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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, guys, another episode of Dental Acquisition Uncensored. We are in the middle of Shark Week. And today, I am interviewing another top broker in their class, Tommy Newton with Excite Practice Sales. We went over some really good stuff that I feel like you didn't hear in the rest of the Shark Week episodes. We really stayed in the lease world because the lease is such an important piece to the acquisition. We talked about the lease assignment issues.
00:55
talked about the landlord psychology and mental state as you approach them on an acquisition. We talked about if the seller owns the property, how that changes the dynamic of the deal and the pros and cons there, how that affects cash flow when they own the property. Earlier on the episode, we talked about the need for you to have a team and be able to approach the brokers.
01:24
with a plan, a specific plan that's not too generic, but not too specific so that you don't minimize your opportunity. We talk a lot about that. And then one of my favorite pieces is there is a real thing when it comes to bad team members on your team as a buyer. You could have the wrong CPA, the wrong consultant, the wrong banker, the wrong attorney that actually is counterproductive to you winning and
01:53
and not paying too much. You need a team. That's number one. You're going to hear that. But there's a such thing as a bad team member. And we talked a little bit about that. So guys, buckle up. Another episode of Shark Week. Let's get it going. Acquisition uncensored. The truth when buying and selling a dental practice. And now your host, Michael Dinsio.
02:22
All right, all right, guys, let's start this episode. This next episode of Shark Week, practice broker Shark Week. We have taken our audience through a journey and we are making our way across the country. And I hope you listeners have had a lot of fun, but today I am introducing a friend of the family here that highly experienced and
02:50
has a fantastic firm. own the Texas area and other areas around them. I'll leave it to Tommy to kind of give the rundown here, but Tommy Newton, owner of Excite Practice Sales, they have six offices, five practice brokers, they're doing a lot of stuff. I respect what they do and I like working with them. And so here we are, Shark Week episode. I don't even know which one we're on, but we're making our way through the journey. So Tommy, thanks for joining, man. I appreciate you being here.
03:19
Thanks for having me, Michael. Thanks a ton. Looking forward to it. The best part about Shark Week is the accents as I make my way across and south. So here we are in Texas. Tommy's got the Texas sound. I love it. It's awesome. I'm just a hillbilly from Ohio. And so I'm boring, but Tommy's got that Texas slang. So Tom, tell me about Excite Practice Sales. What gets you guys up in the morning?
03:47
you know, what are you guys all about? Just give the audience who you are. Yeah, sure, sure. So, uh, you know, myself and three friends started this company back in on February 1st of 2013. We worked for 10 years together before that doing this. Uh, you know, our firm does two things. It's represent dentists in real estate transactions, whether it's a startup or going on into, uh, multiple locations, buying building, buying land, et cetera. And then of course the,
04:15
The other division that I'm in charge of is our practice sales acquisitions division where we represent dentists that are, you know, selling their practice. And sometimes that's a dentist that's selling to another dentist for the typical transition. Sometimes it's one that's going to partner with a DSO. It all made sense to do it together because, know, on the real estate side, a dentist might want to do a startup and they might not. They might want to buy a practice. So we always wanted to be able to provide them a solution, whether it was the startup route.
04:45
or the transition route and for us to be able to have kind of a group of listings that we could put in front of them and help them out. We wanna be a part of the dental community. We want these great practices to continue to be great practices and for the dental industry to grow however it is. It's something that is needed out there obviously.
05:10
Well, it's super comprehensive because like I had you guys on Shark Week last year on Startup Uncensored, our other podcast that focuses on startups, Brandon did a great job interview. It was a great interview. But here we are in the acquisition side. And you're right, there is so much crossover. You start with someone that's gonna do a startup and they find a practice and then you transition over there. Or the opposite, hey, I wanna buy, which is the most common, right?
05:39
where a buyer starts down this ownership journey and flips over to startups. So you're speaking my language. You've got two podcasts specifically for that reason, Startup Acquisition. And so you guys are on both sides. And so that's super cool. Let's get right into it, Tommy. Like this is totally unscripted folks. We have zero agenda other than providing you great information. I want to remind you all to hit the show notes below.
06:09
Tommy and Excite Practice Sales will have all the links and stuff that you can get a hold of Tommy and they can walk you through the practices they have and maybe even help you get a startup going. big picture, Tommy, I ask all the practice brokers the same question, and it is, what could a buyer do to get into first position on one of your practices? That's different than what everybody else is doing.
06:35
What makes them unique? I coach people on this all the time, but there's a lot of people that aren't going to hire me. So for those people, what can they do to get into first position? Because it's one of the hottest markets there there's been and the last decade. If you know, it's it's something else. You know, say we have that typical practice that everybody's looking for. It's a million dollar practice fee for service, PPO, right? And in a usually a large metropolitan area. Yeah.
07:04
If we put that out on the open market, we're going to get 30 to 40 non-disclosure agreements signed within the first 48 hours. And so what happens is that agreement goes out, it's signed, and then we send out a buyer information form. We want to understand who this doctor is and are they prepared and what's their history and have they talked to a lender before? Because obviously you got to have the funds, you need the team around you.
07:33
When, and that goes for probably any of my competitors out there, the same amount of buyers are coming in because it's such a seller's market. The ones, so with us, when that happens and we have 40, 50, 60 practices on the market, you can imagine a broker weeding through all that. There's really just not enough time in the day to have a conversation with each one of them. You would like to.
07:57
It's like interviewing for hygienists right now. It's the opposite of that. mean, if you have all of these applications, anybody that's hired for a job and you get a ton of applications, it's like, how do you sort through them? Right? That's it. It's a job interview. Right. It's a very competitive job interview. How do you make yourself stand out when everybody's filling out the same information? And we have a list. So if you go to one of our brokers, it's next door, Duff.
08:27
He's one of our vice presidents here in the Dallas office. If you go in his office on his board, he's got about 15 dentists. These are ones that have at the very get go. They've said, I talked to this lender. I've got all my information with them. I am pre-approved. This is my work history. I know this attorney. I know this consultant. I use this CPA, right? They've got their team around.
08:57
They know what they're looking for. They know where they want to go. They don't say things like, yeah, Dallas or maybe Houston. Like that doesn't know. I'm really looking in, you know, in Fort Worth, North Fort Worth, or they'll say, you know, they've, they've, they are able to tell us I'm a buyer. Um, I've got my team together. I'm ready to go and I know what I want and I know where, and I'm a buyer now. And so.
09:25
What that is to us is surety of clothes. And it's a story that we're able to take to our seller because most of our sellers are saying, look, the economics are very important. Yes. But I want to transfer my patients to someone I'm comfortable with. I want to get along with them. There's going to be a lot going on even after the sale. We got to go through the negotiations, economics, how everything's going to work, the timeline, of course. But after the sale,
09:55
As you know, Michael, the 30 days right after it's closing, there's a lot that goes on there. You're transferring a business that someone ran for 20 or 30 years to someone who may have never run a business at all. May have everything that majority majority haven't ran a business before. It's an undertake. And, know, that's where you guys are so important in the, you know, helping out with that piece is so important. And so do.
10:21
I mean, there's a few, don't get me wrong. We'll have some clients here and there, some deals go where it's purely economic and it just, you know, for whatever reason. But I'd say 90 % of them, they want to sell to somebody that they know and feel comfortable with and think their patients and their staff are going to be in good hands and that they know from a clinical standpoint, they think the same way. So what I'm hearing you say, Tommy, is having a specific plan for
10:51
what you want, a vision, so to speak. We talk about vision all the time on the program, but like having a vision for what you were looking for, a specific vision. Now I love that because you're right. Most of the calls that I take, it's just kind like, Oh, don't know. Help me out. want a million bucks. want to, yeah. You're like, okay. But here's my, but here's what let's take this. Let's take this a little, a little deeper. If they're too specific, is that a problem? Well, uh,
11:20
Right. That can knock down, knock down the pool that you have to choose from. so maybe is it, is it a balance between the two? Maybe like, Hey, I'm good with all of DFW anywhere within an hour drive. Tell me what you got type of that's okay. You still need the team. You know, one, you got to show that you got to show that you have the ability to buy this. Uh,
11:48
So the lending really is probably the number one piece to be able to say, I spoke with so-and-so at this bank and everybody probably knows there's a handful of banks that really focus on this because what's going to happen as part of our responsibilities is we're going to need to talk to that lender. We're going to need to not only hear it from the prospective buyer, but usually we're going to talk to the lender. They're not going to give us any private information at all.
12:18
but they are going to say, yes, the way you've priced this practice, the procedures that this, this Dennis does today, and we feel comfortable underwriting and giving this doctor so-and-so amount of money. You know, they won't tell us the amount, but enough to, to qualify to purchase this practice. Cause we have to give that information over to our seller. That's kind of what they're hiring us for. mean, a lot of buyers get a little bent about communication from the other side.
12:47
to their people. And I want the audience to know that that is actually a normal process. I think the idea of a buyer's rep, which is what I am, is a new concept that is kind of an, what am I trying to say? Yeah, between all of that, because talking to a banker about your financials and all of that can feel a little private, but at the same time,
13:12
folks, have to understand that the other side needs some confidence that you can get to the finish line. Otherwise, why are they going to take the practice off off the market? Right? That's right. That's right. Because when you're when you're going through the the letter of intent to which is pretty much the business terms of the deal, once that's done in good faith, both parties are trying to move forward and get that done. We are not out there continuing to market the practice. We are not taking on additional nondisclosure agreements and
13:41
and trying to do this unless something happens in the deal, some sort of material stall or issue or red flag. And to further expand, these lenders, they're not going to give us any personal information. They're not going to tell us if the practice is priced well below what the buyer could afford, the lender is just going to say, we could underwrite for this. They're never going to tell us, they could pay a lot more. That's not how it works at all. It's more of,
14:10
It's simply just pre-approval. It doesn't have any numbers attached to it when we're talking to them. That's really good. So team is kind of what we're taking it back to. I think that's great. I think that's been a very overwhelming theme for Shark Week is like, is have a plan and have a team. And that's you, you're right on par without even talking to the other sharks. You're right on par with everybody else.
14:40
You know, I haven't gone here. Let's go here because I want each episode to be a little bit unique. What is there such thing as a bad teammate? Should I go? Let's go. Let's go there. Let's go. I'm glad you went there. So let me set the table. Let me set the table, Tommy, because
15:04
I had a buyer just last week say, Hey, a practice broker said I was not getting this deal because of the buyer rep that they choose chose. Would you represent me? And I'm like, you know, there's, there's a lot there. Right. And, we call it shark week because there are some sharks out there. The ones we've interviewed are not sharks. You guys are all quality. You're dialed. The evaluations are.
15:30
You're you're professional. There's a lot of practice brokers that are absolutely sharks. Hence the pun of the program. But the point is, is when I get a call like that, I've got a flag up saying, well, is this broker trying to pull something over? Like now all of a sudden I don't trust it. But when I dug into it, I actually called the broker and said, what's the story? And the broker said that they worked on a deal with this particular professional.
15:57
and it got out of hand quickly. so therefore they're not going to take their seller through that process with that particular professional. So full circle. How do let's have a conversation about bad teammates. you. Yeah, let's do it. Yeah. I've had attorneys. It look, what we're talking about here is specializing in something. All of us are right. Dentists.
16:24
They're special. They have a specialty too, right? So why would you go through a dental M &A transaction with a, you know, a state attorney that does wills, right? And so what happens is you'll always, every now and then actually, you'll have someone say, yeah, my brother-in-law, my so-and-so or whatever, they're an attorney. And they just don't do this. That will kill a deal.
16:54
If they don't know what we're talking about, what we're working through, what are real issues, what are not. Many people probably heard this, but time kills deals. And an attorney that just does not, they're not a bad attorney. They just don't specialize in this. And other attorneys sometimes will not work with them. There are attorneys out there that just do this. if they...
17:23
you if there's an attorney on the other side of the table, they've never heard of, doesn't have any M &A experience. They're just like, look guys, it's, it's just not worth my time. It's going to be a crazy overload. don't think it might be, it might be worth their time, but the bill is going to be astronomical for no reason. Oh my gosh. Yeah. It doesn't have to be. So I love that point. That could also be trans transferred over to
17:50
non-bent dental bankers, non-attorneys, non-CPAs, heck, consultants that aren't familiar with M &A. I've had that consultants that were great practice consultants. Think of a hygienist or a front office consultant that was great at helping the hygiene team grow that division or that department. Do you think they know a ton about M &A? Probably not.
18:19
Yeah, it's that that's the number one. mean, you're looking for people that do this all the time and specialize. They're going to help you through a lot of hurdles, save you some time, save you some money. But that's the one that we probably come across that can can really and, know, they don't come in until the end. So then you're really talking about a lot of work has been done by everybody and then they they can gum up a deal. Yeah. So
18:49
Good stuff. Something else to think about too is the assignment of the lease. If had anybody talk about that, that's at the end of the deal too. know, a landlord. Let's talk about, I actually just had an email just right now and it's heating up. It's heating up. So let's talk about that. Yeah. So just from the buyer's perspective, so they understand the reason why a landlord may be like this.
19:17
Well, set the tone, Tommy, set the tone. Yeah. A lease, the assignment where we are and how we get there. So you get to do, know, you got to deal all the way going to the gold line. And the seller has has leased this space for 10, 15, 20 years. Right. Well, in order for the buyer to take over that lease, an assignment is done. And it's just simply that it is a document that says the buyer will take over all the responsibilities.
19:47
economic and legally of the lease, pay it, go forward. The landlord has to approve that. So you can't just have anybody come through. And so when you're talking to a landlord, you got to think about this. A tenant is an investment in a landlord's building. That tenant pays them money. They pay the mortgage for that landlord. So a landlord has a known commodity. They know them. They've been paying them.
20:16
month in and month out for 20 years, 20 years, good relationship. All of a sudden you're saying, I'm going to take somebody who's I've known for 20 years that has been doing a great job in paying me and knows what they're doing, taking them out. And they're also, they're very financially well off. Could be working for a while. And I'm going to bring someone in half the age who, a third of the age. Yeah. I don't know. I don't know if they're good at it. I don't know what their financials are. I've got a really good one here. know.
20:44
But now I'm just gonna let these guys come in. So what they're gonna do is they're gonna wanna look at the buyer's financials as well. They're gonna wanna know who they are. They're gonna probably wanna talk to the bank. And then on top of that, they're not in a hurry because they've got the rent come in no matter what. You can't push them or make them do that. If the lease has five years left on it or longer, they're just not in a leverage situation. So you have to play nice.
21:13
You were very much asking them to do this and you're saying, look, I'm going to be a good tenant. I'm going to be there longer. Eventually this guy's going to retire. This girl's going to retire. So you're not going to have them forever. And you got to kind of state that. So that needs to be done, you know, earlier in the transaction than most people do it because the landlord just doesn't have to move quickly. And if you wait till the last week, could be in trouble. I'm glad you brought up lease.
21:40
lease stuff because Excite does both sides. So you guys are trained professionals in both departments, but it's not that acquisitions don't have any leases. They do. Let's touch on this. You talked about the assignment clause, that's specifically an issue or could be an issue. And you talked about those dynamics, but let's take it one step further because I think this is really good.
22:09
Oftentimes buyers, you are going to take an over the market deal or above market deal on a lease with an acquisition. are, you know, here we are negotiating for the practice and, you know, working with the seller and getting all of the work in progress figured out and the accounts receivables. And there's all these little negotiating points for this transaction. Yeah. And
22:37
It's quite the process. Tommy works his side. I work my side and it's quite the process. And then you get to the lease and it's, you'll, to your point, Tommy, like that usually gets kind of pushed to the, to the end, but you, really have zero leverage, zero leverage with the, with the landlord startup, totally different. Yeah. Empty space.
23:06
empty space, can, you can pit them against five other spots. You could, you know, do your thing and try to, try to sell yourself and let, let the best offer win type of a scenario and acquisition. What are you going to do? You're to buy the practice and then relocate it? No, you have to. So Tommy, talk about that dynamic a little bit. I'm taking, I'm stealing the show, but you're the expert here. Go, go on. Give yourself time when you don't have leverage. You have to give yourself time.
23:36
to work at the landlord's pace because you've got to be nice. And you might be working with a property management company. You may never even talk to the landlord. There could be a $2,500 fee for an assignment in the existing master lease, right? So go ahead and agreeing to that and getting that payment over to them early, showing them that you're responsible, you're quick to act, you're responsive. mean, you're very much playing nice.
24:05
all of the leverage. know that you are deep in the negotiations. You probably have attorney's fees. You've been working on this for a while. You want to buy this company. The other person wants to sell the company. So they're usually not going to unreasonably withhold, which is the language in the lease, an assignment, but they're going to do their due diligence and it's not going to go quickly. It'll hold up the whole deal and you can't go demanding anything and you don't have
24:35
another place to kind of like you talked about, pit them against or leverage them against. So it needs to be thought of sooner than most people think of it. Yeah, it's a doozy. It's a doozy in the acquisition world, but there's no solve for it. Let's talk about the thing with us that's been nice is because we do a couple hundred startups a year. Many times.
24:59
When we're selling a practice, we might know that landlord or developer because we've put somebody else in their building. So what we do is use the leverage of our company to say, Hey, you've seen us bring you other new tenants for new buildings before. We'll continue to do that. You know, we need this relationship or what other buildings do you have? Because I have a whole real estate division over here that's doing 200 deals a year. Let me introduce you to my brokerage team.
25:26
Everybody would love to have a dentist in there because as you know, the default rate for a startup, three, four, five, 6%, depending on where you are. So that's about what you have to, yeah, right. What you have to use for leverage. It's about the only thing out there on the market. Yeah, that is a bit of a game changer. We're staying in that lease space just because it is. We've talked about so much of the PSA, the acquisition, the deal terms with a lot of the other brokers.
25:56
let's stay in this lease a little bit longer, just because it's great for conversation. I had a deal once where a real estate broker, not, well, you guys are all real estate brokers, but not the practice broker. Another real estate broker came into the deal and they were dental specific. knew what they were doing, but they were trying to create some leverage.
26:24
on the acquisition to score a better deal for the buyer. So they started talking about, I've got this other space and it's right down the road and it's already pre-built. I was fairly young in the buyer rep world and so, and I trusted this broker cause they were in dental. Come to find out I will never do that again, no matter how much the story kind of makes sense because essentially the
26:52
buyer could have taken that practice over to a pre-built dental office and just plugged and played. And it was technically right up the road. And so you can see kind of the strategy there. Let me tell you, as much as that story made sense to try to create leverage with the landlord that had the lease of the acquisition, it went south on us so quick and the buyer ended up paying more in their lease in the end.
27:21
It didn't work out. So let me tell you if someone, right, Tommy, if someone takes you down that path. captive audience. And the landlord went from, oh, I was willing to just do a simple assignment and work through it typically for you. But now if you want to play it like this, well, you know, we'll do it my way. I know what my leverage is. They know, they know, they know you're playing nice on this, this piece. Now when you get into, we'll do this if you want to, but if you want to get into, uh, if the
27:50
the, the dentist, the selling dentist owns their building. Yeah, let's get, let's get, well, I haven't touched that. So let's get into it. Yeah. We got it. We got a few more minutes. Let's go. If the seller does buy or does have the real estate, it does change the dynamic of the entire deal. How is that? Why? Definitely. You know, it does from a lot of different perspectives. One, if you're, you know, one that's probably going to be a pretty attractive, um, you know, transition.
28:17
for everybody, right? Because, you know, what, then it's wouldn't like to own their office as well, the real estate as well, right? Great from a lot of different purposes, you know, your PLLC can pay your LLC and it's just, and then when you sell later on, it can be just a mailbox money income opportunity for you. It could be an investment sale or sell lease back opportunities. A lot of different things that you can do there, which options are great, right? Who knows what the market will do when it's your turn.
28:47
and eventually you'll have it free and clear. Also, it allows you when you're buying the practice, if you do need to move money from the real estate piece from a lending standpoint, from the practice piece, right? It allows you to move it back and forth because the bank has that real estate as collateral, not just kind of your personal guarantee and the assets or the goodwill of the company there, which goodwill is tough as a collateral piece, as you know more. So that gives you more.
29:11
ability there too, if you are buying the practice to be competitive by maybe moving those around a little bit if you do or find yourself in a competitive situation with some other buyers, which you typically might. So that's really nice there. But at the same time, when you're working through those transactions, know, the bank's going to have an appraisal that's going to take time. They're probably going to charge you for that as well. You know, a few thousand dollars. That appraisal is going to need to meet.
29:39
uh, the price that you're willing to pay or else you're going to come out of pocket. If anybody's bought a house before in this market, which has just changed, but you know, when you're buying these houses for $50,000 over ask, they're usually not appraising for that. So you're having to bring cash to the table. Same instance here. If it doesn't appraise, uh, but, I will know, um, most banks aren't doing a hundred percent financing across the country. The audience is a,
30:07
is a national audience here in Texas. You know, I know it's a rule of thumb. Dare I ask where the average sale price does come in of revenue in Texas? Again, rule of thumb and you never use rule of thumb folks, but what is it in that market on average 85, 92? Yeah, it still holds true there. And if you have something that's just such a competitive situation with several, you can definitely see the hundred or
30:34
you know, go above that. So I only ask because the banks that if the practices is selling closer to like an 85%, you might have, you might have some money to lend to throw at the real estate. But most of most of you guys buying practices are going to get 100 % financing on the practice, including accounts receivables and Morgan stump over provide broke a lot of that down for us earlier in the season.
31:00
But when it comes to real estate purchasing, you are going to have to come out of money out of pocket for money. Yeah, usually 20 % down is something you can count on. Sometimes it's 10. Sometimes you can look at an SBA small business loan where they'll do less as long as you occupy more than 51 % of the building. Because, sometimes you might be buying a dental office that's in a building that also has a tenant because the selling doctor owned that as an investment as well. But you wouldn't be able to qualify for one of those loans if
31:28
you only occupied 40 % of the building as an example. And so those can be really nice loans, but they take longer. You we're talking, you know about that. So you got to have that in your timeline when you're going through closing. Okay. So, so we talked about lending and kind of like the pros of getting a building on a purchase sale where you could have two assets to sell at the end of your career. And that's a great thing. I've seen a lot of nonsense in the practice broker in world.
31:57
where the net adjusted income is, hey, you know where I'm going with this. Folks, we talked a lot about trying to calculate cashflow properly so that you know how much money you can kind of predict come close day in your first year in business. That's never going to be perfect. But what you're trying to do is you're trying to look at historicals, figure out what money that business threw off.
32:25
and try to predict for the future. That's ultimately what you're doing. But when the brokers or the sellers, let's say even non-brokered sales, an owner owns the building, you have to pay attention to what rent they are charging themselves as the dentist that is renting their own space. hope that makes sense. And Tommy, let's walk through that because a lot of people miss that part.
32:55
That's right. Well, you know, and we'll end here on what we'll end on this. is perfect. Okay. Uh, depending on, know, what their CPA says, you know, for tax purposes, it might be beneficial for them to charge them personally owning the building as the landlord to charge their company, the PLL, see the practice above market rent to reduce revenue, therefore reduced tax liability. Right. So
33:24
You're right. not, I don't know what everybody does out there, but we always internally adjust all that before it goes to market because it needs to be in line with market rents. All that has to line out. And usually it's a good thing because what's happening is if they were charging themselves more, we're adding to EBITDA by making the rent market rent. There are some instances where they do charge less and you need to pay attention to that as well because
33:53
You know what you're talking about is, you know what your net is at the end of the day. Now you're going to when you're buying the building and and the practice and you're playing landlord and tenant and all that. Of course, your nets all come down to a bottom line there and you're going to need to understand that. But it is a lot more to pay attention to. And there are expenses on buildings, taxes, insurance, common area maintenance, which is which is, you know, just landscaping, repainting the parking lot.
34:23
Keeping the building, know, standing up the basics, right? There are additional costs there that you have to take into account. And sometimes in the P &Ls of the practice, they may not have carried those over and charged the tenant like you usually wouldn't a triple net lease. Maybe they were just holding them themselves. Well, that's going to be costs that you're going to have either way, which as you know, is going to affect just in general, the operating costs of.
34:50
owning the building, owning the practice, all that still needs to line up for you to have enough net to pay all your debt and make some money. is such a great conversation. We may have lost you folks, but the big no, no, Tommy, this is perfect because folks rewind it and re listen to that maybe a couple of times, because if you were buying a practice and you don't buy the building that the seller of the practice owns, there's really a lot of due diligence there. And
35:20
Unlike excite practice sales, they might not have the real estate knowledge or dare I say, ethical integrity. There's a lot of practice brokers out there or sellers that don't have any representation, which could be even worse. When they're trying to represent what your cash flow is going to be, you have to understand what your rent's going to be because it's not
35:50
really the rent that they're probably doing to themselves. So hopefully that makes sense. Tommy did a great job of explaining that probably better than me for sure, but really, really key. We can have a podcast or just on that topic. Oh, shoot. Oh, it goes way on down the road of you planning for yourself and your exit down and what you can do with that property. And if you could pull money out of it for additional expansion, if you bought a practice that had other operatories that could be
36:20
you know, plumbed out or chaired out and not. there's so many different things you can do there. If you have the opportunity to buy a practice with the real estate, great. If the owner is going to keep the real estate, like you said, hopefully they do everything the right way. remember they were paying themselves. So they probably weren't, they didn't care about all the details. Didn't have to. Now they've got a tenant, which is you. It needs to be right. It to be accurate. think the global, the global takeaway here is, is if you could, if you could buy,
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real estate do it. that's my general roll of thumb suggestion. Now, if the building was three, $4 million, maybe a little dental practice couldn't afford that. Depends. Depending on the market, we're talking to Tommy here in Texas, the market's not like that in Seattle or Pasadena, California. It's totally different. Real estate values are insane in a lot of different markets across the country.
37:17
Real estate's not a possibility, but if you are in Texas, it probably is a possibility, right, Tommy? That happens a lot. it definitely isn't. Probably the last thing I'd leave you with is sometimes we'll have a buyer come in and they want to buy the building and it just doesn't make sense from an underwriting standpoint yet. So we'll usually structure something where, buy the practice and you'll have a right of first refusal or a must take in a year or two. You're going to get the building. That's
37:46
That's wonderful. Just remember this. What makes the money to buy the building? It's the practice. Concentrate on that first. You can get the rights that nobody can take it or buy it out from underneath you, but sometimes people will put the real estate in front of what makes the money to pay for the real estate. And so just keep those things in mind and it's okay if you have to rent it for a year or two or something like that.
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in order to pay down the debt a little bit, improve the production, the practice, just really just showed the bank that you know what you're doing and you can operate and go on from there. So not the cart before the horse thing. Well said. That's a perfect like ending point that well said Tommy, like that's, that's probably the, that's one of the best golden nuggets, hopefully.
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Our listeners lasted 30 minutes to hear us just rambled out this stuff. But that's a great one. Tommy, any last comments about Excite or how they can get a hold of you guys? Yeah, our website, ExciteCo. Excite companies, ExciteCo.com. Just go there. We work nationally. Got our six offices in Georgia, Florida and Texas. And whether it's real estate or practice sales.
39:05
Or if you just want to run something bias, if you need to know somebody else in the industry that's done a really good job for other clients, we're just all about the support. You know, we talked to people today and may not work for them at all. May work for them in five years. Uh, we're happy to be a part of the industry. We want to be an educational resource. So looks up, there's a lot on the website too, whatever we can do to help. We're happy to. There it is folks.
39:31
Tommy Newton with Excite Practice Sales. That's a common theme with the folks that I interview. I think one of the biggest things that you all don't take advantage of is calling these people. These people know what they're doing. They have experience. Even if they can't help you in their market, they have experience to help you. Tommy talked about the team today and how important that is. Tommy can be on your team.
39:56
in an indirect way or someone from his team can help. They just want to help. That's what this program is all about, is helping. And so, yeah, we're blessed to be in the industry and it's, you know, we're giving back ultimately. The industry has been great to us, right, Tommy? And we're just simply giving back. So Tommy, thanks for being on the show and being a part of Shark Week. And we will sign off here, my friend. Thanks for being here. Yeah, I'm honored. Thanks, Michael.
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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.