Introduction
In this insightful interview, Scott Witt shares his journey of acquiring and growing a clinical trials business. After a successful career in healthcare administration and consulting, Scott decided to leave his corporate job and pursue entrepreneurship through acquisition rather than starting from scratch. He purchased Triad Clinical Trials in 2016 and has since tripled its revenue to $3 million. This QnA explores his entire process – from the search criteria and deal negotiation to overcoming post-acquisition challenges and implementing growth strategies that transformed the business.
Founder Success Story QnA
Can you tell us about your background and what led you to look for a business to acquire?
I have over 30 years in healthcare, mostly on the administration side, working first in operations, then technology, and then management consulting. I moved around as my attention wandered – I’ve got ADHD as many folks who end up in this place have. When I got to Deloitte, I thought I’d really reached the pinnacle of my career. But it became clear that partnership in a consulting entity has its rewards, but it won’t really take you to the place where I thought I could go unless you end up running the entire group. That’s a very rarefied level of very rarefied people who make partner and ever make it to that final level.
Why did you decide to buy a business rather than continuing with your corporate career?
In consulting organizations, there’s kind of two pyramids. There’s the employee pyramid where you come in as a bright MBA, work 90 hours a week plus travel, and if you’re too stupid to quit, they promote you. Then you get to managing director or partner and become an owner at some level. But to get consistently to seven figures, you’ve got another 20 years in that second pyramid. I was 49-50 when I made partner, and I just laid it out that this just isn’t going to get me where I want to go. This gives me more control. I can focus on things I love, and I haven’t been on an airplane in two years. I was Chairman’s Preferred on American and Double Platinum on Delta before this – I lived on the road.
Why did you choose to acquire a business rather than starting one from scratch?
I’ve worked with a ton of startups and really the world I know is healthcare. I watched a lot of my peers in healthcare say, “I’m smart, I got a network, I got a million dollars from my mother-in-law, I’m gonna go start my own business,” and most of them failed. In healthcare, it’s so regulated, so conservative, and it takes five to seven years to really make it. Most companies don’t have that kind of focus and most VCs don’t have that kind of focus. I saw the chances of success as one in ten. With an acquisition, I could walk into a business with existing revenue and a brand name.
What were your criteria when looking for a business to acquire?
The criteria was healthcare, something that generated at least a 50% margin because you need that – compliance is hard. I was going to have debt service and needed to pay myself more than some entrepreneurs do. We had kids going to college and lifestyle expenses. It had to be stable and you needed some margin of safety – room to make mistakes. You start with the margin, you start with the owner, you start with the broker. The broker is a huge factor – even great ones are going to mess you over. I looked at five or six sites, talked to seven or eight brokers, and probably seven or eight business owners looking to sell.
What price range were you looking at when searching for a business?
Probably minimum would have been what we bought because I knew I could buy that easily on our own. Could I have found an ongoing business at five or ten million dollars that met all those criteria and gotten a larger SBA loan? Probably. Could I have found some path of investors to take us to that next level? Sometimes I look back and think maybe I should have done that because scaling from 5 million to 10 million is way easier than scaling from 1 million to 10. But this one just happened to fit all of that at the time.
How much did you acquire Triad Clinical Trials for?
All in, we were in about just under 2 million for the business and about half a million for the building and equipment. So 2 million for the business and half a million for the building and equipment.
How did you finance the acquisition?
We worked with an SBA lender that the broker knew. They work with an entity down in Texas – guy’s name is Monty Walker with Walker Advisory. He helps you structure a C corp that you roll your personal cash into, you roll your IRAs into, and then use that cash to acquire the business. It’s done in a legally very upfront, legally defensible way that banks will sign up for and the SBA has signed off on. So it’s a combination of cash, IRA, SBA loan guarantee. We put a lien on the equity in our house and put a lien on probably a million dollars worth of investments I have elsewhere.
How did you convince yourself that this business wouldn’t fail despite the risks?
Having worked in healthcare and knowing something about drug development, I knew there was a site run by the National Institute of Health called clinicaltrials.gov. Every clinical trial for any drug anywhere in the world that anybody wants to sell in the United States gets listed there. I downloaded all that data – it’s public domain. For the 80,000 clinical trials that ran worldwide over the last ten years, 20,000 were open then or getting ready to open. Most clinical trials never make their recruiting goals. That ability to run a clinical trial, find subjects, get them into the trial, keep them in the trial, and pay it out is very valuable and very rare. I knew from looking at the financials that this woman had figured all that out.
Where did you find this particular business opportunity?
I think it was on BizBuySell. I lost track of the three or four sites I’d signed up with. I filled out the form and the broker called me. He brought four buyers to the table, and I was able to get their bid packages. We made the most compelling case that we understood the business and would remain successful. I think she wanted to be sure the business would be in good hands and wouldn’t go broke or run afoul of regulatory agencies.
What was day one like after acquiring the business?
That’s probably a neurological deficit of mine, but my role for years was always rainmaker, deal hunter. When you close the deal, that first day is just the best. I walked in there and said, “I’ve worked for Quintiles and this is business. My wife and I are going to run it. We’re very excited. We didn’t buy this because it’s a great building; we bought it because you guys have been doing great work for years.” I made it very clear that we bought this for them, not the building or the name. I spent time with the owner and the physician who serves as principal investigator. My wife was watching the room and saw the look of horror and panic on every other staff member’s face.
What was the biggest challenge you faced after acquiring the business?
The biggest thing was that the backlog and pipeline were wildly overstated. I did worry about the viability of the business and engaged a litigator to review everything. We decided against pursuing legal action. The business ran on a cash basis, and the contracts are written per enrolled patient. Sometimes patients drop out or leave early, and you may have a contract for 15-20 patients but only get 5-6. About six months before the deal closed, the previous owner really took her foot off the gas in terms of marketing and seeking out new clinical trials. I basically put a lot of investments and process changes on hold so I could strictly focus on business development.
How did you and your wife handle the stress when you discovered the revenue issues?
We upped our alcohol intake significantly – that helped. My wife has a degree in Russian studies, was multilingual, and used to manage consular sections in embassies, but then stayed home raising kids. About 18 months later, as she began taking on more responsibility in the business, she looked back and really understood how precarious that situation was. There was some money residual cash flow in the business that the owner claimed by the contract. They anticipated an additional three or four hundred thousand dollars, but I had my lawyer make that stop, so we had lots of ugly, unpleasant conversations with the owner.
What could you have done differently during due diligence to uncover the cash flow issues?
Part of what made the business attractive was the lack of systems and structure. She operated on a true cash basis and didn’t know week to week or month to month when cash would arrive. There was no system in place to adequately track that. She had hand-drawn spreadsheets with a ruler and a pencil. What was presented as a million and a half dollars of backlog ended up being about $500,000. Apart from spending a week going through all the files and verifying all the charts, which was never going to happen, I just think I was probably too optimistic about what was really there because I wanted this business to happen.
What strategies did you implement to grow the business after acquisition?
We got a much better staff – very experienced clinical research people who are emotionally and mentally committed to doing clinical trials. When you’re a patient in a clinical research study, you’re here for sometimes an hour, sometimes 12 hours, so you get a lot of time with our doctor. We offer slightly lower compensation than some other companies but very flexible work-life balance. We found great physicians to add on who love the science, and sponsors get excited when they see their resumes. I hired a full-time recruiter who spends all day on the phone talking to people who’ve been in our studies before or answering our Facebook or Google ads. We’ve gotten very good at figuring out what studies we do well on, and in our last 15 studies, we hit our enrollment goals quickly.
How much has the business grown since you acquired it?
We acquired the business in 2015 when it was doing about $850,000 in revenue. Now we’re going to hit about right at $3 million. We’re out of space as it is, so we’re looking at expansion plans for a bigger building or different locations.
How big do you think you could grow this business?
I’ve got some personal parameters – I don’t want to get on airplanes regularly for work anymore, and I don’t want to have to manage a bunch of obnoxious prima donnas like me. I think we could take this business to six or seven million with the current management structure. At that point, we become more of a corporate entity requiring more infrastructure and administration than I would personally want to do. There are groups of VCs acquiring clinical research sites, and I’ve talked to a couple of other folks about a loose partnership or shared equity joint venture. I just got an email from a broker with clinical research sites for sale in Austin, Texas. My older son is starting at UNC Asheville in the fall, so we’re looking for businesses maybe in Asheville where we might want to retire.
Do you consider this acquisition a success story?
I think so. It seems like a great case study, a great success story. There were dark days, hard days, days I didn’t sleep, with a very different level of stress. If I lost a deal as a consultant, I’d go find another one, but the practice would carry me for a year. Here, there was nobody to carry it. I remember a couple weeks where I just didn’t sleep at all because I really felt like we were going to fall off a cliff. My only regret is that I wish I’d done this 15 years ago. I would have made those mistakes back then and figured stuff out and been further along.
Scott Witt Business Stats
Scott Witt’s acquisition of Triad Clinical Trials represents a remarkable success story in the healthcare industry. The business has experienced significant growth under his leadership, with revenue tripling from the acquisition point to nearly $3 million annually. Below are the key statistics and metrics that highlight the business performance and financial achievements.
- Acquired Triad Clinical Trials in 2015 for $2.5 million total
- Grew revenue from $850,000 to $3 million (3x growth)
- Maintains 70% gross margins in the clinical trials business
- Expanded from a small local operation to nationally recognized site
- Became top enrolling site in the country for multiple clinical studies
| Metric | Value |
|---|---|
| Acquisition Year | 2015 |
| Acquisition Price | $2.5 million |
| Initial Revenue | $850,000 |
| Current Revenue | $3 million |
| Revenue Growth | 253% |
| Gross Margin | 70% |
| Employees | 12-15 |
Scott Witt Method
Scott Witt’s approach to acquiring and growing Triad Clinical Trials involved several key strategic methods that transformed the business. His background in healthcare consulting and administration provided him with unique insights into operational inefficiencies and growth opportunities. Below are the core methods he implemented to turn around and scale the business.
- Implemented professional management systems to replace manual processes
- Hired experienced clinical research staff committed to quality
- Invested in full-time patient recruitment infrastructure
- Negotiated more aggressively with sponsors based on performance results
- Developed expertise in specific therapeutic areas for competitive advantage
Scott Witt Tools
To achieve the remarkable growth at Triad Clinical Trials, Scott Witt leveraged various tools and technologies to streamline operations and enhance business performance. These tools helped transform the business from its previous manual processes to a more efficient and scalable operation.
- ClinicalTrials.gov – Used for market research and identifying trial opportunities
- Professional accounting systems – Replaced manual cash basis tracking
- Digital recruitment platforms – Facebook and Google ads for patient acquisition
- Modern clinic equipment – Upgraded from third-hand equipment to reliable tools
- CRM and data management systems – For better patient tracking and reporting
Key Notes
Throughout his journey of acquiring and growing Triad Clinical Trials, Scott Witt learned several valuable lessons that contributed to his success. These key insights highlight the challenges faced and overcome during the transformation of the business.
- The importance of thorough due diligence, especially regarding revenue pipelines
- Value of having margin for error when acquiring a business with operational issues
- Significant growth potential in specialized healthcare services like clinical trials
- The critical role of experienced, committed staff in service-based businesses
- Negotiation leverage that comes from demonstrated performance results
Get Started in Just 5 Steps
For entrepreneurs interested in following Scott Witt’s path of acquiring and growing a clinical trials business, here are five essential steps to get started. This roadmap draws from his experience and the strategies that led to his success.
- Gain healthcare industry experience or partner with someone who has it
- Research the clinical trials market using resources like ClinicalTrials.gov
- Secure financing through a combination of personal funds, IRAs, and SBA loans
- Focus on acquiring businesses with strong margins despite operational issues
- Implement professional systems and hire experienced staff immediately after acquisition
Conclusion
Scott Witt’s journey of acquiring and growing Triad Clinical Trials demonstrates the potential of business acquisition as a path to entrepreneurship. His background in healthcare consulting provided him with the expertise to identify an opportunity with strong fundamentals despite operational challenges. By focusing on building a professional team, implementing efficient systems, and leveraging his industry knowledge, he transformed the business and tripled its revenue. For those considering a similar path, his story highlights the importance of thorough due diligence, having a margin for error, and focusing on industries you understand. Clinical trials represent a growing segment of healthcare with significant opportunities for those with the right expertise and approach.