DSOs from an Insider’s Perspective – Episode #349

More and more practices are being purchased by them—and one in five dentists under the age of 35 is now working for one—so what’s up with DSOs? On this Dentist Money™ Show, Ryan interviews Sara Stock of Stock Legal, a firm that provides legal expertise to DSOs. Take a peek behind the curtain to see where the money comes from and why equity-backed practices are trending.

 

Show notes:

www.StockLegal.com
https://www.stocklegal.com/blog/dental-service-organizations-the-what-and-why-of-dsos

 

 

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Podcast Transcript

Ryan Isaac:
Hello, people of podcast land. Welcome back to another episode of The Dentist Money Show, brought to you by Dentist Advisors, a no-commission fiduciary, comprehensive financial advisor just for dentists. Check us out at dentistadvisors.com. Today on the show, we have a new friend, Sara Stock, from Stock Legal. We are talking about the legal and business side of DSOs, but from the standpoint of actually building a DSO model. And what surprised me in this conversation, which I thought was the coolest turn of the conversation, was that not only is this conversation for someone who’s looking at building a very large, giant organization from a DSO perspective, but an owner who is looking to incentivize associates to keep them long-term through equity grants of various kinds. And Reese, on our show, has talked about that over the years. It’s something that’s very common in other industries, but not as common in dentistry. And Sara really breaks this down, and I thought it was just brilliant. Such a cool conversation.

Ryan Isaac:
If you have any questions for us, you can go to dentistadvisors.com, click the Book Free Consultation link. Let’s have a chat about your situation. But many thanks to Sara. This was a great conversation, looking forward to having her back and talking about this in more detail again soon. Thanks, everyone, for being here. Enjoy the show.

Announcer:
Consult an advisor or conduct your own due diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors, a registered investment advisor. This is Dentist Money. Now, here’s your host, Ryan Isaac.

Ryan Isaac:
Welcome to The Dentist Money Show, where we help dentists make smart financial decisions. I’m your host, Ryan Isaac. And I’m here today with a new friend of the show, Sara Stock, from Stock Legal. How are you doing, Sara? How’s it going?

Sara Stock:
Oh, I’m wonderful. Thank you. How are you?

Ryan Isaac:
Well, and I was just… As I’m saying that, I’m like, “Wait, your last name is Stock, right?”

Sara Stock:
It is.

Ryan Isaac:
‘Cause it’s Stock Legal, but there’s a play on words. And I’m like, “Did I get that wrong?” But it’s Sara Stock. So we got that right.

Sara Stock:
I’m Sara Stock of Stock Legal, and you can take stock in that.

Ryan Isaac:
I like that. I like that. It’s cool when someone’s name kind of lines up with the industry they go into. I don’t know. It’s pretty rare, but that’s pretty awesome. So you’re coming to us from, you just told me, Illinois.

Sara Stock:
St. Louis, Missouri.

Ryan Isaac:
Oh, St. Louis, Missouri, not Illinois. Why did I tell… I told you a story how I was in Illinois, thinking that…

Sara Stock:
I grew up in Mascoutah, Illinois, that’s why.

Ryan Isaac:
Oh, ’cause you said, that’s why.

Sara Stock:
I grew up in Mascoutah, Illinois, yeah.

Ryan Isaac:
Okay, that’s why. So coming to us from St. Louis. And Sara, let’s just get… Let’s just kind of start with an introduction to your back… I thought your background is cool, the family business, answering phones, how you got into the legal profession, and then how you kinda broke away. Our audience loves hearing peoples’ stories, especially business owner stories, which that’s what you are. How about start there? How did you kind of begin your entrepreneurship and your business life?

Sara Stock:
Well, first, Ryan, thank you so much for having me. It’s a real honor to be on this podcast and I’m really excited to talk about the work that we do with dentists and dental service organizations. But it didn’t start out that way, which is always… It’s always a fun story to figure out, “How did you get here?” Right?

Ryan Isaac:
Mm-hmm.

Sara Stock:
So my back story is I grew up in a family business. My family still runs a trucking company over in Lebanon, Illinois called Stock Transport. They’re quickly approaching their 50th year in business, if you can believe it, right?

Ryan Isaac:
Woah. So cool. They’ve seen it all.

Sara Stock:
They have.

Ryan Isaac:
They have literally seen every possible up and down in their industry.

Sara Stock:
And the amazing thing for me was that when I was a child, my parents ran this business out of our home.

Ryan Isaac:
Wow.

Sara Stock:
And so I literally grew up answering the phone, “Hello, Stock Transport. How can I help you?” Right? [laughter]

Ryan Isaac:
Yeah.

Sara Stock:
So, what it meant…

Ryan Isaac:
That is so cool.

Sara Stock:
Yeah, thank you. What it meant for me as a child was that I felt all of the stress that was happening in that business. And when fuel prices would go up, I could feel that stress. When insurance prices would go up, that stress impacted the family. And the beautiful thing that came out of that is that I grew up wanting to be one of those people that helps small to medium-sized business owners. And just from the experience that I had in my childhood, I also have a really great work ethic. I credit my parents for that. [laughter]

Ryan Isaac:
Yeah, thanks, mom and dad. [chuckle]

Sara Stock:
Yeah. So ultimately, it led me to go to law school. I wanted to become one of those trusted advisors that support small to medium-sized businesses, and I thought the law was the way to go. When I graduated, I started at a big firm. I had a background in general corporate, M&A and securities. I then quickly started doing some commercial real estate work. 2008 and ’09 happened, and I pivoted back to my original passion, which was general corporate, M&A and securities work, while still doing some commercial real estate and some banking.

Ryan Isaac:
Wow.

Sara Stock:
0:04:57.7 SS: So for those of you who don’t know law firms well, what that means is that for a big firm lawyer, I was very well-rounded. Lawyers don’t usually come out of the big firm like that, right?

Ryan Isaac:
Oh, right. Yeah, a lot of different areas.

Sara Stock:
Yeah. And it gave me a really 30,000-foot view into how… What support business owners need to really build a solid legal foundation. I started building my own portfolio of clients in 2009, ’10 and ’11. And by ’12, I realized that the big firm model was just not the right place for me. As you go up in the chain of command at the big firm, I was made equity partner. I was quickly out-pricing my client base. So in November of 2014, I made the decision to leave and start my own practice. And most of the work I did in the beginning was external general counsel work, really using that 30,000-foot view that I had based on my broad range of experience to help counsel small to medium-sized business owners on how to grow and scale their business from a legal perspective.

Ryan Isaac:
You just said something I’ve… It’s really common. I’ve never heard it phrased this way. You said you were out-pricing your clients.

Sara Stock:
Yes.

Ryan Isaac:
And dentists, as you know, they go through that. I think a lot of professionals go through that in your career. In the beginning, you’ll do anything for anyone for any amount of money. [chuckle]

Sara Stock:
Right, yes. [laughter]

Ryan Isaac:
But then after a while, you do. You become a… I don’t know how to phrase it, maybe a higher billable person, a more experienced person, you’re worth more money per hour to the general community. And, yeah, when you’re kind of with a certain client base or clientele, you can out-price them by just making progress in your own career. I know… I mean, we know dentists struggle with that when they start and they’re taking every insurance possible and they’ll service the whole community, but then they become really niche and specialized. They only do high-end services and then they can’t kind of be with their people for… It doesn’t really have much to do with what we’re talking about today. [chuckle] I just thought that was an interesting thing that a lot of people go through and that’s not easy to figure out how to deal with in career. And your solution was, “I’m out of this big corporate stuff. I’ll go do my own thing so I can get back to the people I like working with the most.”

Sara Stock:
Yeah. It becomes a crossroads in your career. And I had what I love to call a Come-to-Jesus moment. I was getting ready to turn 40, so midlife was quickly approaching.

Ryan Isaac:
Yeah, midlife, shoutout to midlife crisis. I love mine.

Sara Stock:
And so my question to myself was, what do I really wanna do for the next 40 years? And it wasn’t working with publicly traded, general counsel, writing detailed memos on nuanced provisions of law. It was helping these small to medium-sized business owners grow and scale. And so, we grew as a firm completely unintentionally from November of 2014 until January of 2017. It was just reactive at every step. And I’m sure your clients can feel that same way when they’re starting their own practices as they’re taking everything that comes in the door. They’re not really specializing. They’re just reacting to whatever business shows up. Is that fair to say?

Ryan Isaac:
Oh yeah. They take every possible insurance policy… Or insurance plan out there, and they’ll do dental work on people that they’re losing money on mathematically, because the discounts of the insurance plan is so steep, but they’ll… They just do it because they need patients in the door.

Sara Stock:
That’s it. Right?

Ryan Isaac:
Mm-hmm.

Sara Stock:
And so, you know, as we were growing and new business was coming in, we were saying yes, and all of a sudden I was working 18 hours a day again. I have three small… I had at the time, three small children, they’re now very, very much bigger. [laughter] But I was trying to figure out how to balance my life and grow a business simultaneously. And so I was hiring reactively. In January of 2017, I took a deep breath and I decided to take a much more strategic and proactive approach to the business that I was growing. Let me say that again, if that’s okay.

Ryan Isaac:
Yeah. Yeah.

Sara Stock:
I decided… Thank you. I decided to take a much more strategic and proactive approach to the business that I was growing. And that also happened to coincide with our first DSO client. So, it was a really fun kind of, you know, twist in our story. Up until that point, we had worked with a lot of doctors, a lot of dentists, chiropractors, physical therapists, a lot of folks in the medical field. But the DSO concept came on my radar first in 2017.

Ryan Isaac:
Okay. So this was… And this is where I was gonna go next, is how you started working with dentists, especially in this DSO market. So take us back there. I mean, as you know as good as anybody, the DSO field is just… It’s wild. It’s crazy. And it kind of came out of nowhere, all of a sudden, and now it’s everywhere. I think us, as advisors, we’re probably discussing at least one case a week for clients who are trying to determine if they’re gonna take a deal or not. So 2017, although it’s not that long ago, there weren’t many big ones out there except for the gigantic corporate chains that had kind of done this a little bit over the years.

Sara Stock:
Right.

Ryan Isaac:
I’m just curious if you can remember, what was it like when you first saw the deal? Were you familiar with dentistry at all, the field of dentistry or medical? Had you had some experience working with clients in those fields?

Sara Stock:
Yeah, we had a number of clients in the medical field. We represented a few dentists.

Ryan Isaac:
Okay.

Sara Stock:
But the concept of dental service organizations really wasn’t on my radar. What brought the deal in was that we had a former large DSO executive that was a potential client and he was trying to exit that large DSO and build his own DSO empire.

Ryan Isaac:
Got it.

Sara Stock:
And the structure that exists now for dental service organizations was still in process of being developed. So we spent a dozen hours easily ideating with him on how to build out a structure for what is now his DSO empire.

Ryan Isaac:
Wow.

Sara Stock:
And in doing that, a lot of research came in, a lot of understanding as to the why dental service organizations were important in this industry.

Ryan Isaac:
Hmm. So you… Okay. So that’s a really interesting side of things. Interesting perspective. You got to see the industry from the other side of helping somebody build their DSO.

Sara Stock:
That’s right. That’s right.

Ryan Isaac:
Wow. Yeah. That’s a perspective not a lot of people have. So you saw that in 2017. I’m just curious, do you remember what you… I don’t know, maybe it was just business, you didn’t think much of it, but was there any thought to like, oh, that’s kind of an interesting thing. You’re gonna go buy a bunch of dental practices. I mean, did you know that was a thing that would… Was going on or happening? Or how did that…

Sara Stock:
No.

Ryan Isaac:
Strike you if you remember?

Sara Stock:
I remember being fascinated by it. And I continue to be fascinated by the model. With dentistry specifically and with doctors as well, and the medical field, the issue that we have in many states is that there’s something called the corporate practice of medicine doctrine, which essentially says only dentists can own dental practices, only lawyers can own law firms in most states still today. And so the idea was, how do you create consolidation in an industry that is ripe for consolidation in the face of this corporate practice of medicine doctrine? We see a similar issue today, not to go off on too big of a tangent here, but we see a similar issue today in the cannabis field.

Ryan Isaac:
Oh, wow.

Sara Stock:
With cannabis, the flower itself that’s grown in the state where it’s legal, can’t leave the state.

Ryan Isaac:
Oh yeah. Okay.

Sara Stock:
And so in the cannabis industry, they’re creating something called a multi-state organization or an MSO.

Ryan Isaac:
Okay. Yeah.

Sara Stock:
It’s all an intellectual property play, right?

Ryan Isaac:
Interesting.

Sara Stock:
So the DSO model in 2017 fascinated me because it was a way to bring consolidation to an industry that was ripe for consolidation. And so we got really excited about it. We happened to work with an amazing transaction consultant called… Now they’re called Polaris. And they were just getting started in ’17, we were just getting started in ’17, and thus began a whole new practice area that we now devote a significant amount of time and resources to at Stock Legal.

Ryan Isaac:
Are you… So do you spend most of your time on the side of the doctor selling their practice to the DSO?

Sara Stock:
We spend most of our time building the DSOs.

Ryan Isaac:
Oh, building the DSO. I think I didn’t understand that. This is even more fascinating, because that is not a unique… Or that is not a common perspective. That’s a really unique perspective to be on that side of things. Okay, so 2017, you start building the first one. And so, what are we? Five years later since then. What’s it been like in those five years? How… I mean, to my perspective, to me, it’s just exploded. The DSO market, just everywhere.

Sara Stock:
We at Stock Legal now have clients in more than 40 states. And we credit much of that growth outside of the region here in St. Louis, to our DSO work. It’s been an amazing opportunity for so many dentists. And we work with the smallest of small. Like, “I have a plan to buy multiple practices. I wanna build a DSO so I have infrastructure when I go out on the acquisition path.” All the way up to, “We’re building out a DSO and a dozen sub-DSOs.” Because they’re going into a dozen different states. They’re going on the acquisition path, they’re looking to buy 50 or 60 practices in the next two or three years, and the cap stack is really complicated. And by that, I mean the way that they’re financing all these acquisitions is really complicated. Money is coming from different sources. And we build the legal infrastructure for that, the smallest of small to what feels like…

Ryan Isaac:
Wow.

Sara Stock:
“We’re creating an empire here.”

Ryan Isaac:
So how often are you working with somebody who’s, let’s just say, running one practice, or maybe they’ve got a couple and they think they’re the DSO person? They’re more entrepreneurial than they are clinical. And are they… Is that a typical client? They’re coming to you and say, “Look, I’ve done this a couple times with a couple practices, but I’m ready to raise financing, bring on a Board, bring on a team, back out of clinical and just start acquiring and building.” Is that a typical profile of a customer?

Sara Stock:
The reason that dentists come to us most often is that they’re having trouble keeping their associate dentists. My understanding, at least a handful of years ago, was that when you go through dental school, they teach you that the only way to really make money is to run your own practice. Right?

Ryan Isaac:
Sure.

Sara Stock:
So attracting associate dentists and keeping associate dentists is really a challenge if you don’t have some sort of incentive equity program. And so our dentists come to us saying, “I can’t keep my talent. I wanna grow. How do I build infrastructure for that?”

Ryan Isaac:
Wow.

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Ryan Isaac:
It’s a little untraditional in the dental field. I mean, it’s a very common thing in the tech industry or legal, probably, CPA, professional services, to grant equity shares of ownership to different partners, but that’s a very new concept in the dental industry. I’d love to talk about that for a minute. Can you explain, maybe just walk through what a typical… I mean, so a dentist comes to you and they’ve got two or three associates, and they’re worried about this problem, which is a huge problem. I mean, it’s a big pain for people with associates.

Sara Stock:
I know that it’s hard.

Ryan Isaac:
Yeah. They…

Sara Stock:
It’s hard.

Ryan Isaac:
It’s just a revolving door. So what’s start to finish process like? How does this shake out? It’s really fascinating.

Sara Stock:
Yeah. So the way that we like to talk about it is. If you’re going to have multiple practices, you’re gonna have multiple clinics and you’re going to have associate dentists at each of the clinics, doesn’t it make more sense or doesn’t it sound more attractive, if you will, to incentivize those associate dentists to grow all three of the clinics?

Ryan Isaac:
Oh yeah.

Sara Stock:
Right?

Ryan Isaac:
Yeah, for sure.

Sara Stock:
Versus just to grow their own. And one of the benefits of the DSO model that I think gets missed in the conversation about DSOs is that we build an incentive equity program at the DSO level. And so Jane Smith, who’s working at clinic one is incentivized to grow not just clinic one but clinic two, clinic three, clinic four. Maybe that’s jumping back and forth between the clinics to referring patients back and forth, because her incentive equity comes from the growth of the DSO overall.

Ryan Isaac:
The whole thing, uh-huh.

Sara Stock:
The whole thing, right? Versus the growth of just her clinic. So it’s a beautiful model to build from the perspective of, “I wanna grow a practice. I wanna take non-dentist investment into the company.” It’s a beautiful way to build a multi-state organization. But it’s also just a great way to build out an incentive equity program that incentivizes those associate dentists to really give everything they have to building the whole instead of just the part.

Ryan Isaac:
Yeah, I think this is… This is… It feels really un-tapped to me.

Sara Stock:
Yeah.

Ryan Isaac:
Some people have done it. Some have talked about it but… So I’m wondering as I’m listening to this. Is there anything that’s too small? I mean is it… Is there… What’s too small? Or what’s the right size to even begin thinking about this? For example, someone doesn’t wanna go multi-state, giant acquisition. They just want three or four locations maybe. But they want to have something in place like this for the associates, what’s the right size?

Sara Stock:
Yeah. That’s a great question Ryan, so. Yeah, we find ourselves trying to talk dentists out of the DSO model regularly.

Ryan Isaac:
Okay.

Sara Stock:
And it’s because it’s expensive to build, right?

Ryan Isaac:
Totally. Yeah.

Sara Stock:
And I wanna bring a lot of value to what we’re building. And if you have one practice, and you’re struggling to retain your associates, we can build out a phantom equity plan for that one dentist. No problem. Phantom equity is simply contractual equity. It looks and smells like equity, but it’s not true ownership. And so that phantom equity program might be exactly what that dentist needs to retain their talent versus building out a huge infrastructure that is just bigger then than their vision.

Ryan Isaac:
Got it.

Sara Stock:
It’s the dentists who have that one practice, but wanna buy a second and probably a third, and they’re gonna partner with a dentist from another practice, and they wanna roll all of that into an efficient model where they can use incentive equity across the platform. That’s when the DSO model really makes sense.

Ryan Isaac:
What… I don’t know if this is too in the weeds. But my brain is kind of just curious about this. What’s a typical… What’s the typical entity structure and setup like of all of this?

Sara Stock:
Yeah, we have a great blog post on exactly that. We did a…

Ryan Isaac:
Okay. We’ll link to that. Cool.

Sara Stock:
Yeah, we did a six-part blog post really, to walk a dentist through the basic blocking and tackling of the DSO model. But how it works is that you create a new entity and that entity is the DSO.

Ryan Isaac:
Right.

Sara Stock:
The DSO holds all of the non-clinical assets. It’s where all the back office happens.

Ryan Isaac:
Okay. Yeah.

Sara Stock:
Your marketing, your payables, your AR. All the back office happens at the DSO level. And that DSO then has a services agreement with each of the clinics that it serves. And that services agreement essentially says the DSO will provide the back office services in return for a fee.

Ryan Isaac:
Right.

Sara Stock:
And that fee is what allows the DSO to have net cash flow that is then distributed not only to the owners of the DSO which are the main partners in the DSO model, but the access net cash flow that is created is what’s distributed to the associate dentists for their incentive equity. Does that make sense?

Ryan Isaac:
Yeah, totally. Yeah. And is your service part of… Or is part of your service helping them set appropriate fees in the service agreements between all the locations and in the payouts to everybody?

Sara Stock:
Yeah, we typically partner with their CPA and their transaction advisor if they have one. Because we wanna bring a team in and make sure that it makes sense.

Ryan Isaac:
Oh, yeah.

Sara Stock:
They’re also… This is a highly regulated industry.

Ryan Isaac:
Yeah.

Sara Stock:
So there are regulations in each state that we always research and update our research on as we go into that state. But yes, we definitely help with that.

Ryan Isaac:
Is there… Oh, yeah, go ahead. Finish your thought.

Sara Stock:
I was just gonna say, I think a key to this program is really building out the projections that show how the DSO model is going to work. Because then you have to explain it to the associate dentists, right? They have to understand, “Okay, if I’m going to stay and you’re going to give me incentive equity either in the form of restricted membership units or profits interest, where does my payoff come from?” So building out those projections is an incredibly important part of the process.

Ryan Isaac:
Yeah, it’s part of the comp plan and retaining these people especially when they’re higher-end more expensive talent that you want to keep around. I’m also curious as I’m hearing this. Is there a typical percentage of the overall business that usually is just dedicated or allocated for non-owner employees? In phantom shares or whatever it is? Is it like 20% of the business is gonna be set aside for the associates or 10%? Or is there not a standard there? I’m just curious, how big of the chunk gets carved off for non-owners?

Sara Stock:
Yeah, that’s a great question, Ryan. And I would say it varies. What we typically see is anywhere from 10% to 20%.

Ryan Isaac:
Okay.

Sara Stock:
It really just depends on the model and the projections. They’re really helpful in ensuring that this will be something meaningful, right? Because if you limit your incentive equity pool to 10%, but 1% as a distribution isn’t meaningful, then your program is not gonna work.

Ryan Isaac:
Totally. Does this… Okay, so does this apply to… There’s a scenario, and it’s getting more and more common where people are building some pretty valuable practices. Maybe they’re in three, four or five locations. They’re not gigantic by any means. But they’re getting to the point where new graduates out of dental school are not able to get loans big enough to buy the typical… You graduate, you come buy 30% of the practice, 50% of the practice, and they’re just too big. I’m hearing this and I’m almost seeing a way for owners of very large practices to kind of set something up to gradually build people into further ownership down the road instead of, “I’m gonna sell you 33% of this thing right out of school, but it’s got a $3 million chunk and you can’t get… ” [chuckle] You can’t get lending for it from anybody.

Sara Stock:
That’s exactly right. We see that as well. We have a really strong both sell-side and buy-side M&A practice at Stock Legal. So we see those valuations. It’s unbelievable right now.

Ryan Isaac:
Oh Yeah.

Sara Stock:
So if I’m graduating from dental school, and I think that my path is I’m gonna find a really great practice, I’m gonna purchase it and that’s going to be my trajectory. And the valuations are so high that I can no longer get financing to purchase a practice like that. Wouldn’t it make sense as a plan B to find a really great DSO model that offers incentive equity. That allows me to receive a distribution. Be an owner and if I’m smart, I’m gonna save up my money and eventually ask to buy into the DSO as a pure subscription which is a purchase instead of just incentive equity. Incentive equity typically doesn’t come with voting rights. And so if you’re a very entrepreneurial associate and you wanna have a seat at the table, buying in is still the way to go. But I always say you have to crawl before you walk, you have to walk before you run right? So this is a great way to crawl right out of dental school.

Ryan Isaac:
What are you seeing in terms of, let’s say for the people out there who are trying to build very large scale their own DSO multistate maybe dozens of practices? What are you seeing in terms of where people are going for funding? Where are they finding money? Is that part of the process? Are you guys involved with that?

Sara Stock:
Yeah, we are not involved with that. But I will say that it’s coming from all different
areas. We’re seeing folks bootstrap right? We’re seeing outside investors coming in. I’ve had more conversations with non-dentists about building dental service organizations this year than all of the other years that we’ve done this.

Ryan Isaac:
Crazy. Yeah.

Sara Stock:
Right?

Ryan Isaac:
Mm-hmm.

Sara Stock:
We’re seeing private equity make a play in this space. We’re seeing your traditional bank financing in this space. In the beginning when we first started doing this work, talking to banks about dental service organizations, if you didn’t find someone that understood what it meant it fell on deaf ears. They just couldn’t wrap their heads around the model right?

Ryan Isaac:
Yep. And they wouldn’t lend anymore. I’ve had clients maybe four or five, six years ago that they had the most beautiful financials. They were a dozen locations. They were so profitable. But banks, were just… They were like, we can’t lend you any money for the next practice. I’m like why wouldn’t you give that person more money? Look at their model?

Sara Stock:
Yeah.

Ryan Isaac:
It’s crazy. Yeah.

Sara Stock:
Yeah. That’s not the case today but it still takes the right… I think the right financial preparation to be able to put the package together for the bank. And finding a bank that has a DSO group or a Dental Group is an incredibly helpful step as well. Because they already know the model. They already understand how these businesses make money.

Ryan Isaac:
Yeah, very cool. I have a last question to wrap up about just the process. If someone gets in touch and kind of the typical thing. But is there anything else before that, that you would like to say or wrap up with or any advice you’d like to give people out there thinking about this kind of path in dentistry?

Sara Stock:
There’s a lot of really great information on the internet. And there’s a lot of really great podcasts to listen to. There’s also a lot of misinformation on the internet.

Ryan Isaac:
Yeah. I was gonna say. There’s a lot of bad stuff.

[laughter]

Ryan Isaac:
Yeah.

Sara Stock:
So often we’ll get on the phone with a potential new client. And he or she will have done all their research right? And they come in knowing what they’re talking about. And we spend a lot of time correcting…

Ryan Isaac:
Undoing it.

Sara Stock:
What they’ve learned. Right, unlearning. And so the best advice I can give is. We are not the only law firm out here who does this. I know that many firms and many transaction advisors will do a free consultation with you. We give away all of the information in our initial consultation. We’ll tell you exactly how to build it. We’ve put the educational material out on the internet so that it is available and can be relied upon. So I highly recommend if you’re interested in going down this path sure, do a little bit of googling everyone does it right? But then speak to someone who really works in this space who can lead you down the right path and help you build the right infrastructure.

Ryan Isaac:
On that note I’m actually curious what kind of mistakes have you seen? Are there any common ones when people are trying to DIY this from Facebook group information and then they… Is there any common big mistakes you’ve seen?

Sara Stock:
Well, it’s almost impossible to build the infrastructure without a lawyer. So it’s more of misconception that comes in about how the model should work, and how incentive equity works, and how easy or difficult it is to obtain funding for this. That’s where the mis-conceptions tend to lie.

Ryan Isaac:
Okay, that’s good to know. So for anybody out there listening. First of all, how do they get in touch? And then what’s the typical process of working with your firm?

Sara Stock:
Yeah, so my name is Sara Stock. My email is sara.stock@stocklegal.com. We have a really great website; stocklegal.com. There’s a wonderful form that you can complete. And that form allows you to request a consultation. I do 99.9% of the initial consultations myself. So you’ll talk with me. And then how the process works is that at the end of that potential new client call, that 30-minute call, if you wanna move forward with us, my first step is always please send me all of the documents that you have. If you have an existing entity, send me your organizational documents. If you have employment agreements, please send me those. We’d like to get a holistic view into what you have first before we make the recommendation on what you should build. After we receive that information, we spend a few hours reviewing it at our hourly rate. And then we typically set up an hour-long Zoom. And during that hour-long Zoom, we dig deep into what you’ve built. We talk a lot of strategy about… And vision about what you’re looking to build. And by the end of that hour-long Zoom we build out a plan. And I’m a big fan of speaking English to clients. I think that’s incredibly important.

[chuckle]

Ryan Isaac:
Right.

Sara Stock:
And building out a step-by-step plan so that you can play along from home. I want you to follow along. I want you to know exactly what we’re building. Once we arrive at consensus on that step-by-step plan, we then build out a fixed fee proposal for our dental clients. And almost all of the infrastructure building work that we do, we do it for a fixed fee at my firm. And once we get consensus on that fixed fee we sign up and we’re off to the races.

Ryan Isaac:
Awesome. Well thanks for going through all that. So that’s stock, S-T-O-C-K legal.com. That’s the website. And the blog posts and everything you were referencing are on the website I’m assuming?

Sara Stock:
They are and we’re gonna send them to you as well so we can link them.

Ryan Isaac:
Yeah, we’ll put those links in there. Very cool.

Sara Stock:
That’d be great.

Ryan Isaac:
Sara, thanks for taking some time here with us today. This was really fascinating because most of the time we’re discussing… When we’re talking about legal aspects of the business side of dentistry usually it’s on the other side. It’s been really cool to hear on the building side of the DSO. That’s really unique. So thank you for doing that. I appreciate it. Stock Legal everybody. And thanks everyone for joining us today. If you have any questions for Sara and her team, go to stocklegal.com. If you have any questions for us, you can go to dentistadvisors.com. Sara, thanks for joining us. Have a great week. And we’ll catch all of you next time on another episode of the Dentist Money Show. Take care. Bye bye.

Sara Stock:
Thank you so much.

Practice Transitions