RFE Investment Partners

Chuck: During Peak’s initial search for investment partners, we spoke to many different firms and Mike Foster came out from RFE to meet us in Albuquerque. You might think it was odd, but there was actually less agreement between Mike and me than with the other firms. Mike and I both had experience in the healthcare industry and we had very different philosophies about how to build a business in the industry. After our initial discussion, he said, “Well, maybe we’re not the right group for you.” However, even though his perspectives were at times contrary to mine, I thought here was an individual who would be dedicated to improving our business and would challenge me. I also liked the interplay between us. So, in the end, I said, “Actually, I think you are the perfect group for me.”

Ernie: For us the best thing about RFE was that they were steady. In the first three years of our business plan, we missed our projections terribly, but RFE was patient and flexible. We didn’t generate nearly as much cash flow as we thought we were going to generate. We didn’t grow nearly as fast as we thought we were going to grow. Partnering with RFE proved to be very beneficial because they weren’t intrusive on management in day-to-day operational terms.

Chuck: We went through three or four very difficult years in which we required additional capital investment and RFE came at least twice to the table and provided additional capital for the company to survive those difficult years.

Ernie: It would have been easy for RFE to throw up their hands and walk away. But they didn’t do that. And we never felt like they were sitting back East regretting that they had ever met us. The company was everything to us. It was our retirement, our reputations, our paychecks. So there was no way that we were going to quit and Mike and RFE, they never quit either.

Rick: During Sun Healthcare’s acquisition negotiations for Peak Medical, Mike was really focused. Number One: Mike understood the business and was really looking at the longer term, even though initially RFE could easily have just sold and cashed out. That gave me a good perspective on how he views businesses. It also gave me a comfort level relative to how he would act as a board member.

Ernie: When we started negotiating the price for the sale of Peak Medical, Mike was a star. Chuck and I ran some numbers and thought here’s the best we can get, and we probably ended up at the end of the day with about 30% more than we thought we could get initially.

Rick: Once the deal was completed – its was an all-stock deal – RFE was the largest shareholder in Sun, but we’re a publicly-held company, so Mike had no more rights as a board member than anybody else. That was reflected in his behavior, in his interactions. Mike is a vocal guy with natural leadership abilities, but he never made anyone think that he should have more say because he was the largest shareholder. Mike is very smart, analytical and thoughtful in how he goes about things. And he brought all that to the table, so there was a lot of good dialogue between our board and him. At one point, Sun was really struggling with an underperforming non-core business unit where Mike had a lot of experience and was really knowledgeable. He made it clear that he had more to bring to the table than the other board members, but did it in a way that was very professional and non-intrusive. When RFE finally decided to sell its stake in the company, it really took a lot of flexibility and patience to sell without creating a debilitating effect on the stock price. RFE handled it so well, I asked Mike to stay on the board even though RFE no longer owned any part of the company. And the rest of the board wanted him to stay as well. To this day he remains on the board.

Chuck: Mike would constantly remind me that “It is what it is,” and I think that’s a difficult thing for entrepreneurs to accept. Entrepreneurs live in almost a fairy tale world where we believe a business can be anything we want it to be. When stark realities start to hit you, when the down turns in the economy that impact your business occur, it can be a very deflating process and Mike’s constant reminder that “It is what it is” helped us concentrate on reality, adjust to circumstances, reframe and understand that with determination the business would be fine in the long term. There’s not a single negative thing I could say about my interactions with any individual at RFE.