March 20th, 2023
Episode 150: LEAKED! What Is the Lampa Dental Group?
“Why did we develop that? Well, people asked. And this is the next step.” ~Dr. Bruce B. Baird
When enough people ask for it, we build it. That’s a driving force of PDA.
In the past few years, we’ve had a lot of people come to us and ask us what’s next. Well, the next step is driven by the consolidation of the dental market. It’s my guess that you have gotten an offer from a DSO for your practice. In fact, I’d be more surprised if you haven’t.
And that may be all fine and well, but what makes me sick – makes me physically ill – is seeing dentists sell their practices for less than their true value and lose control of the businesses they worked so hard to build. This is why we created the Lampa Dental Group.
You probably have some questions! And I am here to answer them today on this episode where I share:
- The driving force behind creation of the Lampa Dental Group
- What our plans are for the group
- What participation might mean for the long-term value of your practice
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Hi, Dr. Regan, Robertson, CCO productive dentist Academy here and I have a question for you. Are you finding it hard to get your team aligned to your vision, but you know, you deserve growth just like everybody else. That’s why we’ve created the PDA productivity workshop. For nearly 20 years PDA workshops have helped dentists just like you align their teams, get control of scheduling, and create productive practices that they love walking into every day. Just imagine how you will feel when you know your schedule is productive, your systems are humming, and your team is aligned to your vision. It’s simple, but it’s not necessarily easy. We can help visit productive dentists.com/workshop that’s productive dentist.com/workshop to secure your seats now.
Dr. Bruce Baird 0:47
The next thing and member built and driven PDA, but the next thing that came up is transitions. We have doctors that have sold their practices to Heartland like me, we’d had offices sold and be too we’d have offices that are selling to what I would call unscrupulous people out there in the marketplace. People who are great salesmen that are making people think it’s going to be a good deal. And they’re basically getting ripped off. And I’ll be honest with you, it makes me sick makes me physically ill to see what’s happening to some dentists. And it’s happened to a couple of our dentists and we decided we’re not going to do that. We’re going to actually put together a group Hello everyone, this is Dr. Bruce B. Baird and you’re listening to the productive dentist podcast in this podcast. I will give you everything that I’ve learned over the last 40 years in dentistry working with 1000s of dentists I’ll tell you it’s not that my ways the only way it’s just one that has worked extremely well for me and and I’d love to share that with you. So you too can enjoy the choices and lifestyle the productivity allows more time for things you love increased pay better team relationships, and lowered stress. Let’s get into it with this week’s episode of the productive dentists podcast.
Dr. Bruce Baird 2:17
Hi, this is Dr. Bruce Baird with productive dentists podcast. Looking forward to today’s conversation, or today’s podcast. We talked about productive dentist Academy last last podcast and what I’d like to do is to talk about the evolution of PDA. And I said last time we’re we are member built and driven because we’ve had over 1500 dentists come through our programs over 19 years. And, you know, we went from, you know, just doing a seminar for doctors to doing a seminar for doctors and their teams, to actually doing coaching in office to to building an entire marketing company that does full, full marketing for practices. And when people have asked, you know, when enough people ask them we do we develop something new to offer to our members to our to our clients. And that’s really where you know where IGP came in investment grade practice. And after I sold my practice, what is an investment grade practice? Well, first of all, I’d recommend that you go listen to the IGP podcast that my partner Victoria Peterson does, that is another fantastic podcast that will tell you a little bit about it. That’ll tell you everything about it. But what I want to do is explain why, you know, why are we doing something called investment grade practice? Well, PDA, the productivity workshop, we can help grow your business productively, you know, you can produce more, you can collect more, but we really don’t look into things that affect your EBITA or your profit. Now, most of our practices before now they get much more profitable. There’s no doubt. But IGP looks at what happens if you walk away from your practice. Does this practice self sustainable? You know, when I left Granberry Dental Center, I thought the whole place would implode. But we had great team great training, we had all the parts in place. We had everything going. And my partner, my partner, Jeff, Jeff bluesky, I mean, his production prior was x mine was probably double that guess what, when I left his production double, he started working with my team and he started working you know, so that is one an investment grade practices. But we began to look at EBIT at what are things that we can do to shave costs, what are things that we can do to increase profits? See whether it be and it may be increasing your Marketing to Increase your your overall revenue. Some people need that some people are way overpaying for supply costs way overpaying for lab way you know and and just don’t have that understanding. But our Doc’s as they’ve come through, we have developed this program, and it is a separate workshop that we’re doing during the PDA workshop. So we will actually have doctors coming to In March the second, third and fourth, I think it is, we’ll have doctors coming and there’ll be attending the productivity workshop. Most of those are new Doc’s. But we’ll have a couple 100 people there and most are new Doc’s and workshop, although we do have what we call repeat offenders, people who come back and just want to hear it again, maybe in three or four years, and they want to just re, you know, re energize themselves and re energize the team. And then in a separate room, we’re going to have the IGP the IGP group or workshop or platform is a series of speakers has PDA Doc’s of what they’ve done to control expenses where you know, where they you know what they look at. And then our group will go through and say these are the these are the highlights, these are the items that we want to see do better. And again, workshop environment we’re looking at, we’re looking at actual things, and there’s lectures and everything else. So why did we develop that because people asked us to do that. The next thing and member built and driven PDA, but the next thing that came up is transitions, we have doctors that have sold their practices to Heartland, like me, we’d had offices sold and be too we’d have offices that are selling to what I would call unscrupulous people out there in the marketplace, people who are great salesmen that are making people think it’s going to be a good deal. And they’re basically getting ripped off. And I’ll be honest with you, it makes me sick makes me physically ill to see what’s happening to some dentists. And it’s happened to a couple of our dentists. And we decided we’re not going to do that we’re going to actually put together a group, you know, because DSOs are out there consolidation is happening, it’s going to happen 65 to 70% of the market, which means 30%, the market is going to continue on just the way they always have 70% will be working for a DSL, or working for you know somebody else. And you know, Is it concerning? Well, yeah, it is. But like I say I sold 12 years ago. Now, if I would have waited, my 5 million would have been worth 20 million now. So did I make the right decision? Hard to say yes. And now. But what Lampa Dental Group is, and Lampa the word lamp comes from my grandfather. My team didn’t tell me they were doing this. But my grandfather was a dentist in New York City was best friends with Babe Ruth, they ran around together for 30 years. And he was a big influence on me becoming a dentists. And so my team thought this will be awesome. You know, let’s call it the lamp. But they didn’t tell me a thing. And last September, at our meeting, they announced at the IGP workshop, that we are now introducing the new lamp, a Dental Group. And what lamping Dental Group was formed for is for the aggregation of practices. So what does that mean? Well, when I sold the heartland Heartland bought 100% of my business, okay. And I made 25% of collections Well, before I was making 40% of collections. But they offered me you know, a lot of money. And I was like, okay, didn’t didn’t know the details didn’t know all the stuff. I just said yes, that’s a lot of money. So what I see is I see dentists, with 10 offers on the table that have and this is true story that had 10 Different evidence. And then these doctors in our Doc’s would come to us and say, Well, I’ve kind of 5x Well, I got an 8x Well, it really depends. And I’ve talked about it in past podcasts. If I tell you your EBIT is 150 I can pay you a million, and it would be a six plus x. But if I told you your EBA was 250, which is probably more accurate. I tell you, you’re getting a 4x So it’s a game. You would never let the people who are buying you figure out your profitability, and that’s what’s happening across the board with DSL. I mean, that’s what’s going on. So what we’ve done with Lampa Dental Group I we announced it in September we actually have 38 offices. Is that our PDA offices, which the practice brokers and the investment bankers that we’re working with have said, These practices are unicorn practices. They’re amazing their profitability is our average profitability or EBIT is 23. I think 23.7 of total. And I would say what we would look for is 25% as being like, unbelievable. But the average across the industry is about 15% 15% of your collections that you do yearly, is EBITA. And so our practices, you know, pick up another eight 8%, which is huge when it comes to multiples, when it’s huge when we’re looking at this. And what did we want to do by aggregating our offices, and we’re going to, we’re doing an initial challenge of offices that are going to sell, but they’re going to sell in a joint venture with some hybrid where you may be able to buy into the DSO itself. We’re not sure totally unstructured yet. And I’m just being honest with you. But these offices over the next three weeks will be signing a letter of intent, an LOI still doesn’t lock them in, and two, we entertain private equity groups. And my guess is we’re going to have between 50 and 70, private equity groups bidding on our group of unicorn practices. And the other thing is, when Heartland buys me at a 5x, or a 6x, multiple,
Dr. Bruce Baird 11:31
it’s immediately worth 14 next to them. How is that? Well, because they’re going to recapitalize their investment. The next time they do that with a net new private equity group, they’ve gone from the teachers union to to KKR. And you know, they keep going to the bigger and bigger groups, and they’re, they’re monetizing that. So I worked my whole life to get a 6x and make it 8x, just for being around. And unlike that, and so that’s where the lamp and Dental Group, we’re looking at, probably somewhere around a 10x Multiple for the first purse go. And with an effective multiple of probably around nine, what does that mean? It’s about 1%, I mean that 10% of the total transaction is going to be fees, lawyers, attorneys, all that stuff. But to get a 9x on your first bite. There’s nobody else why are we doing that? Because I want the dentists we’re going straight to private equity. I was told when we put this together that, hey, you know, what are your options would be to sell to heart? And I said no way, sell to me? No, I don’t want to sell to anybody else. I want this to be for our doctors and our doctors are going to be part of our board of advisors, we’re bringing in a board that is second to none. In the industry. We’re actually in the process now of doing all these things. We’re building a platform for the DSO. And these are the things that we’re working on right now as part of lamp a dowel group. So our first tranche of 34 practices, which again, are unicorn practices, we’re going to have somewhere around 25 million and EBITA. Well, is that a lot? Is it not? It’s an enormous amount for another office for another DSO to get 25 million, and even if they may have to buy 120 offices. The one other thing that we have that’s going to be very unique, is we are making in to, to the sale on everything else. And so we were going to monetize our work is we’re baking in coaching. So you will have five years of coaching, which we know that our coaching clients grow at an average of 13.3% year over year, that is significant. Private Equity loves that. That’s why why are we getting such a great multiple, the second multiple who knows the second event, who knows it’ll be down the road, my guesses will be three to five years, probably closer to three. But that next multiple we believe will be 14 Plus, a friend of mine just did a deal that they got an 18.3 Multiple so we’re somewhere in that neighborhood. Private equity is continuing to love dentistry. They are going to continue but why would a dentist do this? Why? I’m going to lose control I’m going to lose my practice No, you’re going to continue to do what you love. You’re going to continue to do demonstrate in the Lampa Dental Group you’re going to continue to do it the way you’ve always done it because why why would private equity a bunch of money guys that don’t know shit from cottonseed, about about dentistry, change what you’re doing? And our DSO is definitely not going to change what you’re doing. Now we’re going to help we’re going to find better supplies costs we’re going to find you know world negotiate with your lab we’ll do the things that can help increase your EBIT. But bottom line is you Take yield, as we talked about last time last week, you’re going to take more money off the table, over two, three or four capital events, it will be five times six times what you would take if you just sold it at 80% or 65% of previous year’s collections, which will happen again in another eight or 10 years when consolidation of the dental industry has happened. So I know this has got to give you some questions. I know that you got to be thinking, What the heck, what is this and, but get more information, get educated learn. Ask us questions, Bruce predicted dentists.com. Look forward to look forward to answering those questions. And I look forward to seeing you at PDA or at the IGP workshop. All you got to do is go to productive dentists.com Go through the website you’ll see all the different options and the different things that we have available for you. So thanks again. I hope you guys have a great week and I look forward to next week. Thank you for joining me for this episode of the productive dentists podcast. If you found this episode helpful, make sure you subscribe, pass it along to a friend. Give us a like on iTunes and Spotify or drop me an email at podcast at productive dentist comm don’t forget to check out other podcasts from the productive dentist Academy of productive dentists podcast.com Join me again next week for another episode of the productive dentists podcast