Practice Transitions: Understanding the Buy/Sell Process with Industry Experts
Episode Description
Join Dr. Murtuza Shah-Khan and Dr. Richard Offutt as they dive deep into dental practice transitions with experts Dr. Rod Strickland from Legacy Practice Transitions and Jimmy Studzenki from Excite. Learn valuable insights about practice valuations, timing your exit strategy, and building the right team for buying or selling a dental practice.
Episode Navigation
- 00:00 – Introduction and guest welcomes
- 00:18 – Jimmy Studzenki’s background in dentistry
- 03:58 – Dr. Rod Strickland’s career journey
- 06:34 – Evolution of practice transitions
- 13:44 – Value of broker representation
- 24:33 – Solo practice future outlook
- 38:37 – Preparing for practice sale
- 46:22 – Legacy protection planning
- 53:19 – Final takeaways and advice
Key Takeaways
Practice Transition Planning
- Start transition planning at least 3-5 years before intended sale
- Student loan debt doesn’t disqualify young dentists from practice purchases
- Practice value decreases approximately 10% per month after unexpected death/disability
- Most DSO buyers require minimum 3-year commitment post-sale
Practice Valuation Insights
- Practices above $1.2M revenue attract different buyer pools
- Banks want to see 6-24 months production history from young buyers
- Real estate can be significant factor in overall practice value
- Professional representation often increases final sale price
Meet Our Guests
Dr. Rod Strickland: Former practicing dentist with 30 years experience, now with Legacy Practice Transitions. Has owned multiple practices and experienced various practice models including solo, group, and associate positions.
Jimmy Studzenki: Transitioned from cardiology field to dental industry specialist with 15 years experience in capital equipment sales. Currently focuses on practice transitions and healthcare real estate.
Featured Discussion Topics
- Practice transition timing strategies
- Valuation methods and considerations
- Broker representation value
- Young dentist buying opportunities
- DSO vs private sale differences
- Real estate considerations
- Legacy protection planning
Connect With Simplify Dentistry
- Website: simplifydds.com
- Facebook Group: Simplify Dentistry Community
Topics: dental practice transitions, practice valuation, practice broker, DSO acquisition, dental real estate, legacy planning, practice sale, practice purchase, dental business, dental practice management
Transcript
00:00:00:00 – 00:00:15:20
Dr. Richard Offutt
Welcome to the Simplify Dentistry Podcast. Join us as we discuss clinical, operational and financial aspects of your practice. Hope you enjoy life and dare to simplify dentistry.
00:00:15:22 – 00:00:46:14
Speaker 2
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00:00:46:15 – 00:01:01:07
Dr. Murtuza Shah-Khan
All right. Welcome back to the Simplified Dentistry Podcast. I’m Dr. Murtuza Shah-Khan with my co-host Dr. Richard Offutt. Today we’re joined by Doctor Rod Strickland and Jimmy Studzinski. Welcome, gentlemen. Eager to have you and and have this great discussion.
00:01:01:12 – 00:01:03:03
Dr. Rod Strickland
Thank you for having me.
00:01:03:05 – 00:01:04:22
Jimmy Studzinski
Yeah. Thanks for having us.
00:01:05:00 – 00:01:15:01
Dr. Murtuza Shah-Khan
So, Jimmy, we’ll start off with you. Kind of give us an idea about your story, how you got into dentistry, and you know what what what you did before and where you are right now.
00:01:15:03 – 00:01:34:02
Jimmy Studzinski
Awesome. Yeah, I actually came from the cardiology side of the medical field for, you know, the majority of my professional career. And then my wife had our second baby on the way, and she said, you, you know, you got to get out of the hospitals and the ERS and the cath labs because guess what? Hospitals never close.
00:01:34:04 – 00:01:50:15
Jimmy Studzinski
And so I started my research, around 2009, of looking for that next opportunity that would fit me and realized dentistry, you know, on average, you guys work three and a half days a week and, you know, have a lot of close downs. No, no, no.
00:01:50:17 – 00:01:55:22
Dr. Richard Offutt
No hard work five days a week for 40 frickin years.
00:01:56:00 – 00:01:59:10
Jimmy Studzinski
I said, I said the majority. But you know.
00:01:59:12 – 00:02:01:03
Dr. Murtuza Shah-Khan
40 years of private school tuition to.
00:02:01:03 – 00:02:08:12
Dr. Richard Offutt
Pay. Yeah. That’s right. Yeah. So then up for four kids in private schools. So I was them working any time somebody would show up.
00:02:08:14 – 00:02:30:21
Jimmy Studzinski
Sure. And, and that’s, that’s where the smoke and mirrors came in was that, you know, I’d already been selling, you know, medical devices and things like that. So I wasn’t moving into, you know, the everyday selling cop and gloves and things like that. So I jumped immediately into capital equipment, and then quickly realized that, you know, you dentists don’t have time because you’re running around three and a half to five days a week or more.
00:02:30:23 – 00:02:50:06
Jimmy Studzinski
And the times that you had to meet with us and have these, these long term, long decision, conversations where we’re on Fridays and Saturdays, you know, and so it didn’t work out quite the way that my wife thought it was going to. But, you know, I loved it. I told her I was going to give it a year in dentistry back, you know, starting in late 2009.
00:02:50:06 – 00:03:21:18
Jimmy Studzinski
And, and, you know, looking back 15 years later, I’m still in love with it. You know what you guys do is, is a different thing than where I came from in cardiology, but, you know, so I did almost 14 years selling capital equipment, especially in digital dentistry, 3D printers, 3D comb beam CT technology that that technically grew the bottom lines of practices, had huge patient impacts and changed the way that your staff, your teams, your patients experience dentistry, you know, for the better.
00:03:21:20 – 00:03:48:12
Jimmy Studzinski
And, and I loved every aspect of that. And, you know, so over the last year or two started looking for, hey, what’s that next stop. And, you know, after 15 years of doing that, it was, you know, looking at transitions. You know, I’ve always been interested in real estate. So I joined a company that does both health care real estate as well as, healthcare practice sales and, and, you know, the more I dive deep into it, the more interest I have to it.
00:03:48:12 – 00:03:56:15
Jimmy Studzinski
And and it’s still at the end of the day brings a huge value to the ultimate patient experience, to your staff, to your teams, and to the legacy that you guys have built.
00:03:56:16 – 00:04:14:14
Dr. Murtuza Shah-Khan
Well, Doctor Strickland, you know, we’ll we’ll give you the, the mic now and let you tell us about your story. I know yours comes from a really kind of interesting background as far as being a practitioner, practice owner, practice owners or practice owner. And then, going now into the next phase of your career.
00:04:14:16 – 00:04:41:08
Dr. Rod Strickland
Right. So yeah, my name is Rod Strickland. I’m a dentist. Went to dental school in Indiana University and practiced in Indiana for about 13 years, and then in 2007 moved down to Savannah, Georgia, and, practiced in Savannah for about 17 more years. And I have owned, multiple practices. I’ve been a single practitioner and small practice.
00:04:41:10 – 00:05:07:22
Dr. Rod Strickland
I’ve been with a, small group practice, where I was one of the owners and a large practice. I’ve been a partner and I’ve been an associate, so I’ve kind of, been, I think just about one of everything in dentistry. Last year, I decided to retire from clinical dentistry, and, I had, I was having dinner, actually, with the gentleman who founded our company, Legacy Practice Transitions.
00:05:08:00 – 00:05:24:15
Dr. Rod Strickland
We were having dinner on Hilton Head Island, and, I told him I was getting out of clinical dentistry and looking for another business to to run. I’m too young to quit working. So I just wanted to retire from clinical dentistry, and and he suggested that I get into practice transitions.
00:05:24:15 – 00:05:25:02
Dr. Richard Offutt
Well, you know.
00:05:25:02 – 00:05:26:14
Jimmy Studzinski
That that’s what I was talking about.
00:05:26:19 – 00:05:31:15
Dr. Richard Offutt
Yeah. There you go. There you go. Is that that three and a half day life? Right. It’s gone.
00:05:31:17 – 00:05:32:12
Dr. Rod Strickland
All good. That’s right.
00:05:32:12 – 00:05:36:18
Dr. Murtuza Shah-Khan
Bullet that. It sounds like none of us do anything that keeps our lives happy. So.
00:05:36:19 – 00:05:38:04
Dr. Richard Offutt
Yeah, yeah, yeah.
00:05:38:08 – 00:05:39:22
Dr. Murtuza Shah-Khan
That’s why even with our best. Yeah.
00:05:39:22 – 00:05:59:03
Dr. Richard Offutt
That’s why we’re here on Thursday night at 9:00. Right? Exactly. Right. Right. Well, well, well, well, tell me this. I mean, you know, I practice dentistry a long, long time, and and I saw a lot of a lot of changes. And how has it changed you guys? How has it changed that in the, buying and selling of a practice, right?
00:05:59:06 – 00:06:11:03
Dr. Richard Offutt
I mean, it used to be that a, a kid grew up in a small town, and he knew the dentist down the street, and the dentist knew the kid, and and they’d kind of say, hey, you know, when you get out, you know, you get out of, oh, I want to go to dental school. Well, we didn’t get out of dental school.
00:06:11:05 – 00:06:19:22
Dr. Richard Offutt
Come talk to me. I mean, that’s how it used to happen, right? So how is that how is that paradigm shifted? Rod, go ahead.
00:06:20:00 – 00:06:46:03
Dr. Rod Strickland
That’s a great question. And I’ve got a great story to tell you. When I graduated dental school, I before graduation, I started working with this gentleman, Ron Progress, who had started, legacy, although he was with Afco at the time, and he was showing me practices while I was waiting to get my license, and I got my license, found a practice.
00:06:46:05 – 00:07:17:05
Dr. Rod Strickland
He said, talk to this banker. I spoke to the banker on a Wednesday. The banker called me the following Monday, said, you’re approved. And that was it. And it was literally, you know, three business days to get approval on this practice. It was a typical bread and butter practice. So that was then the majority of dentists would graduate and they would go into private practice purchasing a practice, or associating in a private practice.
00:07:17:07 – 00:07:45:22
Dr. Rod Strickland
But the majority of dentists would, would purchase or hang their shingle and start something right out of school. Today, it’s a lot different with corporate dentistry. Banks are still eager to loan money to dentists, there’s no question, but they want to see six months minimum a year to two years of work product that this dentist that this young dentist can produce before they’ll really go out and, and loan money to them.
00:07:46:00 – 00:08:10:20
Dr. Rod Strickland
And, and the main reason is they want to see how much this, man or woman can produce based on what practice they’re looking at. If they’re looking at a, practice $1.5 million practice, the dentist is doing $1 million in dentistry hygiene program is doing half $1 million. They want to know that that dentist can produce $1 million if they’ve been in a in an associate shop where they’ve been producing $300,000 a year.
00:08:11:02 – 00:08:39:14
Dr. Rod Strickland
You know, it’s a pretty big jump to go from 300 to 1 million. But if they’ve been in an associate shop doing $700,000 a year, that’s not that big of a jump as an owner to be able to bump it up from 700 to 1 million. So. So to me, that’s the biggest difference, is, these these young dentists are almost exclusively they’re all going into associate programs, whether it’s in a private practice or whether it’s with corporate dentistry, prior to actually purchasing a practice.
00:08:39:16 – 00:08:58:14
Dr. Richard Offutt
Oh, so, Jimmy, what are you thinking? I mean, when you say when when I, you know, when we look at that question, what’s the biggest change? In the last, in the last ten years that you’ve seen, with, with the, transition practice transitions? You know, buying and selling what’s what’s the way where are where’s your head on that?
00:08:58:20 – 00:09:15:08
Jimmy Studzinski
So, you know, based on everything that I’ve dug into in research and my personal experience, it was it was just like you said, doctor, off at the beginning is that, you know, it was this whole secret industry that, you know, you had a relative, right? It was an aunt and uncle or grandfather or father or mother, somebody who practice dentistry.
00:09:15:08 – 00:09:31:01
Jimmy Studzinski
And why you went to dental school and then you were just going to roll into their practice, or they knew somebody in the area that you wanted to be. And and you went and you made the deal based on, on revenues of the practice. Right. And and there wasn’t a whole lot of checks and balances to make that happen over time.
00:09:31:03 – 00:09:55:21
Jimmy Studzinski
Very quickly, private equity money, Wall Street figured out that, that dentists re is is almost fail proof. You guys probably know dentists more than than what Wall Street knows that have failed, but it’s, and they’re based on their numbers. It’s less than 1%. And that changed when you’re talking about, you know, ten, 15 years ago to even post Covid.
00:09:55:21 – 00:10:20:09
Jimmy Studzinski
And that’s where the big shift has happened. So when we talk about ten years ago versus even just the last 3 or 4 years, there is so much money coming into dentistry and wants to back dentistry and like Doctor Strickland was talking about, you know, this is where the DSO is, private equity, the the family lending businesses have come in and they know that this is where they can make their money.
00:10:20:09 – 00:10:55:09
Jimmy Studzinski
So how has it changed significantly to the point that once you crossed a specific threshold as far as top line revenue and how the practice was built and developed, now you’ve got two different types of buyer sets that we’ve got to look at and evaluate. And that’s that’s a very interesting point that, of where that, that inflection point happens, you know, somewhere in that 1.2 to $1.5 million top line revenue, we’re seeing, you know, this practice has to go to a whole different buyer network than the one that is sub 1.2 million top line revenue.
00:10:55:09 – 00:10:58:10
Jimmy Studzinski
And that’s you know, lenders know this.
00:10:58:10 – 00:11:14:23
Dr. Richard Offutt
So so so Jimmy, actually what what you just said is what’s a perfect segue into two things that I want to talk about. Which one is kind of that EBITDA deal. And, and you know, when you get above the 1.2, 1.4, but but but I want to back up to that. So do I need a broker?
00:11:15:01 – 00:11:18:14
Dr. Richard Offutt
Do I need do I, do I need, do I need to hire you guys.
00:11:18:16 – 00:11:19:11
Dr. Murtuza Shah-Khan
I need you.
00:11:19:13 – 00:11:37:15
Dr. Richard Offutt
I mean here’s, here’s, here’s your answer that I need you right. Do I need you guys I mean, you know, talk to me a little bit about that. How does the the dentist. Yes, I think I got my act together. I think I want to buy a practice, you know. Do I need these guys. They want 10%. Why?
00:11:37:17 – 00:12:22:06
Dr. Rod Strickland
Well, from the the answer is no. You don’t need us. But you’d be kind of silly to not use our services. You know, depending on, again, whatever route you’re going to, if you’re wanting to sell to corporate dentistry. You know, these TSOs are pretty heavily marketing directly to the dentist and, and submitting offers directly to the dentist, and it’s just like an insurance company who has a car wreck, and they try and give you a check right off the bat, you know, you can accept that check for $15,000, or you can hire a competent attorney and get, you know, $150,000, or or a whole lot more, with a good
00:12:22:06 – 00:12:46:20
Dr. Rod Strickland
transition firm, we know what the value of the practice is. We know what comparable DSO are paying for practice is. We can take that seller who’s been approached by a DSO and given an offer for his practice. We can look at that. And almost 100% of the time, we can go out and either negotiate with that DSO for a much better price.
00:12:46:20 – 00:13:07:06
Dr. Rod Strickland
That would more than cover what our fee is. Or we can find another DSO that may have better terms, better price, and again, more than cover what our fee is. Even for the dentist that is not looking for a DSO sale. I think it’s a huge advantage to use us. Number one, the valuation of the practice. The banks trust our valuations.
00:13:07:12 – 00:13:33:14
Dr. Rod Strickland
We’ve been doing this for over 30 years. We have over 1500 dental transactions that we’ve done over 30 years. So we’ve got a tremendous amount of, of, experience in the market. So from valuing the practice to giving advice to the dentist before they’re ready to sell on how to maximize the value in the practice. And then once it comes through, you know, basically what you’re selling is goodwill.
00:13:33:20 – 00:13:51:05
Dr. Rod Strickland
That’s the majority of what you’re selling. And if the transaction doesn’t go smoothly, then you’re really cutting into that goodwill and going with a practice broker that knows, you know what they’re doing and has been been and done this, they’re going to be able to help make the process smooth.
00:13:51:07 – 00:14:15:21
Dr. Richard Offutt
Jimmy, so you touched on something you said. You said sell side representation, right? Okay. My my friend over here, doctor Chacon wants to buy a practice and he reaches out to you. So is this, in the transaction? Is the brokers allegiance to the seller or to the buyer, or do you try to straddle that line?
00:14:16:02 – 00:14:57:07
Jimmy Studzinski
So that’s a great question. And specifically the company that I work with, we are sell side representation only. And that’s a key differentiator because, you know, it brings this honesty and transparency to the process that if if Doctor Shakun wants to sell his practice, that he knows that, you know, just like Doctor Strickland just said, he’s got somebody in his corner that is going to do everything in the power to ensure that somebody on the buy side is not there, taking advantage of either his his lack of knowledge of of some of the terms or the deals that are put out there, the structures that are put out there, some of the fine line
00:14:57:07 – 00:15:22:09
Jimmy Studzinski
items that that get skimmed over, something that you ask that Khan was, do I need like a sell side broker to represent me or sell side representation, know like that district and said, absolutely not, but you want it. And the reason is that these TSOs have become very, very, aggressive with going direct to dental offices that identify in the market that are very, very attractive.
00:15:22:11 – 00:15:45:20
Jimmy Studzinski
And I can give you a prime example. We had one that got a direct offer in hand listing agreement was ready to go for 2.2. $9 million. Right. And, you know, they were very happy with it. They blew them away. But what was happening was their business development team knew that they had more money to spend, but they came to this doctor and they knew this would be a very attractive offer.
00:15:45:22 – 00:16:08:21
Jimmy Studzinski
But the fact that when once they brought us on board, we kept that that DSO in our listing agreement and said that we can still get more money from them, possibly. Guess who ended up buying that practice for 900,000 more than what they originally offered, just solely based on the fact that the doctor got excite involved in deal sellers had representation.
00:16:08:23 – 00:16:31:17
Jimmy Studzinski
And so to that, Strickland’s point was if 10% of a $3.8 million deal is 380,000, and the doctor received a $900,000 kick up just by bringing us on board, we tripled that that growth just by having our name behind it and understanding the value to bring to the table. So yeah, there’s a lot of facets that go into it.
00:16:31:19 – 00:16:51:14
Jimmy Studzinski
But yeah, there are buyer representatives out there if you want to buy practice. Now, I just had a conversation with Dennis yesterday. Out of out of Austin, who’s looking to buy a practice. And I said, I’m happy to, you know, show you practices that I have listed. But I encourage you to reach out to other brokers who have practices listed.
00:16:51:14 – 00:17:07:17
Jimmy Studzinski
And we went through the whole scenarios of what we talked about earlier. I was on the phone with him for a good 30 minutes, just talking about the types of things you should be looking for in the practices that are in her realm, and those kind of things as far as technology and, you know, what does it look like as as you walk up to the front door, things like that.
00:17:07:17 – 00:17:12:14
Jimmy Studzinski
So I’m happy to have those conversations and walk them through what a good practice looks like.
00:17:12:14 – 00:17:48:18
Dr. Rod Strickland
As Jimmy was saying, to the buyers, we’re not going to represent the buyers, but we’ll give them advice. And how they can put their team together. So that right now it’s such a seller’s market. One of the pieces of advice that I always give to the buyers, because I love talking to buyers. And but the advice is, get your team ready, find an attorney, find a, a good CPA that does a lot of dental practices, find a good attorney who works with dental practices a lot, go ahead and contact a banker, kind of get everything ready on your team and then start looking for practices.
00:17:48:18 – 00:18:12:17
Dr. Rod Strickland
Because when you find that great practice, chances are it’s not going to be on the market for very long. And so if if that practice gets multiple loses and you have one buyer that’s pre-approved with a bank, has a CPA, an attorney all ready to go, and another buyer can’t show that they have done that. Who’s going to have a little more, you know, wait, for the seller, as far as the choice that they want to make.
00:18:12:17 – 00:18:15:13
Dr. Rod Strickland
So so yeah, I like talking with buyers.
00:18:15:15 – 00:18:34:18
Jimmy Studzinski
A lot of times if you go to our website or you go to their website, probably, or any other brokers websites that that have listings up once they’ve hit the market, it’s already been filtered through some of our best buyer pools that are out there, through some of the best networks that we have with with private equity buyer groups.
00:18:34:20 – 00:18:38:18
Jimmy Studzinski
And to be honest with you, it’s been passed on by those.
00:18:38:18 – 00:19:08:21
Dr. Murtuza Shah-Khan
I’m a solo practitioner. Jimmy knows that, my brother’s so about you know, a lot of my friends are solo practitioners in the area. I bought my practice. I’m the third solo practitioner in this practice over 67 years now. But I feel like I’m almost a dinosaur in that, you know, you don’t see the solo practices anymore. And with the changing economics of dental buying, you see a lot more of these groups coming in buying, cobbling together practices.
00:19:08:23 – 00:19:15:18
Dr. Murtuza Shah-Khan
Are you seeing a death of the solo practitioner and the advancement of these group practices?
00:19:15:18 – 00:19:22:22
Dr. Richard Offutt
Right. Let’s not call it the death of, let’s kind of but maybe, maybe the extinction of them, I guess.
00:19:23:00 – 00:19:23:15
Dr. Rod Strickland
There you go.
00:19:23:17 – 00:19:26:14
Dr. Richard Offutt
Yeah, basically. I mean, how many dinosaurs do you see running around?
00:19:26:14 – 00:19:28:04
Dr. Murtuza Shah-Khan
Right, exactly. But.
00:19:28:06 – 00:19:49:06
Dr. Rod Strickland
I’ve got maybe a little different, opinion. And some people have on how, how much consolidation there’s going to actually be in the market. Some people are saying, you know, the market’s going to get 70% consolidated, meaning that, you know, of all the dental practices in the country, 70% of them will be a form of, in a corporate relationship of some sort.
00:19:49:07 – 00:20:11:20
Dr. Rod Strickland
I don’t I don’t see that as happening. Dentists have always been pretty resilient and push back on things like this. You have to realize that these private equity firms, they’re looking to buy practices, just as Jimmy said, in that one, two, one five plus range. You know, they want to see a certain amount of EBITDA or else they’re just not interested in it.
00:20:11:22 – 00:20:42:13
Dr. Rod Strickland
The average dental practice in the United States is somewhere around what, 700 and $800,000 is the average, so the average practice would not qualify to be a DSO candidate. So unless unless these private equity groups or individual DSO buyers, unless they reduce their standards and they reduce the values, of what they’re looking for, then it’s not going to get anywhere near 70% consolidated when the average practice doesn’t meet their requirements.
00:20:42:13 – 00:21:04:14
Dr. Richard Offutt
I think I think that’s that’s a spot on do what you’re saying. And that, from my own personal experience, we, you know, built the DSO. And the whole time we were doing it, we had to gear it towards what the buyer of our DSO wanted. All right. So the practice had to check all the boxes, had to have a certain amount of EBITDA.
00:21:04:17 – 00:21:28:20
Dr. Richard Offutt
Doc had to be willing to work a certain number of years. But but where there seemed I mean, so we would talk to dozens and dozens of of of doctors and we go, man, that was a great guy. But he doesn’t check all the boxes, right? So it seems that there’s a tremendous amount of value out there in the practices that don’t check all the boxes, right?
00:21:28:22 – 00:21:56:16
Dr. Richard Offutt
You know, you know, so maybe for our listeners, maybe what the goal is, is to have you guys find, a practice that’s $700,000 practice that if they introduce technology, they get with Jimmy sort of people, they bring in, you know, they digitalize all the records. They, you know, they start doing some, some CAD cam, restorations that they could easily get, you know, computerize your hygiene recall system.
00:21:56:16 – 00:22:23:03
Dr. Richard Offutt
So it’s not all going through file cards. Yeah. Probably could take that practice from that 700 to $1 million pretty quickly. But that’s not that’s a whole nother subject. Yeah. One of the things that I wanted to talk about and I, rod, I you might have touched on it. Jimi is okay. These young, young guy now coming out of a residency program, you know, somebody that’s coming out of, like like doctor.
00:22:23:03 – 00:22:51:07
Dr. Richard Offutt
Seconded. He’s been an associate, and he’s he’s looking for these practices. And I think, rod, you said it about getting pre-qualified and so forth. My question, my question really to you all is what what ground game. So we have one of our is what ground game do they need to do to get ready to buy a practice. Other words should they should they identify their lender?
00:22:51:07 – 00:23:12:03
Dr. Richard Offutt
Should they. You know, one of y’all said, you know, get your CPA in line. Get you know, it’s not a natural thing when you’re coming out of residency to to know a CPA, to know, you know, an attorney to, you know, you’re moving to you don’t know even what town you’re moving to. And so it’s very hard to to kind of get that team around you.
00:23:12:03 – 00:23:24:12
Dr. Richard Offutt
What are y’all thinking about that should you should you should you get connected up with the lender ahead of time? Should you get connected up with the attorney that does dental practice transition? Should you do you know, what are y’all suggesting on that.
00:23:24:16 – 00:23:26:13
Dr. Murtuza Shah-Khan
Yeah. And do y’all do those services.
00:23:26:16 – 00:23:44:00
Dr. Richard Offutt
Yeah yeah. Can you guys do turnkey stuff with in your types of businesses or do you refer or you have the the buyer bring that to the table on their own? I guess, as well as sell side representation there probably have to bring it to them themselves for legacy.
00:23:44:00 – 00:24:07:06
Dr. Rod Strickland
What we do, where our fiduciary duty is with the seller, you know, we are there to help the buyer. And we will refer to them, you know, the CPA that we know understands dental deals and has done dental deals before. The same with the attorney, and the same with the bank. So, yes, my recommendation is get those three people on your team, ASAP.
00:24:07:06 – 00:24:39:11
Dr. Rod Strickland
We are about legacy practice transactions is about a fair deal. It has to be a fair deal to both the buyer and the seller. And the seller can’t walk away winning everything, and the buyer can’t walk away winning everything. So we like to work with CPAs and attorneys that also have that same, you know, that same mindset that, yes, they’re going to they’re going to advocate for their client, but they also realize that they can’t advocate they can’t be a pit bull and advocate so hard that it ruins the deal and ruins the goodwill of the of the deal.
00:24:39:15 – 00:24:41:13
Dr. Richard Offutt
Jimi. What what what are your thoughts?
00:24:41:15 – 00:24:48:00
Jimmy Studzinski
No. At all. That is, is is dead on. You know that I agree with 100% is is to formulate a team.
00:24:48:00 – 00:25:06:22
Dr. Richard Offutt
I like that idea that both of you are saying I think and this is something that that for the the folks listening to us today, I think the takeaway is, is build your team. Yeah, build your team and be ready to play the game rather than rather than staying on the sidelines. And then then oh my gosh. Oh my gosh.
00:25:06:22 – 00:25:10:23
Dr. Richard Offutt
Oh my gosh I need to I need to get this I need to get that. But to build to build the team.
00:25:11:00 – 00:25:34:16
Dr. Rod Strickland
You know, my advice to the young dentists that are coming out and and starting and getting in there, associate chips, you know, produce as much as you can produce and be frugal with your money. Save some money so you have liquidity. Don’t go out there and buy the expensive cars. And the expensive houses, you know, and so keep your consumer debt at a reasonable amount.
00:25:34:18 – 00:25:49:02
Dr. Rod Strickland
And don’t worry about your student loan debt, because every dental student has it. If the banks held up on on student loan debt, they wouldn’t be, you know, they wouldn’t be lending money to to half of the people buying practices. Three course of the three fourths of the people buying practices.
00:25:49:03 – 00:26:08:10
Dr. Richard Offutt
Rob that that’s that’s excellent advice that that that really is because I think that is what frightens frightens I think frightens a lot of young dentists is they have the school debt. And I think you’re that your advice on on that is, is is really, really fantastic. I wanted and.
00:26:08:10 – 00:26:11:17
Dr. Murtuza Shah-Khan
Also they don’t buy the the flashy car when you get all this stuff.
00:26:11:18 – 00:26:34:08
Dr. Richard Offutt
Yeah yeah yeah that that that that that that may be the key to the whole dance. Well I want to change gears here just a little bit. Okay. So we’ve been talking about the, the, the the, the young dentist coming in buying a practice that, you know, I want to talk a little bit about the dentist that says, okay, guys, I’m five years out from selling.
00:26:34:10 – 00:26:54:15
Dr. Richard Offutt
I’m three years out from selling. I’m 12 months out from selling. What steps should they be taking to get their ducks in a row for, you know, kind of and we obviously we could talk about this for hours, but just just in a, you know, Jimi, what do you think? You know, the doc’s three years out from selling.
00:26:54:19 – 00:27:14:07
Dr. Richard Offutt
What should he be thinking, doing to make it so that when when he calls you out and goes, Jamie, boom. Let’s pull the trigger, then. Then he’s ready to go. I’m not and I’m not. I’m not talking about emotionally, you know, or any, you know, or hanging on any of that stuff. I’m just talking about fundamentals in the practice.
00:27:14:12 – 00:27:30:08
Dr. Richard Offutt
What do you want these docs to do to and and Ron, I’m gonna give you the same I’m gonna give you the same question because I think that’s very important. What do you want them to be doing 36 months out, 12 months out, so that they are ready to go so that you’re not, like, doing a clean up on aisle six?
00:27:30:10 – 00:27:50:06
Jimmy Studzinski
The biggest thing is no different than when we talked about the new buyers is you need a team. You need that team in place. It doesn’t matter where you are in your career is go ahead and get a practice evaluation. We call it a recast. And basically what we’re going to do is we’re going to look at 2 to 3 years of financial statements, tax statements for the practice.
00:27:50:11 – 00:28:04:11
Jimmy Studzinski
We’re going to look at panels. We’re going to look at cash flow. We’re going to look at your trailing 12 months. And we’re going to identify, hey, you know, because the same thing is buying a practice. You got to know your buying power. You also need to know what is your selling power.
00:28:04:16 – 00:28:23:13
Dr. Richard Offutt
Right before I flip it over to you, I think I think, Jimmy, I think you, I put I did a post, not long ago on our, our Facebook thing where it says, get the boat out of the practice. And I think you commented on that one, so. Right, right, so, so right before I flip it over to you for that same answer, any other I put these these things.
00:28:23:13 – 00:28:44:07
Dr. Richard Offutt
I did one on trailing 12 months and a couple of other things. So, so, I, we welcome any comments you want to make on our Facebook things to our post. Right. It so Jimmy’s Jimmy’s been very, very generous with his time and and and material. So so rod what is your advice to a to a doc who’s you know, he says, you know, I think I’ve got plenty of money, right?
00:28:44:07 – 00:28:58:14
Dr. Richard Offutt
I think, you know, I think I’m gonna be fine, but I just want to do the best I can do on the sale of this thing. You know, the practice means a lot to me, and I want to get. I want it to be a fair deal, but I want to do a good job with it. What is your suggestion to him along those same timelines?
00:28:58:14 – 00:29:01:05
Dr. Richard Offutt
You know, five years, three years, one year type of thing.
00:29:01:07 – 00:29:08:21
Dr. Rod Strickland
Starting early is always key. I completely agree with that. We have a product we call a legacy protection plan are perfect.
00:29:09:02 – 00:29:22:14
Dr. Richard Offutt
Let me ask you both in a very few words. Doctor Strickland. Well, what would your takeaway be for our listeners on this podcast tonight? Yeah. You know, in a few words.
00:29:22:16 – 00:29:24:21
Dr. Rod Strickland
I’ll be hard to do it in a few words, but I’ll try.
00:29:24:23 – 00:29:26:05
Dr. Richard Offutt
Well, we believe that.
00:29:26:07 – 00:29:27:02
Dr. Murtuza Shah-Khan
We’ve done well.
00:29:27:07 – 00:29:32:10
Dr. Richard Offutt
Yeah, we talk for an hour, so it is hard to wrap up. What would be your take away thought for our listener?
00:29:32:13 – 00:29:54:22
Dr. Rod Strickland
I think it is, start early, get a team together, you know, put experts on that team, and, you know, really understand what your end goal is going to be, whether you’re a buyer or whether you’re a seller. I would suggest working with a transaction firm. That has a great reputation the way ours and excite does.
00:29:55:00 – 00:30:00:11
Dr. Rod Strickland
And, you know, start early and, and, put the right people on your team.
00:30:00:12 – 00:30:00:21
Dr. Richard Offutt
Jimmy.
00:30:01:01 – 00:30:27:03
Jimmy Studzinski
Jimmy, my my last words of advice for anybody listening would be, you know, reach out as soon as possible, establish a relationship with, with a sell side representative. And like we said, whether you’re a buyer or seller, reach out, establish that relationship as early as possible so that there are no surprises. Because like you said at the beginning of the call doctor office, one of the big surprises is, hey, you know, there’s a there’s a 10%, commission that goes with this.
00:30:27:03 – 00:30:45:16
Jimmy Studzinski
And we don’t want that to be a surprise, but we also want to show where that value comes from. Once you establish a relationship and understand the value that we’re going to bring to the table, and you’re ultimately going to be the winner of this, you know, whether, you know, a lot of times we negotiate that it’s anywhere from 7 to 10%, but that’s not a big surprise.
00:30:45:16 – 00:31:00:22
Jimmy Studzinski
And you understand why that commission is paid once the deal happens. Right. And I think that’s a big part, is we bring value to the table from anywhere from the middle of your career to the end. So reach out, establish a relationship, and let’s start talking.
00:31:01:00 – 00:31:21:04
Dr. Murtuza Shah-Khan
Guys, this has been great, Rod. Jimmy, really appreciate you guys taking the time to join us with this. It’s some solid take home messages that yeah, hopefully our listeners will really take heart too. I can’t thank you enough for joining us on the Simplified Dentistry podcast. And please join our Facebook group and check us out on some of our Dotcom and Dentistry.
00:31:21:05 – 00:31:43:20
Dr. Richard Offutt
And Post and we welcome what you have to say. Yeah. You know, I mean, I put one thing out on trailing 12 team and and I was stunned how many people were talking about it. So every little nuggets of information. Yeah. You know, I realized when I said less than 20 words that neither of you had that ability, Bobby Ray or myself.
00:31:43:21 – 00:31:49:12
Dr. Richard Offutt
Right. We have so much to say, so much to. Sorry, but, guys, great to see you. Thank you so much.
00:31:49:12 – 00:31:54:02
Dr. Murtuza Shah-Khan
Thank you so much. And, look forward to catch up with you guys again.