Episode 183 – Are You Going To Sell That: Part 2
“A lot of dentists who are wanting out don’t like the business side of dentistry. That’s easy to fix.” ~Dr. Bruce B. Baird
What’s the difference between $2 million and $5 million?
Well, if we’re talking about the value of your dental practice, those numbers could make a huge difference in what your future looks like.
In my experience, I’d say about 5% of dentists are really good at business. Most of us don’t get into this industry to be business owners. We just want to practice dentistry and help people.
Here’s the problem: many dentists right now are getting numerous offers for their dental practice. Maybe you’ve gotten a few of your own and are contemplating selling. I bet some of those offers look attractive.
The sad truth is there’s not a lot of people who are on the side of the dentist. So I want you to think about something: is it time to sell your practice or is it time to increase your business and leadership skills?
I am passionate about helping independent dental practice owners live a life they love today, while ensuring they get the most value for their business. My greatest wish is that you are aware of what you’re facing, so you can make the best choice for your financial future.
So, I am continuing this series on selling your practice with a few real-life stories that will help you understand:
- What to be aware of when you’re looking at offers for your practice
- How to ensure you’re getting max value for your practice
- Your business so you can make smart decisions for your financial future
Dr. Bruce Baird
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 way is the only way it’s just one that has worked extremely well for me 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 Dentist Podcast.
Regan Robertson here, with Productive Dentist Academy. Get ready to join your favorite podcast host Dr. Bruce B. Baird, Victoria Peterson, Dr. Chad Johnson, and myself Regan Robertson at the nation’s number one dental business course that guarantees practice growth. That’s right, full emergency ease so you can consistently produce more, and align your team for results without compromising excellent patient care. Productive Dentist Academy has a special running this month that you can activate immediately. It’s called the PDA productivity bundle and we put this together so that you could attend this workshop which is happening from September 22, to the 24th in Frisco Texas at the Hyatt Regency along with tools to make sure that not only are you getting a great education on how to increase your productivity, how to communicate better with your team and your patients, increase your case acceptance, authentic market practice and more.
You also get a two-hour business advisory session before the workshop to really get clear on what matters to you most, so that you can be set up for success at the workshop and following the workshop, you get 12 months of access to PDA on demand. That is the entire productivity workshop on demand for you to make sure that you are doing everything you can in your power to soak up all of that see and implement it come Monday morning, the next month, and the next month and the next month for 12 months down the line. Registration is now open. The tuition cost is $2,195 which is ridiculous because it’s regularly $5,528 for the productivity workshop attendance to our business advisory session and 12 months of access to PDA on demand, hop on over right now to www.productivedentist.com/workshop to grab your registration today again, that is www.productivedentist.com/workshop If you cannot wait and you have to have it right now, email Brent email@example.com. That’s Brent, firstname.lastname@example.org and we will save you a seat. I look forward to seeing you there.
Dr. Bruce Baird
Hi, this is Dr. Bruce Baird with The Productive Dentist Podcast this is part two of you know have a conversation and I don’t know how many parts we’re gonna have until I guess I get finished talking about it but that might be two parts or it might be five parts but in the last podcast for those who listen to it, you know, we talked about those dentists that are, you know, thinking about selling or the dentist who doesn’t like dentistry and is selling and certainly understand that I just wish for those Doc’s they hadn’t had to go through dental school to figure it out but most of those people it was about the business part they didn’t like and truthfully, that’s something that’s easy to fix, and then there are the dentists that get to the end of their career and they haven’t built the type of value that they really want to build and it really comes down to EBITA and I’ll tell you a story. We have a doctor that we worked with Productive Dentist and we’ve always focused on production per hour. Now our focus is starting to shift towards an Investment Grade Practice.
My partner Victoria is writing a book called The Investment Grade Practice. I’m writing a book that will be coming out here in about six weeks called legendary leadership and the combination of those two things can allow you to build a pretty amazing and amazing business but we’re now focusing on EBITA and we see doctors, and again, we get probably 1515 offers a month when I say offers their offers to doctors that we know doctors that would like for us to evaluate their offer because there are not many people out there that err on the side of the dentists. There are all these corporate America guys who are making these offers and two stories, number one, the dentist who brought us the offer, and they were getting a 5x Multiple and they said, “You know, I’m really excited about this. They’ve offered me $1.5 million,” and we went, “fantastic. I mean, that’s great. Is that good for you and your family and everything else?” They say, “Oh, yeah,” and that so we evaluated their numbers, and we looked at him, and we got, we got all the same information, the DSO goT, but then we run the EBITA are numbered and guess what the EBITA is we’re not the same. the peeps the and I’m not saying every DSO does this because we’ve seen some that are just dead-on right accurate but the DSO gives you an offer, based on an EBITA that they figure out. Now, standardizing this is very difficult, but we look at EBITA as true EBITA and we found out that this doctor’s EBITA, was actually about 60% more than what they would have gotten from that DSO, and what that means when you five exit, you’re talking about double the offer, or triple the offer. So that’s what we do and you can always go to productivedentist.com and sign up and talk to us and let us evaluate your offers because I think that’s critical. The other thing is why, you know, again, why are you taking that offer? Why are you leaving dentistry? Are you at are you 55, 60 and you’re you’re you’ve done well financially, and you’re ready to retire? Great. Still, let us look at your stuff, so we can get you the max value.
We had a recently a doctor in her late 40s and I say recently, about four years ago, she came to us and this is what can happen for that doctor who’s not ready to sell but she came to us and her practice had an evaluation, great dental practice, and just great clinical skills. Our practice was worth about $1.7 million in sale price. She worked with Productive Dentist Academy for a little under four years and we took her EBITA and the growth and evaluation of practice from 1.7, she just sold that practice about I think seven months ago for $6 million. So if you’re in that time where you’re like, “Okay, I am not quite ready to sell because I haven’t really planned financially for my future, I haven’t really planned the way I really thought I planned I got I’m so busy going to see and continue to add and learning all of the new techniques and new technology and now I’ve come to this place in my career, where I really need to what we say in Texas make hay while the sun shines.
That’s where Productive Dentist Academy can make a huge difference and we can help you grow that but the things that I’m telling you here, these are the things that you need to be aware of you need to know that, you know, on the one hand, you may be getting an offer from someone that’s not it’s not your true EBITA and most dentists, you know, bless us but, you know, we don’t have a whole lot of business sense. I mean, there I’d say 5% and the 95% just love being a dentist and we’re working hard and everything else. Let professionals look at it. One of my really good friends now works with us. David Pora, Dr. David port David is got his doctorate, he worked with me as CEO of Compassionate Finance but David, after he left Compassion went and got his doctorate and his thesis was on job satisfaction of a dentist in a DSO amazing information but he was also part of a DSO, a large DSO where they were making offers to people and so he evaluates most of these offers and is able to look at them and compare truly apples to apples, you know, oranges to oranges and that’s really what you need and we feel like in the, you know, we’re making this change in direction. It’s not really a change in direction. We’re going to continue to help people increase our production we’re gonna continue to help teach people to communicate better and communicate in different ways that lead to success, continue to teach people how to become better leaders. in their business, but this is the one thing that now we can look at your practice and we will know your EBITA every single month, meaning, you’ll know if your EBITA is growing, you’ll know if your EBITA is going down, you don’t know and when it’s time for you to sell when you look at it and say, you know because as even it goes up, guess what happens, the multiples go up, you know, if your practice is doing a million, you’re gonna get a different return different multiple on your business than if your business is doing 3 million and having said that, what’s the difference between 4x and a million, that’s, you know, if you have million-dollar EBITA, but you know, that would be four million and if you had a $5 million EBITA, and you’re looking at 6x, or 7x. So the numbers get crazy, a small change and EBITA can make a huge change in what revenue comes to you. As you begin to exit dentistry, you’re no longer part of it. I see a lot of dentists that are in their 30s selling, and they’re selling their practice I’ve talked about this several times on the last few podcasts, but they sell their practice. Now, what are they going to do? So they, you know, they got an offer, and they built a business and they got a million and a half dollars and they’re all excited and you know, they decide, I’m going to do a little clinical, and then I’m going to do a little of this, a little of that and maybe they have another business line down. Great. You know, I’ve been down that road where I’ve had other businesses, I’ve always done it in conjunction with my own practice but for whatever reason, that’s the direction that they’re going, but what ends up happening is a million dollars in 2000, the year 2000. Its value today is about 560,000 and that’s with very minimal, very minimal inflation. What’s gonna happen now is now we’re in 2022, inflation is at 8% 8.4% but that’s because they changed the rules back in the back in, I think it was like, in the 90s, they changed the rules, inflation today, if you compared it to 1981, it was the worst inflation, except now we just passed that, if you compare it with the real numbers of the same timeframe, our inflation probably is closer to 15%. People are suffering, it’s gonna affect your dental practice. So you sell your practice for a million and a half, and you find out eight years later, 10 years later, 12 years later, which hopefully, you’re still going to be around that value of that practice is not worth near what it was. So what I’m telling you is, let’s look at your practice. Let us help you let me help you determine is this a good time to sell? Is this the right time to sell?
Am I getting maximum revenue for this? Am I getting? What this is worth? Do you know what it really truly is worth or am I getting what a DSO is willing to offer? And so that’s where we can help guide you down the road because there’s really not a lot of people that are guiding people, I know dental nachos, those guys are doing a lot of really great stuff but there’s just they’re few and far between most of the brokers out there that are selling to the DSOs that are, you know, aggregating practices selling DSOs. You know, they get, you know, they may have two or three out of 10 that come to them that are really ready to sell and so we’ve got a built-in mechanism to help dentists to help build, they’re there, even if they’re not happy. Not all that happy with the dentistry part. You know, we’ve got ways that we can help you along those lines but that’s something you’re gonna have to do on your own but if you’re unhappy running the business, don’t sell just because you think your F fo mo FOMO, you know, your fear of missing out, don’t just sell because of that. Now, there are some people that are really high up on Facebook, maybe they’ve sold their business, but they’re also getting back in revenue from the DSOs and have sold them sold to by bringing more dentists to them. So that’s great. I mean, if that’s their business model, fine, but what I’m telling you is you don’t have to just get in line here. You don’t have to be like, “Oh my gosh, my friend just sold her DSO, maybe I should do that. That was really smart of them.” Every single practice is different. The practitioners are different they have different you know, you guys have different wants different needs. Every, every time you look at EBITA Well, it depends on how you calculate it, if you think it would be a pretty standardized thing, but it’s actually EBITA is only the fourth most popular way of valuing a business but that’s what all the DSOs was even, you know, is that because they can manipulate it more, is that because I don’t know, I mean, that’s up to someone else to decide. I’m not, I’m not going there. So anyway, these are, these are the things I want you to be thinking about. It’s time. Is it time to grow your business? Is it time to increase your leadership skills? Is it time to increase your communication skills, all of these things can be handled, and they can be handled, I won’t say easily, but they can be handled with just a little attention to detail.
Everything is an intentional activity, when it comes to, to practices that I like to work with, we help you do that, you know, we’re gonna give you some intentional things to do, your valuations are gonna go up and you’re gonna find that your back and join Denisha we’ve done that with a bunch of dentists where we increase, their communication skills, increase there, you know, leadership skills, increase their business skills, and made it automated, so they’re not having to worry about it day in and day out and guess what, they ended up practicing another 10 years, another 15 years. Why? Because they actually love doing what they love doing. I mean, I know, you know, I’m busier now since I’ve clinically retired than I’ve ever been and I don’t want to retire necause, you know, most of my buddies are retired. You know, and I want to be active, I want to keep thinking about things and keep coming up with new solutions and new ways of doing it. So that’s the Productive Dentist Podcast, please tell your friends about us and, you know, I look forward to our next time you go to productivedentist.com and ask questions, you can send me a message at email@example.com I’m more than happy to reach back out to you. I don’t type fast, but I will reach back out to you. So again, look forward to next time.
Dr. Bruce Baird
Thank you for joining me for this episode of The Productive Dentist Podcast. If you found this episode helpful, make sure you subscribe and pass it along to a friend. Give us a like on iTunes and Spotify. Or drop me an email at podcast@productive dentists.com Don’t forget to check out other podcasts from the Productive Dentist Academy at productivedentist.com/podcasts/ Join me again next week for another episode of The Productive Dentist Podcast