they can put something under control, they can turn it around quickly and then flip it off to somebody else, that's just positive for their cash flow. But for the young people that are getting involved, I think there's real opportunity here. When it comes down to it, there is a lot of growth that's going to be happening in our industry just purely because of needs. We have a ton of people that are now aging in place as opposed to running off to a community, which is scary in the short term, but in the long term, that means they're gonna need more services in the next couple of years. Because if they're staying at home, they're not getting the services they might need right now. And if we can provide and be ready for them when they do come in, that would change our industry as a whole.

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Sim 11:03

So I think if there is interest from someone who is looking to get into this space, now's the time. Everyone has taken their company around, now there might not be a ton of transaction volume, but they're looking at their company and they're saying, "Where can we be better? And I think that that is something that is so beautiful because there's no transactions, there's no new thing to jump to. You're now forced to sit in your office and look at every single aspect of your company, your operations, everything that's going on and be like, "Where can we do better?" And when there's that lag on the transaction volume, that really is where things just can absolutely explode.

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Josh 11:35

Even though you said transaction volume is down, that's across the board. You guys leverage relationships to get transactions done and you do a lot of them. So if you could give us a little bit of and I'm putting you on the spot here a little bit.

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Sim 11:50

That's fine.

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Josh 11:51

Smack me if you need to, but if you could look at this calendar year, deals that you've already closed or about to close or projected to close this year, could you say there are certain types, could you categorize some of the deals that seem to be the most getting done, whether it's a product type or a size type or a sector of the country that seems to be more volume, where is it happening?

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Sim 12:16

It's really happening all over. And this is one of those types of questions where every single person you talk to will give you a different answer, which is why it's such a great question. There are boxes that can be filled, boxes that can get checked if this is a cash flowing deal that is newer vintage, that has a strong occupancy, yes, you can get the deal done. But what about that group that found a great opportunity that's been mismanaged, doesn't have the right people in their positions of leadership, but it's a great deal and they can get it at a basis that actually makes sense for them. Can we find someone that can actually partner up with them? And the answer frankly is yes. There are enough people in the space right now that understand that right now is a really, really great time to invest. They see the future, they see the trajectory of this industry as a whole, and they realize that this is not going away anytime soon. We can get this done at a price point that makes sense with the right people who are not necessarily jumping ship to start their own operation. And it's a really great time. So yes, if a deal is cash flowing, it's amazing. If it's newer, vintage, even more so if there's some sort of debt coverage ratio that they're actually hitting amazing. But there are deals that are getting done, it just needs to be the right deal. And I think we're past the days of getting a deal in my market. I'm going to pay more for it, I'm not sure if it'll work, but at least I'll own the market. I think those days are a little bit behind us and we're seeing a lot of buyers right now, a lot of people that are in the space, in the transaction space, that are getting stuff done and they're getting stuff done because they're being very, very strategic with their interests.

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Josh 13:39

So boilerplate it for me. I'm about to bake the transaction cake.

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Sim 13:43

Okay, let's do it.

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Josh 13:43

And I need the recipe. Simplify the recipe for dummy Josh to get a deal done this year. What's it going to take to get a deal done? Like what do I need to be doing? What kind of story do I need to be telling? What kind of team do I need to be forming?

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Sim 13:55

First thing you need is patience. There's nothing that's quick anymore. We have deals that people have a regular 30, 45 day due diligence period on and they get something under control and you're like, "Hey, I need a term sheet for the next 30 days." And a bank will tell us, "Hey, we haven't even really started yet. The last 30 days, all we've been doing is really doing some research on these people and seeing if this is a partner that we can actually support." So the first thing is patience. Be patient with yourself, be patient with your partners. Understand that anyone who's actually interested in getting a transaction done right now is also going to need to be patient. Things are taking a whole lot longer now. It's unfortunate, but it's just the way it is.

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Sim 14:26

And the second thing I'd say is, make sure that you're capitalized properly. There's a lot of people in this space who, to make a couple extra bucks, will try to choose someone that might be trying to get into the space and might be trying to get a real sweetheart deal, stay away from that. Yes, you won't be making as much. Maybe there's a way that you can structure this deal where everyone is more equal on this as opposed to what you would normally want, which is where you're really in the driver's seat, but you want a boilerplate, find a deal that actually makes sense in a market that you understand better than the back of your hand. Find someone that you can speak to, anybody, any one of the people, any one of the consultants that this lending partner or this equity partner might bring to the table to ask you those questions. Make sure that you're not going to have to tell them, "Hey, I'll get back to you on that," but at the same time, don't be afraid to tell 'em that. The last thing you want to do is someone throwing an answer at you that you know is not the truth just because they didn't feel like it was a good look for them to not have the answer. So you need a deal that's actually a strong deal. Great. Everyone knows that. Yeah, no one's doing bad deals these days, great. But you need to deal with the right partners and with people that actually understand the space. We're not in an age anymore where you can go to an equity shop who's never done senior housing before and be like, "Hey, can you cut me a check?" The bank's going to look at it and just tell you, "Listen, like we appreciate this deal. We can understand the value, but right now we need someone who can offer you more than just money." And I think the great thing about this industry is that so many people who have operated in it have operated in it for so long that they can actually provide that. They can offer more than just a check. They can offer you back office services and understandings and relationships that you might not have yet. So capitalize on those groups. They're not necessarily saying go to a REIT, but the REITs are a great avenue to go through right now. They don't need conventional bank debt. They can cut those checks themselves. They have understandings of these markets. They're interested in growth because they need to grow year over year and if they don't, they're in trouble.

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Sim 16:12

So find a deal that actually makes sense in a market that you understand. Make sure that you're capitalized to the right level. Don't try to go out and say, "Well this deal works if I get 80% leverage on debt. That's not going to happen these days anymore. Make sure that you've done all the diligence. I get calls from people all the time and I'm not going to make any money off of any of these deals. These are not things that are actually going to come to me. But we all share information. That's really how I learned about this industry. I spoke to hundreds of people who gave me their time and energy and I'm forever thankful because they're really the ones that told me how these things can get done. Boilerplate, five little boxes. Make sure it's a strong deal. Make sure it's a deal that you actually understand in a market that you understand. Make sure that you've done this before. Make sure that you have partners that have the interest and that you're aligned. I think that's the biggest thing for people right now. They want to make sure that everybody who's involved in this is going to be working towards a goal together. And it's not, well one side wants it and one side doesn't really care. Right? Because they're not really making any more or less. So I'd say if your business interests are aligned and the market is strong and the product itself is good and you have a strong understanding of what that means for yourself, for your institution, as well as for the people that you're servicing, we'll find someone for you. There's no question about that.

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Josh 17:21

Lucas, you ready to shake and bake? Was that a good pep talk for you?

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Lucas 17:26

It's good stuff.

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Josh 17:26

Good recipe.

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Lucas 17:27

It's good, it's good. Absolutely. Before we wrap up, I did have a question about something you were talking about. More of a needs-based care for people that have been really hesitant to move out of home. There's a big talk of active adult, right? Which are trying to attract a younger demographic. If people are waiting till they have a needs based, does that mean AL and memory care is going to have a resurgence over the next couple of years?

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Sim 17:51

So I definitely think that there's people right now that are holding off. I think if Covid taught us anything it is that people were incredibly nervous. I mean we all saw the news articles, we all heard from owners, operators and people that have been in the industry just about what was going on in these communities and how scary it was for so many people. So I definitely think that there is a pause and the people that say it's going to bounce back right away, I don't necessarily know if I'm on the same page as them. I think when Covid was going on, we thought, "Right when Covid is over, everything's going to bounce back and you're going to see it's going to go right back to the way it was." And I think we've realized now that that was a little optimistic. But I think when it comes down to it, I think that there's a lot of people right now that are a little bit more hesitant because of what they've seen over the last couple of years and what's gone on and being stranded from their families just for their own health.

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Sim 18:33

If we're talking about specific acuity types, I think memory care is going to come back in a real way. I think there's a lot of people right now that normally would go to assisted living, but right now they're families or whoever it is that's assisting them, they're all on board, they're all there, they're all doing the work to take care of mom or grandma or aunt or uncle. It's going to get to a certain point where they can no longer do that. So they're sort of going to skip that AL stage and go right to the memory care, which is frankly heartbreaking. I do think that the memory care space is something that is going to have a stronger surge than others.

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Josh 19:04

Interesting.

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Josh 19:05

And with every challenge brings an opportunity, a lot of the questions that are being posed by a lot of people might not be the right questions. I've heard at a handful of events this year, "What are we gonna call senior living in five years?" Who cares? Who cares what we're going to call it in five years? Really? And I don't mean that disrespectfully, but I think we're getting hung up on some of the wrong thoughts leading us down a rabbit hole that's really not productive for us today. And we don't know. We've got to care for people where they are and in the environment that makes sense to them. There are amazing opportunities for these operators. The amount of care programs and services that they coordinate in whatever housing type, whatever community type that they are running. Many of those services need to be coordinated into the home. They've already got the infrastructure to do that. They've already got the labor to do that. And I think we get so caught up in worrying about we've got to keep building exactly the volume of what we've been building and building it exactly and funding it exactly the same way that we're not looking at the opportunity that's right in front of us because we're worried about what we're going to call it in a few years. And in five to 10 years who's going to come? Well, in five to 10 years, that transaction's long gone. So I'm kind of marrying my thoughts with your thoughts a little bit there, but I like your insight in a relatively tough market right now. I think there's a huge opportunity and we need more people like you in the industry. So I hope people hear your story and jump right in.

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Sim 20:43

I appreciate that.

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Lucas 20:45

Well, and I know our listeners are going to want to reach out to Sim. We welcome you to check out the notes section of this podcast. We'll also leave a transcript on our website, btgvoice.com. We'll link this to our social media sites. And be a part of the conversation. We want to hear from you. And we'd also love to partner with you if you're looking for a unique way to position your brand with marketing around digital content that is educational to the industry, reach out to Bridge The Gap. We'd love to talk to you and work with you. And thanks for listening to another great episode of Bridge The Gap.

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21:15

Thanks for listening to Bridge The Gap podcast with Josh and Lucas. Connect with the BTG network team and use your voice to influence the industry by connecting with us at btgvoice.com.