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This podcast covers from START to FINISH How to Acquire a Dental Practice. Michael Dinsio, founder of Next Level Consultants has literally seen hundreds of deals as a banker in the industry & he has personally consulted hundreds of dentists as a Buyers Representative. Michael talks with GUEST SPEAKERS about Due Diligence, Legal, Demographics, and more... He invites experts to the show to help you avoid those headaches and heartbreaks. So start at the TOP w/ Episode 01 and work your way through the transition process. We break it down step by step in a true #UNSCRIPTED and genuine way.
00:00
Oh yeah! Here we go! Practice acquisition! There are pitfalls throughout the entire process.
00:25
All right, all right, here we go, guys. Another episode in Shark Week. We are interviewing one of my dear friends and a guy that's part of a really large organization with DDS Match. And we covered a lot of great things. I hope you guys are getting something out of each one of these Shark Week episodes. But on this particular episode, we covered how to get your
00:54
you know, get some separation between you and the other buyers, like how to differentiate yourself. We talked a lot about like the seller's fiduciary. The practice broker has a fiduciary to the seller and what that actually means. That's really important to understand that you appreciate the broker or the transition, the transition specialist role in it.
01:21
We also talked a lot about the prospectus and kind of like the process of the deal, the purpose of the prospectus in itself and what to kind of expect with all of that. I think that's really, really key as you walk into these transitions. Just covering like the mindset of the seller as well. Like I think this is such an emotional process and so understanding the seller's mindset. Don't miss that part of this episode. It's the end.
01:49
Because it could cost you a deal. It could if you don't understand it. So let's get it going Shark Week!
02:00
The truth when buying and selling a dental practice. now your host, Michael D'Incio. All right, let's do this. We are in the middle of Shark Week and one of my favorite times of the year, Shark Week. I don't know how many more years I've left with Shark Week. This is a lot of work, but it's so worth it because
02:29
If you're following along, we are going from coast to coast interviewing the best practice brokers in the country. man, lots of golden nuggets and great things, great takeaways, things for you guys to learn. And we are now in the country. We are in the middle of the country, the mountain states, if you will. Just left of the middle. Just left of the middle. But we would like to lump you in the middle.
02:57
That's where we're at. And I am lucky to have Jeremy Keck, one of my good friends. We have a history in the banking world, but now it has taken over the DDS match territory. And I'm lucky to have you Jeremy. Thanks for being on the show, man. Thanks. Thanks for having me. So practice broker week, shark week. Let's get into it. So
03:25
Colorado, the mountain states is a little different than the coasts, but yet it's similar too in some ways. let's just get right into it. What do you think makes Colorado and the mountain states, the territories that you work in, attractive for a buyer? I mean, in a lot of ways, let's plug your region, because it's a really cool place to live there. I used to live there.
03:55
But what's the attractiveness in your market?
03:59
Oh, the sunshine. Sunshine. Oh, I mean, you're we're from Ohio, Mike, we know the I was I've been here for 17 years almost. And wasn't out here a week. And I'm like, I'm not going back to Ohio. And and sunshine is a huge part of it. But I mean, it, you know, people are moving here from from everywhere. You know, it's fast growing.
04:29
population, tons of recreation. know, the local economy is great. Skiing and, you know, people come from all over the world to visit Colorado. It's fantastic place. You do get both. You get sun, you get snow, you got mountains, got... And in fact, had snow a couple of days ago. And then it's gone probably in one Yeah, it's gone, but it's also May, almost June.
04:59
It's crazy. I remember living in Parker and on Friday, there would be this line of cars heading up into the mountains. It's just what everybody does. You get both worlds. You get the sun and get the snow. It's acceptable to take your kids out of school. It's a legitimate excuse that we're taking them skiing. Of course. Teachers just sign off on it. Yeah, it's fine. I love that.
05:29
Yeah. What we had to do to get out of school in Ohio was like, yeah, you know, hunting season. That's right. Tractor day. Tractor day. All right. So obviously, yeah. No offense. We love Ohio. Go Buckeyes. So OK, so practice. So what we've been trying to do this week is really help the listeners get in the right place for approaching a practice broker.
05:58
because we've gone through this process of talking to the banks and maybe trying to find a practice organically through your own network, you know, getting demographics figured out and just really prepping the stage. But now it's like, let's talk to the practice brokers and figure out what they have to offer and what listings they might have. And we were talking about some kind of key takeaways there. Let's get into that because I think buyers have
06:27
sometimes they don't know what they're getting into when they call you guys in general and gals, gals, of course too. So what do you think is the best way to approach a, a, a transition specialist like yourself? Like what, sets them, what could set them apart? I think, I think first of all, you know, it's not unlike hunting for a house in it. Talking to a bank early on in this process is critically important.
06:56
one of the of the dental lenders and so that you can come. There's a couple of reasons for that obviously like, you know, knowing what what range you should be looking and what size of practice. I mean, you might have an idea in your head that you want, you know, $1.2 million practice and six or seven or eight ops and but the banks may have a different opinion of that. So that's one of our my first questions is have you talked to the bank?
07:25
Because you don't want to you know, you don't want to spend too much time talking about a certain practice if that's not gonna fit and Mike, you know like it you the buyer may also have a financial Situation where they can't get something too small which seems counterintuitive We're illogical but you know with your student loans and car payments and
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your personal expenses, you might need something a little bit bigger. So the $500,000 practice won't work either. It's not 1.5, but it's not 500 either because that won't have enough income to kick off, cover your personal debt, cover their personal debt. So anyway, it's a long way of going about saying financing is really, really important. Getting pre-qualified if there's such a thing, just having a conversation with a decent lender.
08:22
You know, I don't think that point has been covered throughout this whole season, getting too small of a practice. It's such a solid point. It wasn't even covered with Provide. We interviewed Provide. And that's really important because I've noticed that the longer that you've been out of school and practicing and making good money as an associate, you tend to have
08:52
a higher standard of living, got a nicer house, got a nicer car. And that in itself would mean that you need so much cash off the practice to support your lifestyle. So that totally makes sense. Thanks for bringing that up. Okay. So financing, financing, that's obviously key. What else? Yep. I think a practice broker, transition consultant, whatever you say it, should be very approachable.
09:22
I mean, my job, I do share responsibilities to a seller to sell their practice. The only way I can do that is if I can find and build relationships with buyers. so I don't, doesn't have to be, I think sometimes it's looked at as, or the approach is taken of almost adversarial.
09:48
You know, we call it a shark week for a reason. Well, yeah, yeah. You know, we don't have to be the enemy. You don't have to be sharks. You know, I believe in like, you know, we all all do good by each other. And that's good for our our profession and our and the dental community and all that stuff. So I think if you if you approach the practice brokers just with just an open mind and
10:18
pleasant and happy and it's probably going to be reciprocated. Yeah. Not always, but the good, yeah. I think that's what you meant is like, there's definitely some folks out there that just won't give you the time of day or if you haven't done certain things, like they don't want to talk to you. Yeah. You know, the, the practice brokers that have the most listings
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have the fewest time to give. mean, that's just common sense. If yeah, the practice broker had a hundred listings, which would be a lot. They're not going to want to sit around and chit chat all day for an hour. They want to know. Yeah. But that's okay. Like, like it doesn't have to be, uh, it could be 10, you know, 10 minute quick call, you know, what are you looking for? Uh, tell me about your finances. Where are you looking, you know,
11:14
What are deal killers for you? You know, that kind of stuff then and move on. It doesn't have to be a long conversation. Yeah, I think that's a that's a great point, man, because I feel like that's why I've had success in the buyer rep world, because my clients do want to talk to me a lot about stuff. Yeah. And that's that's my job. Yeah. To talk about.
11:42
the deal, talk about issues, talk about concerns. A practice broker, not necessarily, they're trying to find a match. As you talk to them, they're trying to what pair you with their listings. Doesn't have to be an hour conversation. Well, and that's the thing too, Mike, is one of the questions that I ask is, you, know, the financing and then, especially as you get a little bit further in, like maybe you're looking at a prospectus and
12:11
wanting to see further financials and things like that is, who's your team? And that would be someone like you and your CPA and your attorney and your lender. We grew up this way, our professional careers, like I'm a firm believer in that. that's, put your team around you and they'll help you get to where you need to be. So it's a great point. Yeah, no, I...
12:38
Understand though that there's some politics. I'm not saying this is with Jeremy, but there could be some politics too. I actually got a call where a practice broker told a buyer that they will not work with that buyer if that buyer is using this particular consultant. And so then the buyer called me and I called the broker and the broker blessed me.
13:05
And we're on the way. you definitely. Shark Week. Yeah, it is. And you're going to have some of that. The folks that I interviewed are top in their class. And so you're definitely going to have some folks that have some politics there. Yeah. Yeah. It's a fair point because I know I've seen that.
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But again, my fiduciary, I need to sell the practice to the right person, you know, make sure the patients are taken care of and the legacy and all that kind of stuff. A big part of that is everything going smoothly and on time, the entire process, you know, and in order for that to help or happen, I hope that a buyer has a team of experts
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helping move them along, know, help to insurances and credentialing and all the accounting needs and legal entity and, you know, there's so much stuff that goes into it and it's really hard to do on your own, especially even associating a few years. How do you know what to do? Yeah. So it's a fair point, but it's self-serving to me. Yeah, yeah. No, that's great. Well,
14:26
Let's flip. let's transition. you mentioned the prospectus. The prospectus. Okay, so you talk to Jeremy and you guys figure out what you're looking for, Mr. Byer, Mrs. Byer. And Jeremy says, got the practice for you. Let me send over the prospectus. This is one place that I would love a plug here on DDS Match. I feel like you guys have a really strong
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prospectus, just a great presentation. I don't think that's one thing that's not uniform between all transition specialist brokers, whatever. What do you think is the meat and potatoes of a prospectus? And I'm kind of teeing you up here why DDS Match has done a great job. And we were talking before this episode, DDS Match is
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one of if not the fastest practice brokers or organizations in the country. So that's a little plug for you guys. But why are they having success? Is it because their presentation is great? Yeah. mean, the presentation of it is basic marketing. I mean, it's how does the practice show before you're actually showing the practice.
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So the more you want it, you want it like in my mind, you want to give enough information for the buyer, potential buyer to say, yeah, I'm still really interested or you know what, that's not a good fit. So if you have enough information to help get to that point, then you've probably hit it. So where it is, how big it is,
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how many operatories, what types of insurances are accepted? Is there Medicaid? Is there not Medicaid? Is it fee for service? it some financial snapshot? we use, I can do evaluation, you could do evaluation, Mike. We use an independent third party CPA firm for valuations.
16:54
There's a lot of reasons for that, but we can pull some information out of that valuation to say, here's the cashflow of the practice. So you can really take a look at the practice, or excuse me, prospectus and get a fair idea of what's going on without having to dig into tax returns and reports and all that kind of stuff. What procedures are kept?
17:19
what procedures does the doctor do and what's referred out? So, oh, ortho and endo is referred out. I do ortho and endo. That's great. It's already a great practice. And then I can just keep all that in. You know, those types of things that help help a doctor to get an idea of whether they want to continue the conversations or not. And I love that because it's not as, you know, we tend to be pretty casual in this industry with transitions.
17:49
Have you noticed that like if you're going to buy a house, I'll never forget one time I worked with a practice broker came right out of real estate as a, as a, a mortgage, like a, I'm sorry, residential. Yeah. And he sends contracts, the contract over and he lives and dies by the dates. And it's like, we got to file an extension and oh my gosh, we're out of contract. Like, I'm like, bro, settle down. Like this is a transition. This isn't.
18:19
You know, like, and so that's what I mean when I say we're casual. My clients oftentimes want it to be pretty dialed in too, because that gives, there's definitely a place for security of the deal. But what I'm getting at here is even though it feels pretty casual through the process, we've done this hundreds of times. And the process is actually purpose. This is, I don't even know if this is a word purposefully. Like you,
18:48
You talk to a broker, you get qualified, that's good. You think there's a good fit, you send the prospectus, it gives you just enough information. And then my buyers always want more information, but the information that you get oftentimes is enough to make an offer, right? But it might not be the whole deal. And then you get through due diligence and stuff like that. so...
19:14
Walk me through that a little bit because I think that would really benefit the listeners is like, do you know what I mean? Like it's almost like bite-sized pieces. Yeah. mean, um, I would typically share, you know, we, had a conversation, share the prospectus. Yes. I'm interested at that point. I'm sharing then a full value, you know, so the doctor reviews says, yeah, this looks like a
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a good opportunity for me. definitely interested. At that point, I'm sharing the full valuation. So a full valuation is somewhere like 60 pages, something like that. So you can really dive into the numbers. And you can have access to all of the reports that I have and P &Ls and production by provider, all these access to all that stuff that you want so that you can take a look and
20:12
make sure that you feel comfortable. then you're going to LOI and then you're moving on to purchase agreement and setting up closing date and all that kind of stuff. Is that what you mean? Yeah, so yeah, that's exactly what I mean. mean, you just laid out beautifully what your process is. think the point to be made here is that every practice broker kind of has a process that's a little bit unique to them. So yeah,
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might not give it all up front until you know that you're really interested. Some practice brokers don't even have prospectuses and they send you all of the tax returns and say, you figure it out. That would be the other extreme of it. And so everybody kind of has their way about this process. that is actually frustrating for lot of buyers. I think that does play into a little bit of what DDS match does.
21:12
Yeah. Yeah. And I mean, that's if I were to just dump it all on you and say, you know, here's a Dropbox file of, um, tax returns. And if they're, would imagine then they're probably not organized either, like tax return here and, you know, here production reports up here. Like everything's on the schedule. Yeah. You're trying to figure out where everything is. Oh, it's a mess. So, uh,
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you know, all the more reason if it were that situation, all the more reason that they need someone like you, Mike, or and the lenders and, you know, have to have a team. Absolutely have to have a team to sort through it. Sort through it. Yeah. What do you let's flip to the seller's psychiatry or psychology. Let's let's flip to the seller's brain. OK. As they as they approach a deal, what are they thinking?
22:11
Cause like, I think that's really important that we discuss a lot of, and unfortunately through Shark Week, we haven't really, really dug into that. And I think it's one of the most important things because there's two people on the other side, buyers are scared, sellers have their expectations. Like where's the seller coming from? How would you describe a seller walking into a transition? I think a lot of my counterparts would say that,
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we act as therapists to the seller. mean, it's their legacy. They're worried about staff, the staff that's been with them for a long time. They're worried about their patients. They're worried about their name. They're worried about what they're gonna do next. I know they wanna...
23:09
they want to travel and play golf or whatever it is that they want to do it. All that's in your mind, but man, you've been going to work every day all day for the last 30 years or whatever. maybe you started your practice from scratch or maybe you bought it, but it's a big emotional event. then, you know,
23:34
This is where like I would I would say for a buyer and we say this to sellers that the negotiation don't don't get too emotional about it. You know, you can see it on either side. People it's not something personal. know, a seller wants to sell it for as much as they can. Buyer wants to buy it for as little as they can. Somehow you have to meet somewhere in there and and it can get it.
24:03
get emotional. a lot of it is, they're scared, they're excited, there's just so much of their life is going to change. And then the money is really important. so $10,000 is a lot of money for both sides. Something you just said, think even though the buyers are emotional, I think they're emotional for a different reason. They're emotional because they're afraid they're going to fail.
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or they haven't owned a business and they're insecure about that? Talk about that. Well, you just did. The sellers are emotional because it's their baby. So $10,000 to you is like a business deal for the buyer. Just trying to get the best deal. And to the seller, it's they're literally you're chipping away at their legacy. Totally different. It's like attacking them personally.
25:04
The, if you look at it.
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10 grand to the buyer. This is where I say like, don't to a buyer, I would suggest, uh, don't get too emotional. Don't, don't let your ego get in the way. Don't, um, walk away from something that 10 grand, you know, when you're spending 700,000 and you're putting it over a 10 year term or 12 year, you know, whatever it be 15 years, know, it's minuscule difference.
25:42
A filling, half a filling. Yeah. Yeah. And so, um, yeah, I think often, and we do the same thing when you're buying a car or a house or anything else, you know, if you're a competitive person, there's a win factor to it that can often get in the way. But yeah, you're right. You're coming from two totally different places. Yeah. Yeah. think that's right. some of that.
26:11
I think is what you said, is maybe insecure or not insecure, but the confidence in will I succeed and how fast will I succeed? And if you're acquiring a practice, where do you build your, where do you get confidence from? like you've never done it before. So how do you know you can do it? And I think you can draw a lot of confidence from
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people like you that would say, I've done this, I can help you, I can move you through this process, I've seen it over and over and over. If you listen to these things, this is how we can make it smooth this transition possible. But the other part is the bank. So, we used to talk about like, who cares behind the doctor, who cares the most about the success of the practice? So doctor cares the most.
27:09
Second most is the bank. Because if I give you 700 grand, I need you to be able to pay me back. And so I think a buyer can build a lot of confidence or draw a lot of confidence from the fact that they got approved for the loan. And I can guarantee you the bank didn't just say, you know, maybe they'll make it, maybe they won't, let's give them 700 grand. But they're doing their due diligence and the numbers and the finances to make sure that it works. So
27:36
I think you can draw confidence. You gotta draw confidence from everywhere you can and that's a good point to draw confidence. That's key, yeah, that's key. 100%, that's great. You're talking about like these emotional decisions, $10,000 was your example. I remember a deal that I was working here in the Northwest and ironically the doctors in Colorado
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these days, he ended up doing a startup. But the deal fell apart the day before closing over
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$2,000. It was a one point something million, $6 million deal. He had his house packed up on a U-Haul moving to Washington. The deal fell apart over something really stupid with the lease and we're going to cover lease later, but it's so true. You got to look at the big picture for sure. Yeah. Okay, cool.
28:47
Can you think of a story, Jeremy, of all the years of silly mistakes that kill deals right at the finish line over emotion? Can you think of anything? Some of our best episodes have been just talking about war stories, and I bet you you have a bunch of them. Yeah. Yeah, I mean,
29:14
I always, that stuff is, there's a million of those stories. I've seen it as well. I think if you had to, I've made big life decisions with my career and I know you did too Mike when we were coming through early on, moving to another place or taking a position that was brand new to us.
29:44
Uh, if you had, for me, if I had to dig down and truly, I can make all these excuses of why I do it, but there's a thousand dollars at the last minute or two grand. And, know, I can't believe this or, know, something, um, something with the lease, the landlord isn't going to do something that they, you thought they were going to do a lot of times, you know, a lease can get in the way. And, um, but I, you know, I would ask.
30:14
For me, was, you I was scared to do it. Yeah. And I could make a million, what seemed like legitimate excuses of not going through with, with career choices that I've made or whatever. And, and what I've seen from buyers, but the guarantee, a lot of it comes down to getting cold feet. Yeah. What do you think in all the transitions that you've been a part of, what do you think that one of the greatest risks of a failure?
30:45
And I don't really mean default. I hate, this would be my soapbox for a minute. I hate when people talk about default rates. We were in the banking world, default rates are crazy low and you're never gonna fail. 99 % people don't default. But I think success and not defaulting are two different things.
31:13
Just because you can make your loan payment doesn't mean you're successful. It's a level of success. To me, a lot of my stuff's clinical for them, is the business stuff can be figured out, worked out. But in your mind, now representing sellers, what do you think would be the greatest risk of a tough transition?
31:43
staff and patient, so staff turning over and patient attrition. I think understanding as best you can upfront how, and I know this is more clinical stuff, but recall and those kinds of things that
32:12
are in place currently that maybe need tweaked or completely redone or a lot of doctors don't do any marketing. And so you just you come in, the website is either non-existent or poor and maybe you're not doing a letter to the patients and you're not rebranding and you don't have a program for keeping patients and you don't have a program for new patient outreach and you don't have social media and
32:42
And then maybe in your due diligence, you didn't explore like really what opportunities are in this clinical, but what within the practice of ortho being referred out or endo being referred out, those kinds of things. so you keep the status quo, your level of success is gonna be status quo, whatever that was, I'm gonna make 180 grand a year, 250 or whatever it is.
33:10
But if you pay attention to all those things, you can go from making 250 to 300, 350. that's what I think. patient attrition, think is probably number one and number two would be staff turnover. And a lot of times that staff turnover could be as a result of the way the doctor, the new doctor is treating them. you know, understanding like it's not, you when you meet the,
33:41
selling doctor, you know, how the selling doctor treats patients is very, important. So you can see if you align clinically, but how they treat their staff is a critical question, you know, to be discussing to try to understand, are you going to be a good fit from a manager perspective? Yeah, no, it's
34:10
that transition plan, I I talk a lot about that with my clients is having a sound transition plan that, you know, embodies the spirit of stepping in, trying not to create too many waves. Sometimes you do gotta make change. I will say, just cause I have an opportunity, making no changes is not the answer either. I think a lot of us like,
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professionals in the industry love to tell buyers, don't make changes. And they're so scared to make any changes that they feel like the whole business is gonna blow up. I've had buyers go in and make a ton of changes and because of effective communication and great leadership, it was totally cool. But that's an extreme. You don't have to be extreme about no, don't make any changes and make a ton of changes.
35:09
Remember your transition plan because there's opportunities in that transition plan. There's bad practice management. There's lots of things that we found during that due diligence that you might need to change. It's how you change is the question. think a lot of buyers is they're so scared to make any changes. They just keep running the business the way it was and it wasn't so great in a lot of different ways. That's a takeaway there.
35:39
Very cool. Well, as we kind of wind up this episode, we touched so much and made some notes here. Final comments. Like if you had an opportunity, Jeremy, just to tell the audience who's primarily buyers, know, key takeaways, things that you would really want to stick to summarize this episode for you, what would that be? Yeah. lending. Lending.
36:09
That's a big one. Not to beat a dead horse, it would really suck to go look at million dollar houses and find out you can only afford 600 grand or 400 grand. That's a big difference. so understanding where you are from a lendability standpoint is critically important. The other is get a team around you.
36:39
And I know there are people that take advantage of doctors. And so you as a dentist have to be skeptical of, I don't know if skeptical is the right word, but. Yeah, I mean, there's a healthy level of skepticism. Get the right team around you, do your due diligence on your team, and then.
37:07
listen to their advice and then you make the decision. Not everybody is out to get you. And so if you put the right people in place, then you will have success for sure. Yeah. I love those two points, especially the second. I think a lot of docs have a negative skepticism and they don't hire people and then that results in
37:37
costing them thousands of dollars. I just worked with a buyer just a minute ago. The seller hasn't hired anybody on their team yet and we're through the LOI. And I'm telling you that their attorney is about to get an LOI because she had no representation through that LOI. Their attorney is like, you agreed to this? It's because my client had me and they're just trying to... And ultimately they're trying to save
38:07
thousand bucks to get some help on the LOI. Yeah. And ultimately that's going to result in a, a $10,000 swing just right there. Yeah. So to your point, like you definitely have a healthy skepticism. love that's my favorite thing too. That's great. Yeah. And, you know, we had a, we sort of practice in a buyer. Um, you know, like he was truly like, I really believe he felt like everybody was trying to get him.
38:37
And so it was just constantly, it was almost like an episode of one of those, I don't know, like Survivor or something like that, where you're making a fake alliance over here to, you know, with the CPA to change the numbers on the offer and because of this, and then you're working the attorney and then you're working me and you're working the seller and everybody can see right through it. And then, you know, once the transition actually happens and, you know, you've built,
39:07
burns a lot of goodwill, not patient goodwill, not the goodwill that we normally talk about with the transition, but goodwill with everybody around you that, know, okay, now you're in seeing patients and it's your practice and you have a question about whatever who wants to help you, you know? Yeah, yeah, yeah. It's a quality takeaway. Jeremy, thanks so much, man. Just as always, folks, you got
39:36
All of Jeremy's contact information below in the show notes. If you're trying to get ahold of him or you're looking for practice in his neck of the woods, you got to talk to him and see what he's got available. And as always, my friend, great chatting with you and thanks for giving back to the industry. it's good stuff. Thanks for having me. All right, my man. Thank you so much. We'll catch you on the flip side. Thanks, Mike.
40:05
Tune in next time for another truth-filled episode of Acquisition Uncensored. We want to hear from you. Interact with your host Michael Dinsio. Follow us on Facebook and YouTube. Comment and Subscribe!