MM Medical

A CDAP project case study.

Dr. T bought MM Medical Laboratories three years ago and has been expanding organically and externally since then. MM Medical Laboratories primarily provide analytic or diagnostic services, including body fluid analysis, generally to the medical profession or to the patient on referral from a health practitioner.

The Goal

The goal is to increase patient volume, demand, and consolidation to leverage rising costs. Dr. T is hoping that one day they can exit the company with a private equity (PE) firm or another player in the industry.

Challenge: No time to manage staff

Laboratories are contending with a shortage of skilled labor as baby boomers, which constitute a significant portion of the industry’s workforce, retire, and fewer individuals pursue healthcare professions. Dr. T needs to recruit and analyze his staff performance at a higher speed.

For each new acquisition, it would take over four years to replicate a new diagnostic clinic and to obtain a good strong client base. With new staff and new clients, Dr. T needs to automate their onboarding and their administrative processes. Difficulties in acquiring accounts and third-party payer contracts are also some of the challenges. Dr. T needs new systems to streamline his marketing and CRM processes.

Challenge: Lack of Financial Clarity

With rapid growth, Dr. T needs to understand the financial side of the business, quick. He needs reporting on partnership & new acquisition costs, staff utilization, and return on invested capital. And overhead and profit margins must be live and available.

Currently Dr. T’s full review financial reporting is generated by his accountant once a year. His bookkeeper/admin runs his books for him but the data and results are not current. And reports are generated on the fly. He doesn’t have P&L analysis on licensed staff and external partners.


We conducted an assessment of the current phase to better understand MM Medical Laboratories’ financials, business drivers, and challenges. After spending time with Dr. T and his key employees and accounting team collecting data, we provided some possible solutions for Dr. T. We helped Dr. T understands the cost and resources required to implement the change. A cost-benefit analysis is provided.

After some correspondence and emails, recommendations are made on how to streamline MM’s marketing and patient onboarding process, and to provide financial reporting to help them understand which service and location is doing well.

CDAP Project Conclusion:

The strategic solutions provided to MM Medical Laboratories allow them to increase patient volumes and consolidate to leverage rising costs. The streamlined marketing and patient onboarding process, along with accurate financial reporting, increase recurring account revenue. The plan is cost-effective and sustainable, allowing MM Medical Laboratories to achieve its goals of growth and profitability.

The comprehensive digital adoption plan like this wouldn’t cost Dr. T much because 90% of the cost is covered by the CDAP. With the CDAP plan, Dr. T is also able to access a $100,000 loan from BDC at a 0% interest rate to implement the plan.

Learn more about the CDAP

It is not uncommon for SME employers to boost employee engagements with some forms of ownership. Employees can receive stock options, bonus, or even stock directly. However, one of the most common ownership is known as Employee Stock Ownership Plans, or ESOP.

Employee Stock Ownership Plans (ESOPs) – Whom are they for?

An ESOP benefits both the employer and the employee in many ways. Besides the obvious employee motivation and monetary benefits, there are strong tax advantages for both employees and employers. For employees, income earned in the ESOP accounts are not taxed until the benefits are received by the employees. And for the employers, contributions to the plan are tax-deductible, with limits.

How do business owners use ESOPs?

There are a number of reasons for business owners to implement ESOPs. First and foremost, the company can provide employees an additional layer of benefit in conjunction with other saving plans. Company can also use a leveraged ESOP. A leveraged ESOP would borrow cash and essentially raise capital for the company. The company will then make contributions to the ESOP. Since the contribution made is tax-deductible, the company’s cost of borrowing is lower.

Considerations before you decide to include an ESOP

Make sure you have a strong financial management system and a valuation

There are a number of things that a business owner should consider before including an ESOP. The company owner must ensure the company’s financial management infrastructure includes all the essential building blocks such as monthly budget, forecast, and cash flow planning. A strong financial management practice not only provides analytics for the management team but also insights for management’s ESOP transaction planning and capital allocation decisions. In addition, the company requires a fair market valuation for the company when the ESOP buys and transfers shares of the company. The company must update and provide a fairness opinion for the ESOP annually and ensure the valuation is acceptable by both tax and pension plan authorities.

Shareholder Agreement Reviews

Want to sell or recapitalize your company? Maybe it’s time to review your company shareholder agreement. Owners might be surprised some of the things they are allowed or not allowed to do. A shareholder agreement can get complicated quickly once you have more shareholders because the shareholder agreement is typically used to define what happens in all subsequent transaction in a given company’s shares. There are many items in the agreement and sometimes these items might even have major conflicts with each other.

Types of Shareholder Agreement

There are typically two types of shareholder agreement, unanimous and ordinary. An unanimous shareholder agreement gives responsibility to the shareholders and usually has restrictions on what the director can or cannot do. On the other hand, an ordinary shareholder agreement gives the description of relationships of the shareholders’ powers and roles as owners of the company, rather than restricting directors’ ability to manage the company.

When should you review your Shareholder Agreement

Beside an Exit, business owners should review the shareholder agreement on any triggering event such as the death of a shareholder, insolvency or bankruptcy of a shareholder, or change of the method use in calculating the company’s tangible or intangible assets.

The shareholder agreement should also have clear instructions for share sale including simple buy-sell provisions and right of first refusal or first offer where shareholders have the right to buy when the other shareholder decide to liquidate. To ensure fairness, there are provisions for majority and minority parties of a company as well. But the often missed item is the value and payment terms and how they might change given the triggering events. Shareholder agreement can also determine alternative ways to derive company value.

Speak to your business attorney to understand what you need to know about your shareholder agreement and the definition of value. When in doubt, make sure you speak to a chartered financial professional for your need.