May 29, 2025 • 22 mins
A sellable practice runs smoother, earns more, and stresses you less. But what does it mean to have a sellable practice? In this episode, the DPH coaches share the seven signs your practice is sellable and explain why you should build a sellable practice even if you never plan to sell. Learn how to increase the value of your practice, what metrics matter to buyers, and how long it takes to make a practice sellable. Tune in to find out if your practice checks all the boxes of a sellable practice!
Topics discussed in this episode:
- The benefits of building a sellable practice
- What healthy businesses have in common
- Characteristics of sellable practice
- How long it takes to build a sellable practice
- Increasing the value of your practice
- When to sell vs. keep building
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Have you ever considered selling your practice
?
Well, even if you never plan tosell, this is a question you
should be asking yourself,because a practice that's built
to sell is more profitable, moreefficient and gives you, as the
owner, a lot more freedom.
In today's episode, we'retalking about why sellable
doesn't necessarily mean it'sfor sale, and what you can do to
(00:23):
make your practice moresellable, and the surprising way
we instantly increase the valueof our practices.
And then you'll find out ifyour practice is ready to sell
with Dr Henry's seven-pointchecklist.
Let's get to it.
You are listening to DentalPractice Heroes, where we help
you to create a team andsystem-driven dental practice,
one that allows you to practiceless and make more money.
I'm Dr Paul Etcheson, a dentalcoach, author of two books on
(00:46):
dental practice management andthe owner of a five-doctor
practice in the south suburbs ofChicago.
I wanna show you how beingintentional about ownership can
create a practice that supportsyour life instead of consuming
it.
So if you're ready to create atrue business that runs without
you, you're in the right place.
Let's get started.
(01:07):
Hello and welcome to the DentalPractice Heroes podcast.
I'm your host, dr Paul Edgiston, and I'm joined by my DPH
coaches, dr Henry Ernst and DrStephen Markowitz both very
accomplished business people anddentist practice owners and
we're taking apart just topicsthat we think are valuable for
owner dentists trying to teachyou how to scale your practice,
(01:27):
because I think that's whatultimately we want to do scale
our practice, live better lives.
So today we're going to betalking about how to make your
practice sellable, even if youdon't want to sell, because if
you have no intention of selling, there's still value in making
it sellable.
So I'll go to you first, henry.
I mean just to give thelisteners an idea.
Henry has sold his practiceabout four or five years ago.
(01:51):
We're on to six, six years ago.
I have sold my practice now,four years ago, and Steve's just
still plugging along.
Go, steve, but Henry, what doyou think?
Why should we make our practicesellable and how do we do it?
Speaker 2 (02:06):
Yeah, it's only going to make you better.
It's kind of like theequivalent of you know, when
somebody has their house andthey've had it for a long time
and all of a sudden they'regoing to sell it and all of a
sudden they do all these repairsand all these upgrades that
they never did before when theylived in the house, the owners
look back and say, gosh, whydidn't we do this?
Like four or five years ago?
We could have lived in thisnice thing here.
So it's kind of like the samepremise it's only going to make
(02:26):
you better.
There's a book called A Built toSell and it's talking about.
It's actually the title of thebook is Creating a Business that
Can Thrive Without you.
John Wallerow is the author andI read that long time ago and
it really kind of hit home iswhat we're trying to bring here
is make your business look at itfrom an outside point of view,
(02:50):
make it sexy for somebody who'dwant to buy it.
Obviously we could talk EBITDAand making that as optimal as
possible.
That's obvious.
But I think one point thatreally hit home for me is about
whenever you're going to sellyour practice.
You know, usually they look atwhat's called a T12, the last 12
months of revenue andfinancials and that's what they
based the sell off of.
And I remember about a littleover a year before I sold my T12
came into effect, I took myselfout of the practice.
(03:12):
I went from about three and ahalf or four days a week to two
days a week and what happenedwas most dentists, when they do
that and you tell them,recommend that they get really
nervous and really scared.
Oh my God, my take-home pay isgoing to go down.
Well, what happened was when Idid that, the revenues went up,
the business got better, mytake-home pay was higher and the
people who eventually bought mypractice told me they told me
(03:37):
this after the sale.
They said listen, one of thethings we really gave you a high
EBITDA, we gave you a highmultiple on your practice
because we know that you built atrue practice.
It doesn't depend on you.
The moment you took yourselfaway and the practice revenues
went up.
That was evidence that youbuilt something that didn't need
your two hands Because, if youthink about it, somebody who's
gonna buy your practice islooking for you know what are
their risks.
The biggest risk would be if Ibought a practice that had one
(04:00):
dentist that was producing 80%of everything.
That's a huge risk.
What happens if that dude walksout the next day?
So to make your practice a realbusiness, look at it from all
different aspects, and I know ifyou're not familiar with the
business aspect certainly peoplelike us can help you with that
kind of stuff and try to make itas good as possible, not just
on the looks part of it but onthe financials and the
(04:23):
steadiness of the practice.
Speaker 1 (04:25):
Yeah, I love that analogy you shared.
So what do you think, Steve?
Speaker 3 (04:29):
Any business that is healthy is sellable, and I think
that's what's most important aswe think about this.
What does a healthy businesslook like?
A healthy business is growing.
A healthy business has healthyprofit.
A healthy business takes careof its customers, takes care of
its team members, takes care ofits shareholders, is able to
(05:02):
continue to grow in its revenueand continue to take care of it
all of its stakeholders throughits profitability.
It will always be sellable.
So when we are talking to our,our team members and they want,
they want raises, which is great, but there better be profit
(05:22):
there for us to be able to givethe team members raises from.
Or if we want to invest intechnology or we want to redo
the office, the aesthetics, sothat everything looks up to date
, there better be profit there,or we can't do it.
So, at every phase of yourbusiness, if you're continuing
(05:43):
to grow and you're continuing tobe mindful of your EBITDA
profitability, whatever metricyou want to use, it will always
be sellable.
There will always be a marketfor healthy businesses.
We just are in a market rightnow that we're super lucky in
that it's such a niche market.
We either sell to specificdentists or to specific people
(06:07):
who own dental organizations.
Those are only two people whocan buy our practice.
So there's always going to be aneed if the asset is healthy,
even if we're not selling asellable practice.
Speaker 1 (06:20):
All these goals of sellable practice is just nice
to have.
I mean, who doesn't want apractice that runs without them?
Who doesn't want a practicethat is systematized and doesn't
need you in there for everystep of the way?
Who doesn't want a high profitpractice, a great culture
practice, something somebodycould just buy and just take
over?
And like you said, henry, withyour practice sale, same thing
(06:41):
with mine.
They really liked that I onlyworked two days a week and took
off like 12, 14 weeks every year.
They were like this shows usthat you are not so essential
here.
And I'm like well, I know I'mreally important too, but
because my ego got hurt by that.
But you know, it's like somepeople would say well, I don't
want to work just two days.
I really love the dentistry, Ilove the, but I could.
(07:10):
You've got the freedom to do it.
And I think that's what comesfrom making a sellable practice.
And when I think of sellable, Ithink of systematized
leadership, systematizedleadership systems as far as
systems and protocols, but alsojust it's culture too.
Speaker 2 (07:23):
Well, plus, we all I'm gonna use the house example
Most of us that own a house, nomatter what level we're at, most
of us have a good idea of whatthe value of our house is right
now.
And it's a good exercise toknow what's the value of my
practice right now, today, andthere's different ways you can
go about it.
But I think that's a healthything to do as you go along this
(07:43):
process here, as healthy thingto do as you go along this
process here, as you're buildingit to sell, be careful of what
you build also, becauseeventually this is the and I
know, paul, you were in the samething.
I know, steve, you would be inthe same circumstances we were
in a situation where I couldn'tsell my practice to one dentist.
There's no bank that would everfinance that person for that
much unless they paid cash.
So eventually, like I build apractice so much where I was
(08:06):
kind of limited to only sellingit to an organization Because I
hear this a lot with someclients is some clients say, hey
, I want to do what you did andI want to build my practice,
build it to sell in the next twoor three years and make the
highest amount that I can andthat's fine, there's nothing
wrong with that.
But kind of I always have likethe list of because I've seen
behind the curtain now like whatare these organizations looking
(08:28):
for?
So if you're that type and youwant to make it like a perfect
thing for somebody, you knowthere's certain things they look
for.
They look for a minimum of sixops.
They look for multiple doctors.
They don't want to buy onedoctor practice because there's
risk.
They don exposure.
They want to have high Googlereviews.
They want to have leadershipsystems in place.
They want to have an EBIT of atleast a million dollars.
(08:53):
Right, if you have all thosethings checklist, then you're
going to be one of those types.
If that's your desire to have areally high multiple selling
practice.
So that would be for thosepeople out there that want to
grow and do that kind of thing.
Those are the things that youwould create like, oh, I don't
have a leadership team, got toget that in place, right?
Oh, we don't really focus onreviews, get that in place.
This is all not just the moneypart of getting your house in
(09:13):
order if you're going to buildit to sell.
Speaker 1 (09:16):
That's the kind of practice when you get all those
things, you can go to the marketand when somebody sends you an
offer, you could just look at itand just go get real Just like
a total dick, because you gotthem Like they want you.
That's a great practice.
Speaker 3 (09:28):
I interviewed a doctor this morning and she's
been out for a couple years andwe just started talking and I
was asking her why she waslooking to move on from her
practice that she's been at forthe past couple years and she's
like, I'm just not that busy.
I was like, oh well, how manynew patients are you seeing on a
month, or how many exams areyou doing?
(09:49):
And she said well, my doctor,the owner doctor, my boss,
doesn't really believe intracking those types of things.
He thinks that's too corporate.
And I said I'm so sorry to hearthat.
We definitely track those thingsand anyone who wants to
actually know what they need toimprove should track as much as
they can.
So when we're not making ourpractice sellable, our team
(10:11):
members know that and they'regoing to look for somewhere that
can take care of them the waythey want to be taken care of.
And she wasn't interviewingwith me because he was doing
such a great job.
She was interviewing with mebecause he wasn't.
And I bet there's many otherpeople at that guy's practice
that were doing the same thing.
Speaker 2 (10:25):
I've never seen a successful dentist that does not
know their numbers likeverbatim.
Like you know, we can havethese comments what's your new
patients per month, what's yourprofitability, what's your EBITO
?
As soon as people startanswering every single question
like that, most of the time Idon't see those people because
they're too darn successful.
We see the people where I don'tknow.
Well, do you have any sort ofmetric system that you no.
(10:47):
I run some reportsno-transcript.
So those are the people thatare never going to be successful
.
Speaker 1 (10:54):
Yeah, so true, I'm just thinking I'm going to go to
Henry From startup to sale.
What is a reasonable amount oftime someone could get to that
level where they build it up andthey sell it?
How many years?
Speaker 2 (11:04):
Yeah, that's a great question.
I mean I was I don't know if Iwas lucky or just lucky and
knowledgeable at the same timebut from the day that we opened
the door until the day we had aneight-figure sale was less than
five years.
Now that's not like superrealistic, I think, but it shows
(11:26):
you it can be done and I didn'thave the intention to sell
until I was about maybe eightmonths before I sold it because
I learned the value.
I had somebody who kind of satme down and said, hey, let's
look at the value, let's look atwhat your future looks like.
But I think I think I couldrealistic say seven years is
realistic If you have thesystems, if you have the
knowledge and you actappropriately when the numbers
(11:46):
are telling you something, whenthe numbers are telling you it's
time to expand, when you're atcapacity capacity and I was
really lucky because I wassupercharged and every time we
expanded you know we expandedthree times, really three and a
half.
Every time I was under the sameroof, so I never had to water
down my leadership team oranything like that.
(12:07):
I was always lucky in thatregard.
So maybe if I had to do it adifferent way, maybe I'd say
seven years is realistic.
Speaker 1 (12:10):
Yeah, I think that's a good time frame there.
I mean, for me it was eight.
But then I look back at all theinefficiency and all the
transition points, like bringingon my first associate and then
the expansion from five to 11ops.
How I hesitated, I think, anextra year or two both of those
times.
So I think I probably wouldhave been right around that five
, six year mark.
Speaker 2 (12:29):
And the beauty is again always having options in
life.
And I know you could attest tothis, Paul.
If, hypothetically, in a yearyou want, you know what I need a
challenge in life, I'm going tostart all over again.
I think about it.
Now you've been through thepitfalls, you've had the
knowledge, you've learned fromlike what not to do.
You could probably superchargethat half at least half.
Speaker 1 (12:49):
Yeah, I think I could too, and I think about doing
that sometimes and never pickingup the handpiece, never being
like.
Well, I want to see Dr.
Speaker 3 (12:54):
Richardson, it is important for us to also
remember that the equity that wehave in our practices as
practice owners, we're actuallysupposed to get a return on that
investment.
It's, in theory, it's nodifferent than owning stock of
Google or Tesla or any otherstock that we own.
It's just in our own business,and most dentists think that
when I sell, I die own.
(13:17):
It's just in our own business.
And most dentists think thatwhen I sell, I die.
And you guys are proven factsLike you still go to work at the
same practice that you soldyears ago.
So just because we are getting areturn on our investment and
taking some of that equity andturning it into cash now doesn't
mean that we no longer have togo to that practice or can't go
to that practice.
There are many different waysto do it.
The goal of any investment isto get a return and maximize the
(13:40):
return on the investment.
At the same time, it doesn'tnecessarily mean we have to take
the greatest offer.
I'm sure both of you guys couldhave taken higher offers for
your practices, but what hasallowed you guys to stay there,
I'm sure, is that you sold tothe person or the organization
that aligned with how you wantthe next phase of your life to
(14:02):
look like.
Speaker 1 (14:03):
Yeah, so true.
I think, Henry, you did take alower offer.
I did the same as well.
Speaker 2 (14:07):
Yeah, I had a higher offer but that person they
didn't vibe with me.
The dude looked like thecharacter from Goodfellellas,
the short character, joe pesci'scharacter looked exactly like
him I do too, and a hard fouryeah so, uh, what am I?
a clown?
So yeah, my clown to you.
To add to your point, steve,like now, when I go to work, I
mean all the stuff that I didn'thave trouble taking care before
(14:30):
.
I don't even have to worryabout that.
Sometimes I find like I feellike I go to, I like going to
work more than I ever havebecause I'm just taking care of
the people that I've taken careof for years.
I get all the specialty stuff tome like wrapped up in a basket.
You know I go to work andthere's like three implant case
that's there and I'm meetingthem for the first time, you
know.
And so I like it and it can bedone and it shows you all the
(14:53):
stuff that can be done.
And while we're on the subjectof getting your practice
sellable, if you go through thatexercise, even if you're not
going to sell, it allows you toclean up stuff too, because I
know you went through this, paul.
So when you go through thisprocess of selling, you got to
clean up your books, because thenext person who buys it is not
going to have, you know, whoknows what you're putting on
through your practice.
(15:13):
Some people buy their carpayments or this or that, and
then the next person is notgoing to have that.
So essentially that opens upmore EBITDA that there really is
there, but you're hiding it, ifthat makes sense.
Speaker 1 (15:25):
I probably had $130,000, $140,000 worth of
stuff going through there that Ididn't even realize was there
and I'm like, oh, this countstoo, and they're like, yeah, oh,
yeah.
Speaker 2 (15:34):
So then, when your account produced a report, it
showed a certain amount ofprofitability, but in reality it
was really a lot higher thanthat.
Speaker 3 (15:40):
Yeah, if you're going through it and you have a
hundred grand in credits likethat's probably something wrong
with your AR system.
Speaker 2 (15:47):
So I always think it's important to go through,
know your value, know where yournumbers are at and make sure
that you have the healthiestbusiness that can survive
without you Using that example,if you had $100,000 in just
credits and you said yourself,dude, I need to clean this up,
and you take a year or two toclean that up.
Let's say, hypothetically,we're going to get a 7X multiple
(16:09):
on your cell.
You just cleaned up $700,000,not $100,000.
You cleared $700700,000 frombottom line.
That's pretty good use of yourtime.
Yeah, absolutely.
Speaker 1 (16:21):
Steve, are you ever, um you ever, going to join the
sale?
Speaker 3 (16:24):
club At some point I will.
Uh, I'm still having fun.
This is going to be corny, butI, I still love it and I, um, I
don't, I think you're addicted?
Yeah, probably it's a lot of.
I mean, we talked about therapybefore we press record Um, I,
um.
We are built to to sell um andknow that at some point there's
(16:45):
gotta be someone who is moreequipped and a better leader
than I ever can be, and we'lltake it to the next site.
Um, just start.
I'm just not there yet and I'mI'm enjoying the ride.
So that's what I've told myself.
As long as I'm still having funand I feel like we're doing
good stuff with good people, I'mnot going to stop.
Speaker 2 (17:06):
I think sometimes you see on these forums, why in the
hell would a dentist that's intheir 40s ever sell to a DSO?
Well, you know what?
There's a lot of whys, you know.
For me, it was taking my chipsoff the table and there was all
the risk because every time weexpanded it was always my name
on that dotted line.
I had all the you know, theloans and all this stuff and I
had all the risk because none ofmy other doctors had any sell.
(17:29):
So there's something to be said.
I answer that question withwell, what about me taking risk
off the table and getting tolive the true life that I really
want to and not being tied toan office and having the luxury
to say you know what, with thiscell, I'm gonna live two blocks
from the beach and I can stillgo to a practice two days a week
.
So there's something to be saidabout that, because I think too
(17:50):
many times there's a stigma ofoh, the doctor sold, he's
selling out, he's giving up,he's done.
No, it's like life you can dowhat you want to and make it
your own.
Speaker 1 (17:59):
Well, what's interesting about those posts?
Because they're all over theplace.
I mean, once a week someone isposting, oh, I think, like three
, four times a week, dude, whywould anyone sell and then work
five more years back and stufflike that?
Here's what I say about that isthe people it doesn't make
sense for didn't have a sellablepractice.
You know what it is it's like,because the thing we talk about
your practice and my practice,henry, your whole organization,
(18:20):
steve these are sellablepractices where it makes a lot
of freaking sense.
If you're looking for somelifestyle goals, such as taking
some risk out, liquidating someof the equity in there and just
moving to some different assetsand stuff like that.
I mean there's a lot that makessense for it, but it doesn't
make sense for the solo doc, inmy opinion, who's got a $1
million to maybe $1.5 millionpractice.
(18:41):
That doesn't make sense to me.
That's where I think everyonegets that bad taste with the DSO
thing is the people that arepicking those practices because
I don't see the benefit of thembeing part of a group.
Speaker 2 (18:55):
I just there's not enough scale.
Yeah, the best way that wastold to me is whatever you get
on that day of sale.
If you could be fine with justthat amount and never get
another penny, then you're goodRight.
And all this other stuff ischerries on top.
And knock on wood, myorganization has lived up to
everything they said they weregoing to do and I get nice
bonuses every year, you know,and stuff.
So.
But I think that it's.
It's a bad stigma that's outthere and I see that at least
three or four times a week andeverybody loves to jump on that
(19:17):
bandwagon.
Speaker 1 (19:18):
It's it's frustrating , but I don't even respond to it
anymore.
Speaker 2 (19:21):
That person that had the million dollar practice that
maybe has a certain amount ofEBITDA.
They're probably better offselling to another dentist and
maybe continuing that traditionand maybe staying on board a
little longer, and that's theirwhy and that's what makes them
happy.
Speaker 1 (19:34):
They do the noble thing.
Those people do them.
They do not.
They don't sell the DSO andwhen, when they sell their house
and they get a higher offer,they're like no, I'm going to
take the low offer, cause I got,I got principles and morals.
Speaker 2 (19:46):
I want a dentist to buy my house for a lower amount.
Speaker 1 (19:51):
Exactly, I want to sell for the least amount
possible, because I am going tobe a martyr for this industry,
ladies and gentlemen, and youwill thank me and respect me for
that, and let's just, let'sjust villainize the.
We're the freaking villains,dude.
We're the villains.
So, yeah, I love this episode,man.
I think that was so great.
And, man, I almost want to goback and checklist those things.
I think you listed seven, eightthings, henry, that were just
great.
Go back and listen to that.
(20:11):
The seven things that make yourpractice sellable.
I think those are goals weshould all strive for.
So if you're looking for somehelp to do that and you want to
have a more sellable practice,to live a better life and
possibly cash out, you don'thave to, but you get the freedom
to do so.
If you want to Try working withone of our
Have you ever considered selling your practice
?
Well, even if you never plan tosell, this is a question you
should be asking yourself,because a practice that's built
to sell is more profitable, moreefficient and gives you, as the
owner, a lot more freedom.
In today's episode, we'retalking about why sellable
doesn't necessarily mean it'sfor sale, and what you can do to
(00:23):
make your practice moresellable, and the surprising way
we instantly increase the valueof our practices.
And then you'll find out ifyour practice is ready to sell
with Dr Henry's seven-pointchecklist.
Let's get to it.
You are listening to DentalPractice Heroes, where we help
you to create a team andsystem-driven dental practice,
one that allows you to practiceless and make more money.
I'm Dr Paul Etcheson, a dentalcoach, author of two books on
(00:46):
dental practice management andthe owner of a five-doctor
practice in the south suburbs ofChicago.
I wanna show you how beingintentional about ownership can
create a practice that supportsyour life instead of consuming
it.
So if you're ready to create atrue business that runs without
you, you're in the right place.
Let's get started.
(01:07):
Hello and welcome to the DentalPractice Heroes podcast.
I'm your host, dr Paul Edgiston, and I'm joined by my DPH
coaches, dr Henry Ernst and DrStephen Markowitz both very
accomplished business people anddentist practice owners and
we're taking apart just topicsthat we think are valuable for
owner dentists trying to teachyou how to scale your practice,
(01:27):
because I think that's whatultimately we want to do scale
our practice, live better lives.
So today we're going to betalking about how to make your
practice sellable, even if youdon't want to sell, because if
you have no intention of selling, there's still value in making
it sellable.
So I'll go to you first, henry.
I mean just to give thelisteners an idea.
Henry has sold his practiceabout four or five years ago.
(01:51):
We're on to six, six years ago.
I have sold my practice now,four years ago, and Steve's just
still plugging along.
Go, steve, but Henry, what doyou think?
Why should we make our practicesellable and how do we do it?
Speaker 2 (02:06):
Yeah, it's only going to make you better.
It's kind of like theequivalent of you know, when
somebody has their house andthey've had it for a long time
and all of a sudden they'regoing to sell it and all of a
sudden they do all these repairsand all these upgrades that
they never did before when theylived in the house, the owners
look back and say, gosh, whydidn't we do this?
Like four or five years ago?
We could have lived in thisnice thing here.
So it's kind of like the samepremise it's only going to make
(02:26):
you better.
There's a book called A Built toSell and it's talking about.
It's actually the title of thebook is Creating a Business that
Can Thrive Without you.
John Wallerow is the author andI read that long time ago and
it really kind of hit home iswhat we're trying to bring here
is make your business look at itfrom an outside point of view,
(02:50):
make it sexy for somebody who'dwant to buy it.
Obviously we could talk EBITDAand making that as optimal as
possible.
That's obvious.
But I think one point thatreally hit home for me is about
whenever you're going to sellyour practice.
You know, usually they look atwhat's called a T12, the last 12
months of revenue andfinancials and that's what they
based the sell off of.
And I remember about a littleover a year before I sold my T12
came into effect, I took myselfout of the practice.
(03:12):
I went from about three and ahalf or four days a week to two
days a week and what happenedwas most dentists, when they do
that and you tell them,recommend that they get really
nervous and really scared.
Oh my God, my take-home pay isgoing to go down.
Well, what happened was when Idid that, the revenues went up,
the business got better, mytake-home pay was higher and the
people who eventually bought mypractice told me they told me
(03:37):
this after the sale.
They said listen, one of thethings we really gave you a high
EBITDA, we gave you a highmultiple on your practice
because we know that you built atrue practice.
It doesn't depend on you.
The moment you took yourselfaway and the practice revenues
went up.
That was evidence that youbuilt something that didn't need
your two hands Because, if youthink about it, somebody who's
gonna buy your practice islooking for you know what are
their risks.
The biggest risk would be if Ibought a practice that had one
(04:00):
dentist that was producing 80%of everything.
That's a huge risk.
What happens if that dude walksout the next day?
So to make your practice a realbusiness, look at it from all
different aspects, and I know ifyou're not familiar with the
business aspect certainly peoplelike us can help you with that
kind of stuff and try to make itas good as possible, not just
on the looks part of it but onthe financials and the
(04:23):
steadiness of the practice.
Speaker 1 (04:25):
Yeah, I love that analogy you shared.
So what do you think, Steve?
Speaker 3 (04:29):
Any business that is healthy is sellable, and I think
that's what's most important aswe think about this.
What does a healthy businesslook like?
A healthy business is growing.
A healthy business has healthyprofit.
A healthy business takes careof its customers, takes care of
its team members, takes care ofits shareholders, is able to
(05:02):
continue to grow in its revenueand continue to take care of it
all of its stakeholders throughits profitability.
It will always be sellable.
So when we are talking to our,our team members and they want,
they want raises, which is great, but there better be profit
(05:22):
there for us to be able to givethe team members raises from.
Or if we want to invest intechnology or we want to redo
the office, the aesthetics, sothat everything looks up to date
, there better be profit there,or we can't do it.
So, at every phase of yourbusiness, if you're continuing
(05:43):
to grow and you're continuing tobe mindful of your EBITDA
profitability, whatever metricyou want to use, it will always
be sellable.
There will always be a marketfor healthy businesses.
We just are in a market rightnow that we're super lucky in
that it's such a niche market.
We either sell to specificdentists or to specific people
(06:07):
who own dental organizations.
Those are only two people whocan buy our practice.
So there's always going to be aneed if the asset is healthy,
even if we're not selling asellable practice.
Speaker 1 (06:20):
All these goals of sellable practice is just nice
to have.
I mean, who doesn't want apractice that runs without them?
Who doesn't want a practicethat is systematized and doesn't
need you in there for everystep of the way?
Who doesn't want a high profitpractice, a great culture
practice, something somebodycould just buy and just take
over?
And like you said, henry, withyour practice sale, same thing
(06:41):
with mine.
They really liked that I onlyworked two days a week and took
off like 12, 14 weeks every year.
They were like this shows usthat you are not so essential
here.
And I'm like well, I know I'mreally important too, but
because my ego got hurt by that.
But you know, it's like somepeople would say well, I don't
want to work just two days.
I really love the dentistry, Ilove the, but I could.
(07:10):
You've got the freedom to do it.
And I think that's what comesfrom making a sellable practice.
And when I think of sellable, Ithink of systematized
leadership, systematizedleadership systems as far as
systems and protocols, but alsojust it's culture too.
Speaker 2 (07:23):
Well, plus, we all I'm gonna use the house example
Most of us that own a house, nomatter what level we're at, most
of us have a good idea of whatthe value of our house is right
now.
And it's a good exercise toknow what's the value of my
practice right now, today, andthere's different ways you can
go about it.
But I think that's a healthything to do as you go along this
(07:43):
process here, as healthy thingto do as you go along this
process here, as you're buildingit to sell, be careful of what
you build also, becauseeventually this is the and I
know, paul, you were in the samething.
I know, steve, you would be inthe same circumstances we were
in a situation where I couldn'tsell my practice to one dentist.
There's no bank that would everfinance that person for that
much unless they paid cash.
So eventually, like I build apractice so much where I was
(08:06):
kind of limited to only sellingit to an organization Because I
hear this a lot with someclients is some clients say, hey
, I want to do what you did andI want to build my practice,
build it to sell in the next twoor three years and make the
highest amount that I can andthat's fine, there's nothing
wrong with that.
But kind of I always have likethe list of because I've seen
behind the curtain now like whatare these organizations looking
(08:28):
for?
So if you're that type and youwant to make it like a perfect
thing for somebody, you knowthere's certain things they look
for.
They look for a minimum of sixops.
They look for multiple doctors.
They don't want to buy onedoctor practice because there's
risk.
They don exposure.
They want to have high Googlereviews.
They want to have leadershipsystems in place.
They want to have an EBIT of atleast a million dollars.
(08:53):
Right, if you have all thosethings checklist, then you're
going to be one of those types.
If that's your desire to have areally high multiple selling
practice.
So that would be for thosepeople out there that want to
grow and do that kind of thing.
Those are the things that youwould create like, oh, I don't
have a leadership team, got toget that in place, right?
Oh, we don't really focus onreviews, get that in place.
This is all not just the moneypart of getting your house in
(09:13):
order if you're going to buildit to sell.
Speaker 1 (09:16):
That's the kind of practice when you get all those
things, you can go to the marketand when somebody sends you an
offer, you could just look at itand just go get real Just like
a total dick, because you gotthem Like they want you.
That's a great practice.
Speaker 3 (09:28):
I interviewed a doctor this morning and she's
been out for a couple years andwe just started talking and I
was asking her why she waslooking to move on from her
practice that she's been at forthe past couple years and she's
like, I'm just not that busy.
I was like, oh well, how manynew patients are you seeing on a
month, or how many exams areyou doing?
(09:49):
And she said well, my doctor,the owner doctor, my boss,
doesn't really believe intracking those types of things.
He thinks that's too corporate.
And I said I'm so sorry to hearthat.
We definitely track those thingsand anyone who wants to
actually know what they need toimprove should track as much as
they can.
So when we're not making ourpractice sellable, our team
(10:11):
members know that and they'regoing to look for somewhere that
can take care of them the waythey want to be taken care of.
And she wasn't interviewingwith me because he was doing
such a great job.
She was interviewing with mebecause he wasn't.
And I bet there's many otherpeople at that guy's practice
that were doing the same thing.
Speaker 2 (10:25):
I've never seen a successful dentist that does not
know their numbers likeverbatim.
Like you know, we can havethese comments what's your new
patients per month, what's yourprofitability, what's your EBITO
?
As soon as people startanswering every single question
like that, most of the time Idon't see those people because
they're too darn successful.
We see the people where I don'tknow.
Well, do you have any sort ofmetric system that you no.
(10:47):
I run some reportsno-transcript.
So those are the people thatare never going to be successful
.
Speaker 1 (10:54):
Yeah, so true, I'm just thinking I'm going to go to
Henry From startup to sale.
What is a reasonable amount oftime someone could get to that
level where they build it up andthey sell it?
How many years?
Speaker 2 (11:04):
Yeah, that's a great question.
I mean I was I don't know if Iwas lucky or just lucky and
knowledgeable at the same timebut from the day that we opened
the door until the day we had aneight-figure sale was less than
five years.
Now that's not like superrealistic, I think, but it shows
(11:26):
you it can be done and I didn'thave the intention to sell
until I was about maybe eightmonths before I sold it because
I learned the value.
I had somebody who kind of satme down and said, hey, let's
look at the value, let's look atwhat your future looks like.
But I think I think I couldrealistic say seven years is
realistic If you have thesystems, if you have the
knowledge and you actappropriately when the numbers
(11:46):
are telling you something, whenthe numbers are telling you it's
time to expand, when you're atcapacity capacity and I was
really lucky because I wassupercharged and every time we
expanded you know we expandedthree times, really three and a
half.
Every time I was under the sameroof, so I never had to water
down my leadership team oranything like that.
(12:07):
I was always lucky in thatregard.
So maybe if I had to do it adifferent way, maybe I'd say
seven years is realistic.
Speaker 1 (12:10):
Yeah, I think that's a good time frame there.
I mean, for me it was eight.
But then I look back at all theinefficiency and all the
transition points, like bringingon my first associate and then
the expansion from five to 11ops.
How I hesitated, I think, anextra year or two both of those
times.
So I think I probably wouldhave been right around that five
, six year mark.
Speaker 2 (12:29):
And the beauty is again always having options in
life.
And I know you could attest tothis, Paul.
If, hypothetically, in a yearyou want, you know what I need a
challenge in life, I'm going tostart all over again.
I think about it.
Now you've been through thepitfalls, you've had the
knowledge, you've learned fromlike what not to do.
You could probably superchargethat half at least half.
Speaker 1 (12:49):
Yeah, I think I could too, and I think about doing
that sometimes and never pickingup the handpiece, never being
like.
Well, I want to see Dr.
Speaker 3 (12:54):
Richardson, it is important for us to also
remember that the equity that wehave in our practices as
practice owners, we're actuallysupposed to get a return on that
investment.
It's, in theory, it's nodifferent than owning stock of
Google or Tesla or any otherstock that we own.
It's just in our own business,and most dentists think that
when I sell, I die own.
(13:17):
It's just in our own business.
And most dentists think thatwhen I sell, I die.
And you guys are proven factsLike you still go to work at the
same practice that you soldyears ago.
So just because we are getting areturn on our investment and
taking some of that equity andturning it into cash now doesn't
mean that we no longer have togo to that practice or can't go
to that practice.
There are many different waysto do it.
The goal of any investment isto get a return and maximize the
(13:40):
return on the investment.
At the same time, it doesn'tnecessarily mean we have to take
the greatest offer.
I'm sure both of you guys couldhave taken higher offers for
your practices, but what hasallowed you guys to stay there,
I'm sure, is that you sold tothe person or the organization
that aligned with how you wantthe next phase of your life to
(14:02):
look like.
Speaker 1 (14:03):
Yeah, so true.
I think, Henry, you did take alower offer.
I did the same as well.
Speaker 2 (14:07):
Yeah, I had a higher offer but that person they
didn't vibe with me.
The dude looked like thecharacter from Goodfellellas,
the short character, joe pesci'scharacter looked exactly like
him I do too, and a hard fouryeah so, uh, what am I?
a clown?
So yeah, my clown to you.
To add to your point, steve,like now, when I go to work, I
mean all the stuff that I didn'thave trouble taking care before
(14:30):
.
I don't even have to worryabout that.
Sometimes I find like I feellike I go to, I like going to
work more than I ever havebecause I'm just taking care of
the people that I've taken careof for years.
I get all the specialty stuff tome like wrapped up in a basket.
You know I go to work andthere's like three implant case
that's there and I'm meetingthem for the first time, you
know.
And so I like it and it can bedone and it shows you all the
(14:53):
stuff that can be done.
And while we're on the subjectof getting your practice
sellable, if you go through thatexercise, even if you're not
going to sell, it allows you toclean up stuff too, because I
know you went through this, paul.
So when you go through thisprocess of selling, you got to
clean up your books, because thenext person who buys it is not
going to have, you know, whoknows what you're putting on
through your practice.
(15:13):
Some people buy their carpayments or this or that, and
then the next person is notgoing to have that.
So essentially that opens upmore EBITDA that there really is
there, but you're hiding it, ifthat makes sense.
Speaker 1 (15:25):
I probably had $130,000, $140,000 worth of
stuff going through there that Ididn't even realize was there
and I'm like, oh, this countstoo, and they're like, yeah, oh,
yeah.
Speaker 2 (15:34):
So then, when your account produced a report, it
showed a certain amount ofprofitability, but in reality it
was really a lot higher thanthat.
Speaker 3 (15:40):
Yeah, if you're going through it and you have a
hundred grand in credits likethat's probably something wrong
with your AR system.
Speaker 2 (15:47):
So I always think it's important to go through,
know your value, know where yournumbers are at and make sure
that you have the healthiestbusiness that can survive
without you Using that example,if you had $100,000 in just
credits and you said yourself,dude, I need to clean this up,
and you take a year or two toclean that up.
Let's say, hypothetically,we're going to get a 7X multiple
(16:09):
on your cell.
You just cleaned up $700,000,not $100,000.
You cleared $700700,000 frombottom line.
That's pretty good use of yourtime.
Yeah, absolutely.
Speaker 1 (16:21):
Steve, are you ever, um you ever, going to join the
sale?
Speaker 3 (16:24):
club At some point I will.
Uh, I'm still having fun.
This is going to be corny, butI, I still love it and I, um, I
don't, I think you're addicted?
Yeah, probably it's a lot of.
I mean, we talked about therapybefore we press record Um, I,
um.
We are built to to sell um andknow that at some point there's
(16:45):
gotta be someone who is moreequipped and a better leader
than I ever can be, and we'lltake it to the next site.
Um, just start.
I'm just not there yet and I'mI'm enjoying the ride.
So that's what I've told myself.
As long as I'm still having funand I feel like we're doing
good stuff with good people, I'mnot going to stop.
Speaker 2 (17:06):
I think sometimes you see on these forums, why in the
hell would a dentist that's intheir 40s ever sell to a DSO?
Well, you know what?
There's a lot of whys, you know.
For me, it was taking my chipsoff the table and there was all
the risk because every time weexpanded it was always my name
on that dotted line.
I had all the you know, theloans and all this stuff and I
had all the risk because none ofmy other doctors had any sell.
(17:29):
So there's something to be said.
I answer that question withwell, what about me taking risk
off the table and getting tolive the true life that I really
want to and not being tied toan office and having the luxury
to say you know what, with thiscell, I'm gonna live two blocks
from the beach and I can stillgo to a practice two days a week
.
So there's something to be saidabout that, because I think too
(17:50):
many times there's a stigma ofoh, the doctor sold, he's
selling out, he's giving up,he's done.
No, it's like life you can dowhat you want to and make it
your own.
Speaker 1 (17:59):
Well, what's interesting about those posts?
Because they're all over theplace.
I mean, once a week someone isposting, oh, I think, like three
, four times a week, dude, whywould anyone sell and then work
five more years back and stufflike that?
Here's what I say about that isthe people it doesn't make
sense for didn't have a sellablepractice.
You know what it is it's like,because the thing we talk about
your practice and my practice,henry, your whole organization,
(18:20):
steve these are sellablepractices where it makes a lot
of freaking sense.
If you're looking for somelifestyle goals, such as taking
some risk out, liquidating someof the equity in there and just
moving to some different assetsand stuff like that.
I mean there's a lot that makessense for it, but it doesn't
make sense for the solo doc, inmy opinion, who's got a $1
million to maybe $1.5 millionpractice.
(18:41):
That doesn't make sense to me.
That's where I think everyonegets that bad taste with the DSO
thing is the people that arepicking those practices because
I don't see the benefit of thembeing part of a group.
Speaker 2 (18:55):
I just there's not enough scale.
Yeah, the best way that wastold to me is whatever you get
on that day of sale.
If you could be fine with justthat amount and never get
another penny, then you're goodRight.
And all this other stuff ischerries on top.
And knock on wood, myorganization has lived up to
everything they said they weregoing to do and I get nice
bonuses every year, you know,and stuff.
So.
But I think that it's.
It's a bad stigma that's outthere and I see that at least
three or four times a week andeverybody loves to jump on that
(19:17):
bandwagon.
Speaker 1 (19:18):
It's it's frustrating , but I don't even respond to it
anymore.
Speaker 2 (19:21):
That person that had the million dollar practice that
maybe has a certain amount ofEBITDA.
They're probably better offselling to another dentist and
maybe continuing that traditionand maybe staying on board a
little longer, and that's theirwhy and that's what makes them
happy.
Speaker 1 (19:34):
They do the noble thing.
Those people do them.
They do not.
They don't sell the DSO andwhen, when they sell their house
and they get a higher offer,they're like no, I'm going to
take the low offer, cause I got,I got principles and morals.
Speaker 2 (19:46):
I want a dentist to buy my house for a lower amount.
Speaker 1 (19:51):
Exactly, I want to sell for the least amount
possible, because I am going tobe a martyr for this industry,
ladies and gentlemen, and youwill thank me and respect me for
that, and let's just, let'sjust villainize the.
We're the freaking villains,dude.
We're the villains.
So, yeah, I love this episode,man.
I think that was so great.
And, man, I almost want to goback and checklist those things.
I think you listed seven, eightthings, henry, that were just
great.
Go back and listen to that.
(20:11):
The seven things that make yourpractice sellable.
I think those are goals weshould all strive for.
So if you're looking for somehelp to do that and you want to
have a more sellable practice,to live a better life and
possibly cash out, you don'thave to, but you get the freedom
to do so.
If you want to Try working withone of our
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