#7: The Build-Up Weekly

Dear friends and colleagues,

Welcome to the 7th edition of The Build-Up, where we deliver weekly insights and inspiration for dentists on every stage of the private practice journey.

As we head into mid-April, it's hard not to feel the warmth and energy that comes with the spring season.

Here’s what we’ve got lined up for this week:

• 🚀 The Acquisition: The Ultimate Shortcut

• 🪴 Growth Stage: Thoughts on “Necessary” Dentistry

• 🤝 The Transition: How DSOs Get Your Practice For Pennies

• 💡Weekly Inspiration: Spring, Reimagined 🎶 

And with that, let’s get started!

A Quick Thought About Buying vs Start-Ups

Choosing the right career path in today's dental landscape can be challenging.

DSOs are spending more money than private doctors ever could to recruit out of dental schools.

Images of stunning practices on Instagram or Pinterest are tempting doctors towards that $1M+ scratch start.

But I recently saw this tweet and wanted to share:

Buying a business is the ultimate shortcut.

Is it as easy as working as an employee?

No.

You don’t get to just clock in and clock out.

But you get so much more.

You get control over your clinical philosophy, team, and schedule. You get unbelievable tax benefits. And there’s also a six million dollar difference on the line in lifetime earning potential.

So if you’re on the fence about which direction to head in, at least sign up to receive customized alerts about practices that fit your criteria.

Register as a Buyer

We have 65+ listings for sale at Integrity Practice Sales, with new listings coming on the market weekly.

Click the button below to set your criteria and receive personalized updates when new listings hit the market.

What is “needed” dentistry?

How do you know when to watch a tooth and when to restore?

Now I’m not a doctor, but I grew up in a family of dentists and now work with dentists every day.

And I know many doctors hesitate to present ideal dentistry, fearing that patients can't afford the treatment or may think you’re over-diagnosing.

But the truth is, most of the dentistry we consider "needed" is optional.

You can live a long life without teeth. Case in point:

What is truly needed dentistry? Probably just emergency extractions and emergency root canals.

I mean, it might be needed if you want to live a long, happy, healthy, comfortable, and confident life. But now we’re making assumptions…

And that’s exactly what we do!

We make assumptions about what our patients need.

We try to balance their needs for them. The need for vibrant, healthy dentition. The need to save money. The need to look good. The need to avoid dental work.

But it doesn’t have to be that way. Instead of balancing the patients needs for them without their input, we can simply ask them what they want and help them get it.

It sounds so simple, but it’s totally transformative.

• Do you want to keep your teeth for a lifetime? Great! Here’s what we can do.

• Do you want to avoid dental emergencies? Great! Here’s what we can do.

• Do you want a smile like Tom Cruise? Great! Here’s what we can do.

We should give patients options and allow them to make informed decisions.

People spend money on things they value, which is different for every person.

This is why I suggest that instead of watching teeth (using the W designation), you use a Patient Watch (PW) designation. This means that that patient has decided to wait on treatment, not that you decided on your own without the patient.

This is more transparent and informative. Instead of telling patients what they need, we get their involvement and empower them to make the best decision for their dental health.

By adopting this mindset, we create a more honest and ethical dental practice and foster better relationships with our patients.

How DSOs Get Your Practice For Pennies on the Dollar

I’m not anti-DSO, I promise. But I try to be rational when it comes to the offers that our clients receive.

I was reviewing an offer yesterday for a practice at 5.1x EBITDA. It’s a good multiple, and the total value of the offer was $1,785,000.

This is higher than a private buyer would be likely be willing to pay.

So far, it sounds like the DSO has a compelling offer, right?

Well, hold on there a minute!

The practice had an EBITDA of $350,000. Very respectable. This means that - as a business, after the doctor was paid as an associate - the practice had $350k in profit.

Now we get into the fine print. The offer was for 80% in cash ($1,428,000) and 20% rolled back into the DSO (so you have equity in the company when it attempts to sell to a larger entity).

The doctor was required to stay on and work as an associate for three years. If the EBITDA went down at any point in those three years, the doctor would owe money back. So the doctor needs to keep EBITDA up to get their full payout.

But if the doctor had just continued to work in the practice, keeping that EBITDA up, they would have taken home an additional $1,050,000 in profit!

That means that the cash portion of the offer is really worth $1,428,000 minus $1,050,000, or $378,000!

So you really need to decide what you think that non-cash portion of the offer is worth. Will that money double? Triple? 10x? I’ve seen some doctors hit home runs and others lose it all.

That’s your call to make, but don't be fooled when you see these high ‘enterprise’ values (the value of all the pieces of the deal put together).

And if you want to know other mistakes that you can make when selling your practice, download our new guide below!

You can download it for free here. It’s material that I’ve covered in this newsletter before, but - if you’re contemplating a practice sale - the advice in this guide is crucial.

And if you’re ready to have a conversation with a practice sales professional, get connected with your local Integrity Practice Sales broker here.

It’s worth having a conversation no matter your current transition plans. You never know what you’ll discover together.

As we wrap up this week's newsletter, let's take a moment to draw inspiration from an expected source (for this newsletter, anyway) – music.

Max Richter's reimagining of Vivaldi's Spring 1 from "The Four Seasons" offers a powerful reminder of the transformative power of creativity.

I think it’s so cool, but probably because I’m so deeply familiar with the original:

Remember that we’re not here to reinvent the wheel: dentistry is dentistry. But by creating variations on the same theme, we can embrace change, innovation, and patient-centered care.

In other words, we can create a dental practice that truly resonates with our patients. 🎶 

And with that, I hope you enjoyed our seventh edition of The Build-Up Weekly.

Please consider using the link below to share our newsletter. 🙂 

With best wishes to you and your families,

Trevor Kimball, PhD

p.s. feel free to respond to this email! I’d love your feedback and suggestions.