Episode #329: Lee Hillman, CEO, Performance Health Systems

Episode #329: Lee Hillman, CEO, Performance Health Systems

Lee Hillman


Pete Moore: This is Pete Moore wanted to officially announce the release of Time To Win Again: 52 Takeaways From Team Sports To Ensure Your Business Success. I wrote this book over the last year. I think you’re going to love it. Good to great meets wears Waldo pick ’em up for your team. Time to win in 2022. Happy to come to your club, your studio, your company, and talk about ways we can optimize business and win going forward. Go halo.

Pete Moore: This is Pete Moore on HALO Talks NYC. I have the pleasure of having one of my initial friends in the health club industry from way back in the day that we won’t even recall or want to remember late nineties, good friend of mine, still kicking away and making things happen in the halo sector. Lee Hillman, how you doing buddy? Good to see you. Great, Pete. Nice to see you. You’re a young, I’ve been there longer than that. Yeah. You were like one of my men back in the day, I was like, all right, listen to your earnings calls and talking about power plate back in the day with private equity. So, you know, we’ve been through a lot, always you. Oh, good. Always we’ve been through a lot together, but now the industry’s probably like mainstream and all this private equity, a venture is in it.

Pete Moore: We said, Hey, told you so. Right. That’s it? That’s it. Yeah. So why don’t you give your give, give your truncated background here. Most people know who you are and what you’ve done. So why don’t you give your bio and how you got into the industry and then we’ll away? Sure. Most people don’t maybe know in this industry that I was a partner at one of the big four accounting international accounting firms, an audit partner. I left in 1991 because I was recruited to a former client of mine called B called ballet all the forms of ballet at the time, because it was before it was just the health club business. And I went in there as a CFO in a sign, severe turnaround situation. And we had 2 billion of defaulted debt, which back in 1991 was a big number.

Lee Hillman: And so it was casualty of the Drexel burn implosion and, you know, a lot of things that you and I remember from those days anyway, it the ballet turnaround went in there, turnaround took several years, but it went well, went very well. We ended up selling the casino group to Hilton hotels. And I came over to run the health club business, which was in need of a second turnaround. And we did that and we grew it to almost a billion dollar company at that time, back in the mid-nineties. And then I ran that business CEO and then followed up as chairman until 2000, the end of 2002 left. And then came over. It was a dynamic company at the time doing great. As I said, almost a billion dollars in sales and, and making tons of money.

Lee Hillman: And I left and then went to consulting practice. And then from there guys at this company called power plate found me and we started there and started as a consultant for their us. Were there us distributor one thing led to another private equity backer. We bought power plate at early in 2006. It was about a 12 to 14 million company. And by the time I left in which wasn’t more than 30 months later, latest 12 months sales were about 90 million. And we were making lots of money there and about five and a half years later, I came back and bought the company back with some partners. And we company in the five and a half years I was gone had diminished greatly. And not because the, I mean, products are incredible, but we came back in and bought the thing back because such a fantastic brand, such a fantastic product technology.

Lee Hillman: And we had to spend much of the last seven or eight years since 2013, putting this thing back together in a great way. It’s we’ve expanded the product line. We’ve the products are incredible. You know, the research, I, I would venture to say that there isn’t another exercise product anywhere that is more independent scientific and medical research and powerplay. Yeah. It’s research. We see, we see studies come across our transom every day from around the world every week, I should say, around the world. Yeah. It’s amazing. The brand power. It is that technology’s, you know, been around for many years and people see amazing results on it. I feel like it you know, we see some of this vibration technology now being used in the, in a workout recovery space and you see the results that people are getting, you know, on the power plate, you know, it’s almost like it was a, it was a niche and it was kind of like hitting, you know, mass market.

Pete Moore: I think, you know, pretty much like right when COVID hit, you know, you just heard a lot more people chirping in a positive way about power plate, but before we go into power plate, I, I want to, you’ve got a really interesting background from a standpoint of not afraid to get your hands dirty. You’re obviously a type a guy, but you got a lot of patience. Talk to people for a minute about, you know, when you look at an opportunity such as now, you know, you’ve looked at deals when you’re during a financial crisis, you look at deals now, post COVID, that might not be EBITDA. You got to have a vision, but you also got to be realistic that says, Hey, like this company can be rejuvenated or of this brand could be Reju or the promise could be remade. Or, you know, look, I look at a hundred different deals.

Pete Moore: Like I pass on most of ’em, but like certain things are special to you and, and stand out. So maybe give us a little bit, if I was coming into you and saying, Hey, Lee, I’m thinking about buying this distress company right now. You know, what kind of like overall guy or questions would, you know, would be important to you to get the answers to great question, Pete. And, and one of the other things I should say is my background. I am have been the director of quite a few public companies. I, some words of directors and on private companies. And I would say if I have anything of a specialty, it is distressed companies, turnarounds and things like that. And so I, I I’ve been through a lot of those experiences. So your question’s right on point. And you know, you, for me, you have to look at something without the, the rose color glasses on it and say, is this a business that should be there?

Lee Hillman: Or is it just a good idea that would be a nice to have, but really isn’t a business. And there’s lots of those that we see those all the time. And people come with all kinds of great ideas. They’re really wonderful ideas, but they need, they need self-support because, because they’re not really investible ideas that can be scaled and can be commercialized in the way that, that they need to be to make them something worth doing. And spending time, time is the one thing that you can never get back. And anything else is, is replenishable, but time is not. And so you have to keep that in mind at all, always when you’re, when you’re looking at opportunities. And we you know, we get quite a few of them now at power plate also. But we you know, over, over the years, I can’t you, how many, well, you, you, you know, you, and I know how many there have been people call you and say, Hey, I got this great idea.

Lee Hillman: Would you mind looking at it? And I’m, you know, I’m pretty easy going guy about it. I look, I like to look at things and, and, and you have to advise them, you know, honestly, as to, is this something that can be done? And if so, how you, he getting done and, and what, what needs to get done? I mean, how you go through it too. Yeah, no, I do. You know, we, we’ve made several investments and, you know, as most people have seen in the, in the public markets, there are companies that are deemed a great idea yet. Haven’t made a dollar of EBITDA. It might not make a dollar of, of EBITDA for, for years to come. It might be valued at multiples of revenue. And those executives might be, you know, high flyers that think, you know, like, Hey, I’m, I’m, I’m killing it.

Pete Moore: You know, based on my Prema or post money valuation, give us a little insight into, like, when you’re in get involved in a business, that’s losing money, you know, it’s going to lose money for a period of time. And I, I have the same issue and I’m, I’ll give you my answer after yours, but how do you psychologically continue to motivate yourself and the team to say like, Hey, this thing’s not turning. I remember desert aside. I remember like hedge funds used to like buy companies and they’d be like, holy shit, this thing’s not fixed. It’s like been three months since we only like, bro, that’s why you were able to buy it for nothing. It’s cuz it takes a lot of time to fix it. So how do you kind of calibrate if you’re going to get into a distress situation and now, you know, it could be a year, it could be three years could be longer.

Pete Moore: How much runway do you want in the bank of someone else’s money to, to get through that? Or how much sleep do you lose? Like me saying, like, you know, Hey, I didn’t, I kind of underestimate how long this was going to take to fix. Yeah. Well, I mean, power play was one of was that this time as well, it was, it was the fix the first time happened faster and I had a, I had a bunch of money behind me that time made it easier this time. I didn’t but we we’ve made the fix and look there, there is no magic number, but I’ll tell you what you’re exactly right. Guys. Often think they they’re very high flyer business is not making money. The first thing I look for when I’m looking at that situation is the, is the founder or the person running it?

Lee Hillman: You know, how much are they taking out? If they’re taking money out of a business, that’s not making money, there’s something wrong. There’s something it’s Sal, you’re saying it’s salary in addition to right. If they’re trying to take money off the table at the time of the, the deal, everything to tell that’s right. I mean, either one it’s it tells you, it tells you something about the mindset, tells you something about the dedication and it tells you about, about the incentive they have, right. To make it work. And you know, that’s, you know, I value people that are willing to make that sacrifice. And you know, maybe it’s not zero, but it’s, but, but make the sacrifice to you know, to make sure that this thing, whatever it is works, and it’s not easy, it’s not easy. Cause sometimes you got to bring in a lot of other people to help you.