How Much Is Your Practice Really Worth? – Episode #659

On this episode of the Dentist Money Show, Matt, Jake, and Christine unpack a real-life case study of a dentist who was approached with a roll-up offer from a DSO. They discuss the fine print behind private equity deals, the financial structure, emotional impacts, and the long-term implications of selling to private equity. This episode explores what dentists need to know before signing a deal and why protecting independent ownership still matters. If you’re considering a DSO offer, tune in to hear this case study.

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Podcast Transcript

Matt Mulcock: Today’s show, we’re talking about one of the most important topics in dentistry, DSOs and roll-ups. We’re doing case study, Welcome to the Dentist Money Show, where we have dentists make smart financial decisions. I am here with the wonderful Jake Elm. You would know and love him. Now he’s done his own podcast, So he’s, you’re in, Jake, you’re just in, uh, and,

Jake Elm: Yes. Stoked to be here. This is

Matt Mulcock: And then we are, I I wanted to kind of hold this one back ’cause I would, I would call you a guest, but actually we have a special announcement. You’re not really a guest this time. You are, but you’re becoming a regular. We’re so excited to announce, the wonderful Christine Uhen. Many of you know and love her. as now part of the Dentist Advisors team. Welcome Christine.

Christine Uhen: Oh, it’s so exciting to be on the show as one of the hosts. Yay.

Matt Mulcock: I know it’s kind of cool ’cause Yeah. How many times, Chris, have we, have we texted like, you will text me, like, oh my gosh, I listened to this week’s episode. I mean, that, that’s been going on for, for quite a while. And yeah. And now to have you on the show as a regular, this is gonna be one of many, many shows we’re gonna have you on.

We’re so excited. I wanna just take a second to talk about this because I think it’s really important to talk about kind of you and the role you’re gonna play and how this helps, uh, our audience and our company and, and the dental space in general. so I guess I’ll just start with this really quick. If, if I may, kind of something we’ve started to really, really coalesce around as a company. Is this belief of really protecting the integrity of dentistry and, empowering independent practice ownership for dentists. And we’re really passionate about this and it’s become, again, truly like our, our why and our mission. And so this bringing and, and having the opportunity to have Christine Uhen join the Dentist Advisors team as our practice strategist is really a testament to that, to that belief that we have and just adding to our team to be able to help the dental space. So I speak for everyone safely, everyone. Chris, when I say we are so excited to have you join the Dentist Advisors team.

Christine Uhen: I couldn’t be more excited as well. This is my passion is growing dental practices and I’ve been following you and I’ve known you guys for years and I know our goals align and when I can help your clients make good choices, know all their options. Make success from their practice, both personally and professionally. That just warms my heart. So it’s a, it’s an honor to be here and a part of this team.

Matt Mulcock: Yeah, it’s great. And there’s, there’s, yeah, there’s so much alignment here. We’ve said this mo so many times over the years, our business is built on this, which is dentists, like the dental practice is the number one generator of wealth for dentists. We fully believe that, that that’s the main investment you should be making. And again, this is just us doubling and tripling down on that and saying, we want to be able to help dentists, make their practices more profitable, more efficient. And so that’s, that’s the focus. So yeah, really excited to have you again, have you a regular on the show as well. This will be one of many, so I.

Today, and Jake, by the way, we don’t wanna steal any limelight from you. Like we still wanna highlight you as, as well. So we just, everyone knows you now.

Jake Elm: Feel free.

Christine Uhen: Of limelight to go around.

Jake Elm: Christine will be the star of this podcast. The, the audience is going to find out. Yeah, no,

Matt Mulcock: Yeah, sure. We’ll find out real

Jake Elm: On the, in the backseat.

Matt Mulcock: We’re just here. We’re just here.

Christine Uhen: Oh

Matt Mulcock: uh, let’s that happens a lot, Chris. Don’t, don’t worry. I’m doing 2 cents after this, and that’s me every time with Robbie. It’s like, I’m just here. Robbie’s the star. so today we’re doing a case study. We’re trying to make these more of a regular thing where, I’ll give, kind of give everyone idea. We were in a meeting a couple weeks ago. We do this every week with the advisors and Christine, we, our advice team, we do, um, what we call mastermind meetings. And it’s really just where we come together. We share case studies, we share things we’re working on. we share like problems we’re seeing with clients and, and, and ways that we can kind of use our collective knowledge to, to help.

And so, Jake had brought something to the team. Chris was there, we’re we all, like, have this great conversation about the situation and about, it’d be 20 minutes into this conversation with our whole team. I was like, we need to do a podcast on this. ’cause this is so pertinent. This is gonna be so helpful, I think, for people to hear. So, Jake, I’m gonna kick it to you. Obviously this is all gonna be anonymous. Um, we’re not gonna share any details around the, the, the person. Um, but we’re gonna go pretty deep into the situation and, and talk about what we’re seeing. why don’t you just take a couple minutes, just kind of set up, set the stage for us of the situation.

Jake Elm: Yeah, Matt, you and I, we’ve, we did a two part podcast series or whatever you want to call it, a couple weeks ago or months ago. I don’t know, time flies now. Um,

Matt Mulcock: A.

Jake Elm: About getting ready to sell your dental practice, right? We talked about just numbers of selling and we talked about sending DSOs or privately, and I think what we’ll do today is an extension of that conversation where in a lot of our conversations on the podcast up until this point, we’ve done just general, like, here’s the things you should be looking out for when selling or when encountering DSOs today. I think what we wanted to do is try and get a little more specific with some numbers and go through some of this, which I think is really helpful for audience who is like, yes, I know the general ins and outs of maybe DSO structure, but I haven’t actually been approached. I don’t know what actual numbers look like.

And so our hope today is that we can give just more education around that, which I think will be helpful. Again, like you mentioned, this case study that we’ll be going through today was from an actual dentist. We’ve changed some of the numbers. Things are general, so we’ll kind of just speak to it in general terms there. So, okay, so I’ll just give first background on the practice and then we can get into kind of the DSO structure things there. So with this doctor, it’s a single location practice. no associates working for them. They are the main doctor, producer. been open for five to six years, right? So this is someone who’s opened a practice, they’ve gotten to the swing of things.

There five operatories, general dentist. I think we should have started that first. Not especially, this is a general dentist. so that’s just the basic outline of the practice there. Collections wise, let’s say $1.7 million is where this practice stands. the total doctor take home pay from that 1.7 or say, let’s say it’s about six. $675,000 all

Matt Mulcock: Total, total

Jake Elm: Total income. So we calculate this with like your bottom line net income number. This is the wages that you pay yourself in the family. This is, we’re adding back depreciation expend, or interest expense. Those other things that you’ll see on the p and l, um, we’re adding those

Matt Mulcock: Stop there really

Jake Elm: Yes.

Matt Mulcock: I just think this is a really good point to make while we’re in it, and we can talk about this more later, but I, Chris, and you and I have talked about this a ton, when we talk about income. To a dentist and collections all the numbers you’re highlighting. this gets confused a lot because when you’re selling privately versus DSO, I think most people out there know DSO focusing on ebitda. What Jake, what you just described, Jake, the technical term for like, what an accountant would call it, is seller discretionary earnings. Um, which is just like to, like you said, all the income that you’re taking from that practice, but that gets confused a lot. I’ve actually seen CPAs produce a p and l and show a profit margin that’s actually just their sd, like their seller discretionary earnings. That’s a critical like difference you have to make. And that’s not profit margin, that’s just everything you’re pulling from the practice

Jake Elm: Yeah, this is the inco number that we like to use when we are doing

Matt Mulcock: In real life. Yeah.

Jake Elm: Yes, because essentially what we wanna know is how much money are you actually taking home from the practice, and what do we have to use for spending or debt payments and saving and investing. So this is, yes, this is going to be higher. We’ll get into EBITDA and profit margin and things like that. But 6 75 is the, like, this is what the doctor’s taking home really right before, again, obviously before, taxes and

Christine Uhen: Debt, any of

Jake Elm: Stuff. We’ll get into that. So with that, that number, so 1.7 million collections, 675,000 in income. That’s about a 40%. Take home profit margin, right. Is what we call like

Christine Uhen: Or the other way he, he is got a 60% overhead.

Jake Elm: Or 60% overhead. Right. If you wanted to flip it there, which Christine, I mean that’s a pretty healthy, solid practice, right? I mean, I think a lot of dentists would like to be in that profit range.

Matt Mulcock: But it’s, it’s.

Christine Uhen: Very. Yeah.

Jake Elm: A few more details here just on the practice side. So this specific doctor, um, they’re still paying, again, they’ve been open for five to six years. They’re still paying down practice debt. Um, they are still around, you know, 10,000 ish dollars a month paying a practice and equipment debt, which is not uncommon. Um, still have around $480,000 in total, like the balance of their practice debt on the practice still that they’re working to pay off over the next, again, five-ish or so years. okay. Any other info on the practice or do we want to get into the DSO offer here?

Matt Mulcock: Said, uh, five ops doing one, seven. Any room for growth on the ops side? Like does he have like, other rooms that are just aren’t equipped yet or just is he pretty maxed out.

Jake Elm: Out, I think at this specific location

Matt Mulcock: Okay. And does he own the building?

Jake Elm: No, no. Not an

Matt Mulcock: Sorry, Chris.

Christine Uhen: Yeah, no, so he’s leasing, so he has, he’s leasing a space that’s not able to expand with horizontally, laterally, with any more operatories in this location.

Jake Elm: Yep. I guess we can plan out four days a week in the chair is what he is doing. One admin day. So he’s, you know, they’re at four days there. anything

Christine Uhen: So it’s a great practice. It’s a great practice. Let’s just not, there are just no two ways about that. He’s got a great practice. He’s doing well. Again, this comes down to the question of, my question is why are, why is he pursuing this as an offer? You know, did something happen? Was this a timing thing?

Let’s get to that story.

Matt Mulcock: Yeah. So I guess that’s, so Jake, to that point, you, you just gave the background of the practice. The whole point of this is, he was approached, to do a roll up and we’ll talk about what that means, but that’s why we’re talking about this. That’s why the ma we had it in the mastermind is someone approached him and said, and gave him kind of an offer or like said, Hey, let’s do this rollup.

Jake Elm: Yes. Which I think most dentists will be in this day and age. Right? If you are a couple years in your practice, you have a pretty successful location, it feels like you are going to get an offer of some sort from either one or multiple DSOs or a rollup, which we’ll get into. okay. Well, Matt, do you wanna start, I want to get into this offer. I don’t know if people, our audience understands what a rollup is. We call it a DSO Rollup. Just, you know, how does that differ from A DSO? Can you give, do you want to give a quick

Matt Mulcock: Yeah, let’s talk about that. And Chris can, can certainly, give a whole other deeper level of perspective, but just, I’ll go high level and then, and Chris can go deeper. Um, so I think most people out there, I’d imagine a dentist listening to this is gonna know, or I’ve heard of something to do with DSOs. The, I think the place to start here though is I heard it once from a broker, never forgotten it. Um. That, and this is from Kyle Francis. Shout out PTS Uh, Kyle has one time said at a, a summit we were speaking together at, he said, you’ve seen 1D SO offer. It means you’ve seen 1D SO offer. So I think that’s the one thing to keep in mind is like there are parallels of like general things you’re gonna see, but every DSO offer is different.

I think that’s the first place to start. But there’s a huge difference between A DSO, let’s say A DSO directly comes to you versus you go to a broker and they start kind of like, you know, fielding offers from multiple DSOs and then a roll up. So those are very different things. So in this specific case, what a rollup is, is a group usually like a private equity or some type of like front, some type of company is coming. And what they’re basically doing is they’re just trying to pick off practices like all over the country. They’re just trying to find solid practices. again, anywhere. And their main focus usually is to find practices with healthy ebitda. Once they get to a certain, kind of group ebitda. So let’s say they try to get 10 practices, 15, whatever the number is, they’re trying to get their total profit margin across those that, that entire group that try to basket of practices to a certain level, and then they’re gonna package it and they’re gonna sell it.

They’re gonna sell it to another group. That’s really what it is. it’s different from A DSO in, in most cases, where DSOs coming in offering you like these services and all this kind of stuff. They might say that, but that’s the name of the game of a rollup. How do we package these things together, put it all together, and then sell it to a bigger group and hopefully we make some money. Chris, I wanna throw it to you. Is that a, a fair description? What are your thoughts you’d add to that?

Christine Uhen: Nothing I’d really add to that other than, again, alignment of you’ve met one, you’ve met one, but same thing. The question is, the offer itself is really what you wanna look at because there are good DSOs that take care of their clients, that take care of the patients that ha, that do support when they put that in the contract. So again, this, my question would be the longevity of this, is this just about aggregation, the mergers and acquisitions that creates the. EBITDA and then soon to sell. And then it’s all the timing of that. Where am I at in that cycle? Am I the second practice within this rollup or am I the 14th practice?

And how much timeframe is there for there to be earning opportunity in that rollup? So all of that is part of that deal structure that matters. So again, this is, that is the intent. Again, that’s what I love about Dentist Advisor is the education, right? We are just bringing education to the client so that they make the best decisions for themselves. So those are all questions that still need to get addressed with any offer that comes on the table.

Matt Mulcock: Chris, you just said something interesting that I think would probably be a good guideline or maybe something that for, for dentists out there to keep in mind and tell me if this sounds fair. But when you were going through that, I’m sitting here thinking, I think you can uncover a strategy or like the underlying strategy or intent of whoever, whatever this group is that’s coming to you by what they’re pitching you on. Like meaning how many times Jake, have we heard their main pitch is the recap, like that’s their main pitch, like, oh my gosh, like. We’re gonna recap in three months, you better hop on board. Like that to me is a telltale kind of red flag sign of like, they’re just trying to do a quick flip basically, versus an emphasis.

Chris, to your point, we’re not saying these are all bad. Like there are some good ones out there that are doing it the right way, as I’d say like the grow to grow strategy. Like we’re actually trying to do this correctly, but that pitch would be very different. They’d be talking in, in detail about like how they’re gonna support your practice, not kind of dangling this roll up strategy in front of you.

Christine Uhen: Well, and again,

Matt Mulcock: To say, Chris?

Christine Uhen: Yes, what is it? What’s in it for me if I do sell my practice? Right? Where is the support? What is the support? What’s the cost of the support, if that, so this, go again, take this back, another layer of why are we even entertaining the offer. And this is exactly again, what dentist advisors does on the the financial consulting side.

What is your why? What are we saving for? What does debt mean to you? Not from a just the cash flow, but from an emotional burden on my shoulders. All of that that often comes down to why doctors are pursuing an option like this that showed up. If I had a nickel for every time a doctor said, well, I had a bad day. The offer came in, I listened. Right? So let’s make sure decisions are made in a neutral emotional state. Not the very lows and the very highs, but it’s how could you not say someone’s coming to you saying, you have a beautiful business. I would love to partner with you to make this an even better business.

Who doesn’t love to hear that? Right? So this does come back to what’s in it for. Everybody, every player. How does the private practice benefit the owner, the individual founder? The unit. The group again, is there different levels, and I’ve heard this from you and others in the industry, of what is the level of involvement I have as a partial owner and of the big group? Is there ownership? Is there stock? Are there decision makings? Are we aligning clinically, not just with our financial finances, but do we all practice the same? Do we believe in the same things? Are we going to share buying power as a group that’s gonna reduce my overheads? Are we gonna have help with recruiting?

All of that is where there is benefit to an owner within a group. But those are all the options that can make or break a deal.

Matt Mulcock: Totally. I totally agree. Jake, can you give us some insight with this? you obviously know the, the, the client, to Chris’s point of like kind of why, what, what even peaked the interest in the first place?

Jake Elm: You know, I think I wanna speak just broadly first, which I agree with you what you’re saying, Christine, which is, I think most of the time doctors just get presented to these offers, like, sure, I’m going to listen. Like, yeah, you, you’re telling me my practice is awesome. You’re showing me some pretty big dollar.

Signs here. And so I’m obviously gonna listen and see what’s going to happen here. And then we always get the dentist coming to us saying, does this make sense? Does it not? In this particular case, I think it was mostly that I think 80%, 70% I just heard of this group. They came to me. this offer looked pretty good.

I was seeing, uh, multiple millions of dollars they were willing to offer me for my practice. And so I really want to take a look at this seriously, maybe the other 20 to 30% is this doctor’s getting to a point now in his practice, again, been open for five, six years, he is now wondering, okay, can I tr transition out of the chair? Right? I think is something that’s top of his mind. Can I step away clinically a little bit? and we can talk about this later about bringing in an associate or can I sell and then maybe get a good financial nest egg and then open up another practice again. Like he was just kind of going through these things in his mind.

Like I think he is at an inflection point where it’s like, okay, I’ve kind of, kind of done. Me solo doc in this practice, we’re running pretty smoothly now. What is the next step? And he was maybe thinking, is this DSL cell or this rollup the kickstart to my next step or what I want to be doing? I don’t think we have clear, he, you know, he didn’t have clearly defined this is what it’s going to help me do, but just considering, is this a good option? Does this make sense

Matt Mulcock: They, they came to him and he was just like, oh, this could be in like maybe.

Jake Elm: This could maybe, yeah, this could maybe be the thing that kicks, smartt, kickstarts me to the next stage of my career

Christine Uhen: Well, and there’s the point, right Jake, he’s at a stage, right? This is, I’ve done the beginning, whether it was a startup or an acquisition. I’ve now got five, six years in at that seven year mark. I think every seven years. Again, you know, you’ll hear, I wanna get out, I wanna buy a Taco Bell, I wanna try something different.

What’s next? Right? I’ve done that crumble cookie. I’ve done this, and I’m kind of on that. Um. Not a rollercoaster, but the, the treadmill, I’m doing this, it’s rinse and repeat. I got this. I’m what’s next? So what I hear there is like I, there’s something else out there and that’s an entrepreneur, right? That is someone who is looking to do the next thing. Whether that’s put somebody else in here, buy another one, put somebody else into this location, take some time off. Those are all something that he can do with the success that he does have. So he is at choice and has multiple options within this facility. There might be a timing on his lease too. So it might be that sometimes that’s a decision making of do I stay, do I go, do I build because my lease is coming up in the next 18 months.

Things like that are often triggers for these conversations and sometimes it is that timing and someone came to me, it was the right time. I’m gonna either listen at least or take the deal so. It’s, he’s really normal. He’s, he is

Jake Elm: That’s what, yeah, I like that we’re highlighting this point. You know, Chris, that you say, say, which is working with dentists, we see this often where for most dentists they are driven and entrepreneurial and that’s like their base psychological mindset. And it’s also part of their life where it’s like, yeah, I go to school, I graduate, then I go to dental school, I graduate, then I become an associate, and then I buy a practice and there’s always these next steps laid out for them and these different transitions. But then I think that stops when, okay, we bought the practice. We are multiple years in their practice is doing well. Their natural in inclination is, okay, well what is next? What is the next step? But, and that’s, I think most dentists get confronted with this. And so I like that you brought that up, that this is very normal and we see this all the time of what’s next.

Matt Mulcock: It, it is totally normal.

Christine Uhen: Generational too. This is, the younger dentists are looking at multiple locations. What is next? I’ve done this one. I’m letting somebody else run it. I’m gonna do it again. Whether that’s crumble cookies, taco Bell, or another dental office, we

Matt Mulcock: Just have shorter attention spans now.

Christine Uhen: I’m not saying that, but it’s different. And you’re seeing that outside of dentistry too. This isn’t, this is a business trend, not just a dental trend. the shorter timeframe for ownership.

Matt Mulcock: I agree and I, I joke that a attention span thing, but I actually do think the landscape of just the world has changed. again, something as basic as just the access to information and the internet and being able to experience or see what other people are doing is far different than, you know, the, the past generation. So I do think there is some level of like, distractions at an all time high, or the ability to be distracted. Um, but the other thing I wanted to say on this, Jake, when it comes to, to the motivation, and, and I love that you guys both said like, this is totally normal, but it always like the origins of the questions to me matter.

So meaning. There’s a huge difference in, in number one, having this be a reactionary thing. Meaning like, this just came across my desk. Like, I don’t know. Cool. I never thought about it before. Maybe I’ll do it. I think it’s good to entertain it, but, there’s a huge difference in saying like, I’m doing this outta boredom. I’m doing this out of burnout, and I’m doing this out of fear, versus I’m doing this out of intention, an intentional vision. I’m executing on vastly, vastly different. And if you, you’re in the first camp of, like, Chris, to your point, I just had a bad day. Or like, I’m just tired and I just want out. Like, or I’m, I’m just like, I’m scared because all these people are saying I’m, I’m gonna get left behind.

Like, those are not foundational, like solid ground to making good decisions off of. So I think the first step for me in these situations would be, or if I’m, if I’m a dentist is saying, is getting really clear and really honest with yourself. Like, where is this coming from? I think that’s the first step.

Christine Uhen: Well with any, I mean, these are these inflection points. Do need to be thought, thought through. Do I bring on another doctor? Do I look at another location? Do I look at a service mix that, ’cause I’m, I wanna invest $200,000 in a new, in a new laser. Well, what’s that gonna do for my practice? The thought behind it and the intentionality of all of these decisions, transition being one of them.

But a transition is a move, A transition is another doctor, A transition is expansion. All of those not just a sale, right? That, that’s the, that’s what everybody thinks of with transitions. But all of those are transitions that should be thought through and be intentional before we have to react. Disability, you know, decisions that, you know, horrible things that can happen to anybody that would force that decision. Thinking through them in advance makes a lot more sense.

Matt Mulcock: Love it. I I love that you brought that up. We’re gonna get into like some detailed alternatives in this particular case. Jake, why don’t we jump to, the, the deal

Jake Elm: We can get some of the details of the, of the Delia that they offered. Okay. So, you know, when they come to, and they’ll give you this offer sheet with this rollup and some of the details of the offer and the structure are this. First with the rollup is they will charge, what do we call, like a management fee, a rollup fee, like an ongoing fee for being part of this new group of practices that putting together, this will vary for, in this cer in this specific deal is 5% of an, of monthly collections is what they charge. Like, Hey, we are gonna try and, you know, they’ll say this on their statement that we’re going to. Help you like, get economies of scale and become more efficient. And hopefully we can lower your overhead a little bit with supplies and different things like that. but that’s their cost for doing that and being part of this group is 5% of monthly collections is what they’re gonna charge as a fee.

Christine Uhen: As a front upfront and ongoing or just ongoing?

Jake Elm: Just ongoing. That’s just ongoing. So every single month they charge the fee, whatever your collections were, 5% of that. So in this case it was around six ish thousand a month or so. Right. Is what, you know, based on that collection level is about what they were going to charge. Because the other charge that they’re taking, their fee for putting this group together and going, gaining other practices in trying to raise the multiple is they’re also going to take 7% of the sell price, like 7% equity in your practice for finding the deal Right off the top.

Whenever the deal happens, it will take 7%. Whatever that amount ends up being. So those are the two fees. That’s usually how I think most of these rollups get paid is they will have an ongoing rollout fee that you pay monthly and then when the transaction happens, if the transaction happens, they will take like a certain percentage of that transaction cost too. Um, with that there. So that’s the first thing to know. So as part as as far as the deal goes, they listed his ebit. So oftentimes you’ll send this whatever group is looking to buy your practice or get into it, they will say, Hey, send us your p and l and we will let you know, just a rough number of what your EBITDA is for the practice is something they’ll do.

Matt Mulcock: Which by the way, they rarely, if ever, tell you their formula. They like, you could have five different, 10 different groups and they’re all gonna tell you something different.

Jake Elm: EBITDA’s funny. Yeah. There’s different ways to calculate or add back things. And what they did for him in this scenario is they placed the practices EBITDA right at about $400,000. Um, so he said his take home was 6 75. Like that’s a total personal take home. It’s profit margin and they had about 400,000. I think this is a little high. It is. I think it’s a little bit high. For what, again, I don’t know their formula or how they calculated it. Mainly because if you, so EBITDA for the dentists out there, a good way to think about this, right? Like Mass said, is like EBITDA is your profit essentially from the practice. What we’re saying is whenever big companies coming into buy your practice, they wanna know, okay, if we’re paying an associate to replicate all of your production, what is our take home after we have to pay this doctor to do that production? Right? So go ahead Chris.

Christine Uhen: They will also normalize expenses. So for example, they will not, you know, a, a third party will look at, oh, you’ve had a consultant. Well, we won’t need that. We can take that out. You

Matt Mulcock: Oh, you have your spouse on payroll? Yeah.

Christine Uhen: All the family, right? But also to the, like, if you’ve spent outside of what they consider like a normal marketing spend, they’re gonna right size that and say, well, I know you spend 8%, but we’re only gonna spend two or three. So they’ll take some of that out. So there is some normalization to come up with that EBITDA as well if at, based on their parameters of what normal expenses should be.

Matt Mulcock: That still seems high.

Jake Elm: Yeah, maybe that gets us doctor up to that 400. The reason I think it’s high is, so in this case, Guinea is taking home 6 75. They say his EBIT is about 400. He is paying himself a little less for his production than what’s standard in the industry. Right? So let’s say just for example, I don’t know the exact numbers here, but let’s say of that 1.7 million collections, let’s say 300,000 of that is hygiene. So this doctor’s own production. Let’s say it’s about 1.4, is what the doctor is doing personally. If you were just to go find a dentist off the street, pay them 30% of whatever. That, you know, their collections are, that’s like $400,000 or so. You’re probably paying to this new associate coming in. So we say, okay, we’re paying an associate 400,000. The take home is 6 75. I think 2 75 or 300 is probably closer to what the actual EBITDA is in the practice. anyway, all in all, they, they put his EBITDA here at 400 though, just, you know, because said it’s a little inflated. That’s what this DSO rollout company calculated his EBITDA at. and then they offered, again, this projection, they’re projecting out, okay, if we do this group DSO, we are projecting that we are going to then sell your practice at a multiple of that ebitda. The number that they put on the software sheet was 10 x ebitda. Right. That’s what they listed as their projection. We’re all

Matt Mulcock: All you need to hear. By the way, if that’s the first number you look at to say, this is a bunch of crap.

Jake Elm: Yeah. So go off on that. Expound on that. Yeah. For the, for the

Matt Mulcock: Go. I’m gonna let

Jake Elm: Or Chris

Matt Mulcock: Have thoughts, but Chris, go ahead,

Christine Uhen: Again. So he, so when I, so they’re offering him $4 million for a

Jake Elm: 4 million. Yeah, exactly. Yeah. 4 million would be the purchase price.

Christine Uhen: Right. So who wouldn’t look at that and go, I feel pretty good about this, right? So again, that is, I can see why he picked up the phone, right? If this is, or the conver had the conversation, because

Matt Mulcock: But sorry. Really quick. 4 million up contingent on the sale. Contingent on them getting 10 x from this when they do their roll up group, right?

Jake Elm: Yes. We, yeah. We

Matt Mulcock: They’re not handing ’em $4

Jake Elm: The audience. Yes. This is Okay. Become, be part of this rollout group and our goal is to sell for 4 million for your practice in a year, year and a half.

Matt Mulcock: Got it. So sign on the dotted line and bet guess what? We’re gonna go get you 4 million bucks. That, that’s the key there. Go

Christine Uhen: So they’re looking at the aggregate. So again, that 10 x, so again, the multiples on 400,000 would not bring in. 10 x that is set, you know, on higher powers than me. The multiples are based on economy banking. I mean, it’s pretty set. What a, what a multiple would be. So 10 X would be, you know, 10 million in ebitda. So again, they’re looking for that 10 x to be on the group, but again, that would be applied to his individual location with the 400,000. So that’s a lot of dots on a map, I think, to get a lot of people together to be able to grow to that 10 million, or excuse me, to that 10 x. So again, this is where questions come up.

I wanna know more about the group, right? Who is it? Who’s involved? Who am I getting into a professional long-term relationship with that? We are now affiliated together, right? So this is quite off the chart, multiple. That’s the first red flag that I saw that is an assumptive. Again, there’s the risk of will they, won’t they? Can they get that? Who knows? At this point. So again, there’s another question of where are you at in this aggregation of doctors? How far along are you? Are we at this with a 12 to 18 month cell time? So again, just more questions than answers here, but yeah, radar went whoop. Let’s talk about that multiple, where that came from. So.

Matt Mulcock: Can I just, this is such crap. I’m sorry. It is. Here’s the, here’s the problem. This is such a contradiction. I’m gonna highlight this contradiction right now where this, you don’t need to look any further than this, which is they’re taking 5% claiming they’re gonna do all these things for you and, but then they’re pitching a 10%, or sorry, a 10 x multiple. ’cause we’re gonna go roll these up and we’re gonna go get this big group. So what you’re saying is you are not gonna be the group to do anything for me as far as like whoever’s gonna buy us is gonna supposedly be the, like, you are a middleman. That’s what this rollup is. You are a middleman. And so it drives me insane that their pitch is like, oh yeah, like we’re gonna do these all these things for you, pay us 5%.

When in reality all you are is like a broker masquerading as this management company pretending to help the dentist. You’re just trying to roll up and, and maximize profits to go sell to some other big private equity group. Like, I’m sorry. It just, it’s such crap. And the fact that you’re saying 10 x is so disingenuous. It’s such a lie. And I, it, it drives me insane. I’m sorry I’m trying to stay calm, but it’s just, it bothers me because these dentists don’t, they see 4 million to your, your client, Jake. I don’t blame him one bit. Chris. Of course, like you said, I’d pick up the phone for that. Oh, are you kidding me? But then you start to look under the hood and you’re like, and you start to understand how these work. And it’s like, this is, this is just, it’s snake oil. You’re selling snake oil.

Jake Elm: Yeah, it’s a projection. It’s one of those tough things to parse through. I think for a lot of dentists where they sing like this official looking statement that says, Hey, we can get 10 x for your practice. You’re just not realizing that this is a projection, this is an estimate, this is a guess. They could throw whatever number they wanted on there. They could say 15 x or 20. There’s no like legal, like they can put whatever number they want on there to try and get you to sign up and go for this. And so that’s something I think that’s important to point out is all of these things, whenever you get these deals, if it’s for a rollout company, that’s not the actual DSO that’s buying your practice are projections.

The estimates, they’re guesses and so be very wary of that. Again, we, Chris, like you said, the actual multiples of what private equities willing to offer different groups or practices. That varies on a lot of things. The economy, interest rates, banking. Yeah, just for just the listeners though, I think we can give like a general rule of thumb or maybe where to set your expectations as of now, in the middle of 2025 and May, 2025. What we see, like five to seven X would be a pretty safe guess. Like if you’re looking to sell your practice, like single location, not huge. Again, this varies a lot, but I think just like to set your expectations, I think five to seven XE, but as a pretty good expectation setter, if you can get more than that, amazing. But that’s why we’re saying 10 X seems pretty ambitious.

Christine Uhen: Yeah

Jake Elm: Would you guys agree with that?

Matt Mulcock: Yeah

Christine Uhen: Would’ve said four to six. Yeah.

Jake Elm: Four to six?

Christine Uhen: Yeah. Again, I don’t wanna overshoot that because I believe I and if they get better grades, so, but I, the right sizing, the expectations, I think, um, four to six, seven I think would be outstanding. Again, if you’re a solo practitioner, for sure. I don’t think you’re gonna see six or seven. again, there’s downsides to the super producers, right? Because I can’t put one associate into a practice. Let’s just use this one, five lo five operatories. If he was gonna say some and I bring it and he cut down some time, I’d bring in an associate who probably can’t produce, you know, 1,000,004. On the same pace. So I now have to put in potentially two. So again, there’s the solo practitioner doing these high numbers are even

Matt Mulcock: A gift and a

Christine Uhen: Get. The bigger Yes. Are even harder to get those bigger multiples ’cause replacement is not, or they’re gonna be locked in as the provider for a longer amount of time because they are the only ones that are making that profit for the business.

So yeah. out outproducing, the market is, there’s some truth to that statement for the super producers. He’s closed to be in a super producer.

Matt Mulcock: Yeah, he’s, he’s up there. So, O one, one thing I’ll highlight on this EBITDA thing, you, you guys are totally right. That’s what we’re seeing, that’s all of us are seeing, and I think four to six is a reasonable ebitda. Like if someone’s like being reasonable, meaning a broker or someone A DSO trying to, you know, give you a pitch and they say four to six, maybe seven, uh, Chris Specialties will go up, right? We’ve seen specialists like, I think orthos actually right now getting the most, or, or maybe is it, pedos that are getting a higher multiple right now. on the higher end, if you’re a specialist, you might be on the hiring, but a GP four to six. Right now, someone listening to this, or like, let’s say the people pitching this rollup are listening to this. They’re fans of the show. I’m just kidding. They’re not. Um, but they might re respond and say, yeah, but the whole point of this is this scale. Right? And, and we all know, like as you get to certain levels of ebitda, like a prac, so for example, a practice doing seven figures in EBITDA versus a practice doing let’s say 500,000, the practice with se uh, seven figures of ebitda, a million dollars or more is gonna have maybe tick up on that scale.

So what they’re gonna say, what they’re gonna pitch the him on is they’re gonna say, yeah, but our goal is to go out and get 10 million in EBITDA across these practices, and then we’ll get, we’ll get a higher ebitda. Like, or, sorry, higher multiple. I understand that conceptually, I’ve just never seen it actually work. So that’s where I think it, it makes sense theoretically. I’ve never seen a roll up like this actually be effective and, and produce. Most of the time they actually fall apart before they even get done.

Jake Elm: That’s the next point I wanted to get to Matt, which is great. I know multiple dentists personally who are part of, like, they signed up, they are part of a roll up for their practice planning on selling. We are on like years two and three now of them not selling, right? So they joined this rollup. The, the rollup said, Hey, we’re gonna try and sell in 12 to 18 months and get this higher valuation. We’ll get more practices in practice. I know multiple dentists who are in year two and three of being part of this rollup, they’re paying 5% of their collections every single month. They’re not really getting the

Matt Mulcock: They’re getting

Jake Elm: Practice. They, you know, the economies of scale or anything that was promised there. And so now they’re just paying this 5% every single month hoping that we can find a private equity deal and get more practice in there. So, yes, like you said, Matt, like in theory, this sounds good. In practice, I think we don’t see executed very well very often, if at all.

Christine Uhen: Well, and then, and things are, things are, things are against that right now. Right? The market, everything. The cost of borrowing money, the, the, the merger and acquisition rush is really slowing down right now for a valid reasons in the marketplace. So while we can’t predict that’s gonna happen or not, or when that’s gonna slow down, this has happened to more than just roll-ups though too, that, that the return, the recaps things have been slowed down.

If they’re really gonna hold to the promises they’ve made to their investors and to the doctors, they are holding on the recap so that they can. Get either more clients involved or get the better returns with the, with the, or better investment with the private equity. So it’s happening all over right now. This is a, I mean, we do think, again, depending on who you listen to, that will get better by, you know, Q4 maybe, you know, early 26. But there are, that’s a reality out there in all m and a markets. Again, not just dentistry. This is happening in, we’ll stick with the USA right now.

Matt Mulcock: Yeah. Yeah, I, I agree. There’s a lot of reasons for that, right, Chris? And, um, I think we’ll call it a hot take. I actually think because of the macro trends, things that have happened over the last couple of years, but also I. I think there’s been some overestimation about how easy it was gonna be to consolidate dentistry. I think it’s proving to be pretty difficult, and I actually think it’s not going the way a lot of people say it is. Um, and it, and that, that’s a discussion for another day. Jake, anything else to break down on this specific deal? You highlighted like the multiple, you, you highlighted the, the fee. I think it would be critical to break down kind of like getting into the nitty gritty of like the take home pay for this doc after all is said and done. But anything else you’d add to the, to the actual, um, deal itself?

Jake Elm: No, I just wanted to get, I think the next step would be get to like, let’s say this goes through and I wanted to go through the numbers of what would the take home and pay and things like that would be. So let’s just, again, we’re just using this exercise. Let’s say this particular doctor could get a 10 x multiple, right? Let’s say joins the rollup, it goes through and they could actually sell like they sell when they say they’re going to sell. I just wanted to run through some of the numbers of that because I think it’s, it’s educational and it, it’s cool to see. So let’s say he could sell for 4 million, right? Like they got it. They found the 10 x multiple they sold.

Matt Mulcock: It.

Jake Elm: So here’s the breakdown of what they were pitching again, in their statement here of that $4 million, they are taking 300,000 this rollup as their figan. That’s that 7% that they are taking for finding the deal, facilitating everything. So $300,000 is going to that DSO Rollup company of that four.

So

Matt Mulcock: Off the bat, three seven.

Jake Elm: Gone. So now they’re at 3.7 million. of that 3.7 million, 1.5 million will be rolled into equity into the parent private, the private equity company. So that’s about 55%, no, sorry, 37%. So about 37% of the deal is going to be not cash in the dentist pocket, but going to equity in this parent group.

That’s a big deal. Something to understand there. Again, every DSL structure is different and every equity structure is different, but generally this is money that is locked up. You are not seeing right away and they will pitch you that this is, you know, as we do different recap events and keep rolling up and keep selling again, that this 1.5 million is going to continue to grow in the future and you’ll be able to cash it out. see. I think it’s safe to see for, if you are selling to a DSL, whatever that roll up equity is. I wouldn’t bank on having that or it growing.

Matt Mulcock: Yeah, and, and depending on how they structure the deal, I’m not gonna say this is always the case. It it, again, it depends. But it is possible. It is possible you be taxed on the full amount and only receive. Like 60% of the cash. So just keep that in mind. Again, there are ways they can structure it. And in most cases, DSOs and these roll-ups, these private equity groups have become pretty smart on how to eliminate that. But the way they structure the, the equity, so chances are you’re not totally taxed on things that you’re not coming home with. But it, it is, it is possible. But what you’re saying, Jake, is um, they’ve taken the 300,000, so it’s 3.7 gross, taking the 1.5 that’s going into this equity that’s supposedly gonna grow. Now you’re left with the actual deal is starting now at 2.2 million. That’s the actual

Jake Elm: That’s the actual cash. So it’s not 4 million like they say in there, but it’s actually 2.2 that you’re receiving. But then we have to do even more math on top of this point. Where on that 2.2, let’s say you don’t have to pay taxes on the equity rollup. But you just have to pay taxes on the cash. Sell that 2.2, that’s about 500,000 in capital gains tax. They are going to have to pay for that sell. So of that 2.2, take out 500,000. And then as part of this sell too, again, if you’re selling, we’re still down on the practice. Debt needs to be paid first. That’s how these things work. And so with about another

Matt Mulcock: Tax, by the way, after so you’re taxed on the 2.2 and but then, so you’re paying tax on that, and then what’s left over is what you pay the, the debt with.

Jake Elm: So in this case, he had about $500,000 in practice debt still on the practice. So if we take out 500,000 for taxes and then another 500,000 to pay off the debt, you are then left with about $1.2 million in cash in your pocket after everything. So we went from 4 million down to 1.2, right? Which this ha we see this all the time. 1.2 may be a little less appealing. You could do the quick math in your head of like, okay, I’m getting $1.2 million cash outta everything. That’s great. You could do the math of, well wait, $1.2 million is essentially three years of after tax income coming to me if I just held on to this practice even after, yeah, so it’s six. Every reason that’s 6 75 number. Let’s take out the taxes of like take home, you know, if that’s around 400,000 or so, somewhere around there you are looking at about three years of forward income that they are giving to you for this sale.

Matt Mulcock: Also, what does he become after this? He becomes an employee and he no longer gets the profits of his business,

Jake Elm: Yeah.

Matt Mulcock: Right.

Christine Uhen: He’s also losing 5% every year with the service fee. Right. And he’s probably gonna get, hopefully paid as the associate. Right. Probably about 400,000. Pre-tax. Pre-tax. That’s pre-tax. Right. So looking at, and if he, so again, we’re looking at probably, well, let’s just say that’s, we’re losing another a hundred thousand a month, excuse me, annually with the paying the 5% in, it’s just. One of the things that I was, wanted to go back. So again, what is he gonna get in the long term? I mean, again, depending if that 1.5 comes through and something as an equity, great. But at the end of this deal, he doesn’t have a practice. He has no asset anymore. Right. So if you look at the three years net after tax dollars at that 1.2 million, he still has the asset that he could sell to the practice later. So that’s, that’s the biggest point. That minus the taxes, minus the fee upfront, minus the debt, does not look like $4 million anymore. Right. That

Jake Elm: That That’s the

Matt Mulcock: And that’s best case scenario.

Jake Elm: Yeah. And that’s assuming we’re getting a 10 x multiple, which we feel pretty confident that that may not happen. So if you’re going down to seven X or eight x, that number is now much less.

Christine Uhen: Yeah.

Matt Mulcock: Think about how long it would take, Jake, to your point, you have examples of someone saying, or someone being in this, and we’re talking three, four years down the road. They’ve, to Chris’s point earlier, you’re paying that five, you’ve now given 5% every year that you’ve given up to potentially have this roll up at at 10 next multiple.

Which again, is pie in the sky. Like may or may not happen, most likely won’t. So we’re even going off of the best case scenario of, of what that would look like. And even in that, after all said and done is, is not that great. And then Chris, you just brought up a valid point. I always try to get Dennis to think about this is, let’s say you end up, okay, you end up with the 1.2 million and now you’re an associate.

You’re get he, in this case, he’s get, he produces pretty well, really well. So he’s getting paid over 400 as an associate. Cool. So you gave up almost 300 grand every year now in profits that you’re, you’ve been receiving, um, you’re now an associate. So you’ve given up all control. Now you’re sitting on 1.2 million. The one thing I think most dentists don’t think about is what we’d call like opportunity cost, right? So meaning you’ve got that 1.2 million, you’ve gotta go deploy that somewhere. So are you better off? We are big believers in the public markets, right? But are you better off taking that 1.2 million. Over the next 20, 30 years and putting into the, let’s say the capital markets in the stock market, and you’re gonna get on average 10% a year. Would that money, would those assets be better suited or better served in your private business and continuing to grow that? Like what’s gonna have a higher ROI, I’m gonna dare say it’s pretty obvious. It’s growing that practice, keeping your asset, and you’ve got the extra cash flow, you can still invest in the capital markets.

Christine Uhen: Well, and he has a practice. I went, I went back and looked at some of his practice data in the last year. He grew his, his revenue, his income stream, the collections were up 13% over the year before, and his profit margin was up 16%. He has a very, very good business and it’s only getting better. So he really, he’s doing, I’m not sure, what I was struggling with was trying to find where the 5% is gonna help the bottom line. Right. Where is, that’s where I was like, so you’re gonna. Well, I looked, I tried, I really am trying to see, yeah, there’s things that can be trimmed, things he can save, you know, one or 2% for sure, but that’s still not equaling the five and the cost. So

Matt Mulcock: Yep.

Christine Uhen: It is, it is again, yes, it’s about the numbers, but again, back to your point of what then this is again, the biggest issue I think doctors don’t think about at the time of sale is the emotional state of being the associate. Not making decisions now, but he is selling a minority percentage. No,

Matt Mulcock: Well, the 7%

Christine Uhen: No. I’m just thinking about from the distribution. I was thinking that was a minority sale. Well, yeah, it’s.

Jake Elm: No, I think in this or

Matt Mulcock: This case, I think it’d be in a wholesale,

Jake Elm: Just the

Christine Uhen: It’d be the full, no, it’d be all of it, but half of it is gonna be, yeah. So back to full associate. And you know, what is that again? I just, you really need to think about that, that piece of it, you know, and then what happens to me, you know, emotionally, what happens to me with decision making? What if I, what is the decision tree that happens in the new group that I join? Because now that’s a big step from running the show to not running the show and or, or to what level do I have any input on that? So again, back to that, you know, it’s not just the numbers, which we’re having fun dissecting, which is important, realizing that that 4 million isn’t everything that it looks like on paper, particularly upfront. And then looking at, you know, the emotional side of things later.

Jake Elm: That’s why I like going through this. I think the main reason here is not, you know, we’re going through the specific case, but it applies to everybody here and just saying like, here’s an actual example of how maybe a DSO offer looks great, like in that 4 million number, dollar number, but if we break everything down. It’s not as great as you may think, but everyone just like latches onto that starting number. It may not be that, and maybe again, maybe there’s an example where this makes sense for a dentist at 1.2 that gets into like that financial independence number. They’re stop. They wanna stop working in four to five years anyway and sell their practice. They’ll do their work back, they’re getting to financial independence. They’re gonna soften a sunset. This could make sense for some dentists. I just think it’s important that we’re highlighting these deals are just not as awesome and amazing and perfect as you may think they are just by looking at the top line number.

Matt Mulcock: I am really glad you said that, Jake. ’cause your stage of career is super important here, like exit strategy versus I’m a young dentist, still gonna still want to grow this thing or still want to be, I’m still gonna be in this for the next 10 plus 15 years. these types of deals are already gonna be a big uphill battle to climb. If you’re the younger you are, it’s gonna be really, really difficult to make the case. that proba, if we’re talking probabilities, you know, people out there might be listening and like, what about the people that got in early in MB two? Like yeah, they’re of course just like, what about the people who got into Amazon in 2002?

Like of course there’s always gonna be those. Yeah, apple. Like there’s always, there’s always gonna be winners in this game. Always. But we’re, we’re talking, uh, whatever game you’re playing that we’re talking about probabilities and the probability of a young doctor selling their practice to a big corporate group and then being in it for the next 10, 15, 20 years and being better off than just holding their asset and treating it like a business owner and being the CEO and growing this thing. Assuming you have that DNA and the team to support you, it’s gonna be really hard to make the case that these are better situations for you.

Jake Elm: I think we forget sometimes that there’s a reason these big companies wanna buy your dental practice, right? They’re not taking a loss on this in the long run. They are doing this because you have a really awesome asset that’s going to pay you a lot of money. And so they’re saying like, yes, we will front load your salary for a couple of years. Please take all of that money because they know that they are winning in the long run. And so, yes, if you are a younger dentist and you wanna make as much money in the long run, hold onto your equity. That’s what these DSO companies are doing. That’s why they wanna buy it from you. And so, yeah, I think sometimes we forget that point. Like they’re not running a charity here

Matt Mulcock: No.

Jake Elm: are. You have a business that’s gonna make them more money than you in the long run.

Matt Mulcock: Yes.

Christine Uhen: Take the win. Take. Take the, take the joy of, you know, that you are, people wanna play with you. People wanna dance beyond your dance card, right? They want you to be a part of them because you’re that good at what you’re doing. So take that as a win. Yeah. And there are, I think this is just again, back to the, you know, the story, the reason we wanted to do this was to use this as an example of what most dentists will come across at some point. And these are decisions. And what you’ve got here though at dentist advisors are great advisors that will think through this, walk through this, share options and impact of these decisions and project that out for you. So

Matt Mulcock: Yeah, I think that’s the theme there is just like, let’s just dig a little deeper, ask some more questions. let’s bring this full circle to what we started with, uh, alluded to being, it’s like, okay, so this deal’s not great. We’re highlighting that right now. Like I would, Jake, you and I looked through this together and I was like, absolutely not. Do not take this deal knowing the situation of this, of this client. let’s talk really, let’s finish here. And again, full circle of like something you alluded to earlier, Chris, of I don’t think dentists actually even think about. Alternatives. I think a critical question to always ask is if we’re saying, start with why am I even thinking about this?

That’s probably question number one. Where is this coming from? and then I think the other big kind of overarching question would be like, what are my alternatives here? And I think one of the issues is that dentists only think that it’s, I’m either selling privately or I’m selling to A DSO or doing a rollup whatever. But I don’t know if that’s the case. I think there’s other things to do. And again, depending on what, where this is coming from. So just, I’ll give a quick example. Um, if it’s coming from burnout and then you follow that up with, okay, I’m burned out. So one option is just to sell and get out ’cause I’m burned out. But ano, what are the alternatives? Well, it might be, Chris, you alluded to a few, a bunch of ’em earlier, like, maybe I need to drop some insurances and drop some days and change up my, like, what I’m do, like I love doing, I love doing this one procedure and I hate this other stuff. So let’s focus on what’s gonna get it Really intentional about the business I’m actually running and, and me actually being excited to do these procedures or do this type of dentistry and get really intentional.

That could be an alternative. Just changing your patient and procedure mix could be the answer. Anything else, Chris, to that point of alternatives that you’d add?

Christine Uhen: Well, we talked funny, we talked about this at the last Dentist Advisor summit, about these opportunities along the way and decisions that have to get made. Yes, diversification of service mix and bringing in another doctor, uh, expanding service mix and bringing in another doctor. Again, it all goes back to what the, the doctor wants from his business. Is he looking to narrow his focus? Is he, he was probably just in growth mode, right? Just I gotta grow more patients take, just get bigger, get busier, but now what is it? Go narrow and deep with certain procedures, certain patients, removing some of the insurance companies will do that in terms of getting out of network.

Then maybe it is expanding and cutting down my hours, but bringing in another doctor who might be the associate that does become a partner that does eventually, you know, buy him out. Is he looking for something different? I’ve done it here. Can I do it in another location? Could I actually expand myself with a second location?

We can do some research in the community to find out if there’s opportunities for that. Should I relocate and get a bigger facility to bring on more doctors and grow that way? So again. What the client is looking for. There are alternatives for that. You know, there’s, again, maybe he’s got, maybe if he just wants to sell to another private practice and locally and bring their their businesses together, there are alternatives. There is still room to grow, by the way, within his own practice, within the five chairs he has, there is opportunity in there. But again, is that looking at service mix, hours, days, all sorts of things that we can do to maximize even where he’s at.

Matt Mulcock: Yeah. Even to that point, Chris, he’s running a great practice, but even on the numbers, there’s room to make that even more efficient and effective and increase his top line even more.

Christine Uhen: Right.

Matt Mulcock: Yeah.

Christine Uhen: Well, and

Matt Mulcock: Jake, anything else

Christine Uhen: the way he is running it, 40% of it’s gonna go right back to him.

Matt Mulcock: Yep. Yep. Jake, anything else you’d add to that?

Jake Elm: Uh, the only thing I would say is you don’t for any dentist l like you also, you don’t have to sell right now. Like you guys were saying, like if you still wanted to go the DSL route, you could say, Hey, let’s grow my practice. Let’s make it more efficient. Maybe let’s bring an associate and grow it, and I can get maybe bigger EBITDA multiple five years from now, or 10 years from now. Like I can hold onto it. This is like, I think part of the DSO pitch is everything’s gonna be consolidated and no one’s gonna wanna buy your practice down the road. I think that’s more of like a sales tactic than anything. And there’s part of that’s true. Maybe the multiples will condense a little bit, but I think you, if you’re ever gonna sell your equity, let’s be really careful about how and when you do it, be really careful about parting with it. Hold onto it. You can always sail down the road if you want to.

Matt Mulcock: To, I love that, Jake, and also I. You maybe never have to sell. Like I know so many dentists who work zero days chairside. They are the deal, they’re, they’re the CEO of their business. ’cause this sounds obvious, but I don’t think dentists actually think this like you are running a business. It is a business of dentistry and I know so many, I have multiple clients who are working zero days chairside, who are the CEO of a dental business and they are making a ton of money and they own an asset that is kicking off massive cash flows and they’re off doing other things. They’re off chasing passion projects and, and doing it. Like I guess sometimes I’m just like, you’ve dedicated your life to dentistry and you are so like, quick to get out of it and do so and go buy a crumble cookie. It’s like your advantage over 99% of the population. Is what you’re doing right now, the most efficient use of your capital, both human and actual money, like asset capital is in dentistry. Why are you so rushing to get out of this and go get into the public pool with everyone else? You’re in a private hot tub and you’re like, how do I get in that public pool with all the people flashing around? It’s like, what are we doing here? What are we doing

Jake Elm: Yeah, this, I mean, we can bring this around. Yeah, bring this around to like the financial planning side of it too, where a lot of this can come down to, well, what do you want? What does your ideal lifestyle look like? How much income do you wanna make? How, what income number is enough for you? What net worth number is enough for you? And if you’re already at those points right now, it’s like, well, why sell or why change? Or do we need to tweak things? Or it’s like, well, I just want more time with my kids. Like you said, Chris, can we cut back a day? Bring

Christine Uhen: Let’s do that. Yeah.

Jake Elm: Those things? Yeah. So this, a lot of it comes back to is just what do you want, what do you want your lifestyle to look like? Rather than just saying, I wanted just try and scoop up as much money as possible. That usually doesn’t work out well in in the long run.

Matt Mulcock: Yep. A word I heard, uh, from the great will gochnour on the, one of the last episodes you guys did. Uh, ruthlessly intentional. I love that he said that. Um, and it’s so true. I think that’s what’s lacking in a lot of these conversations and a lot of these processes is am I being intentional Again, am I coming from a place of pro? Am I grounded? Am I being proactive? Am I being thoughtful or am I reacting? And, and having, you just used the term fomo, am I just kind of copying everyone or being like, oh man, I see him driving a Lamborghini. Should I be driving a Lamborghini? It’s like, do you want one? Like having more intention behind all these decisions, I think is so ruthlessly intentional, I think is great.

Guys, this is an amazing conversation. I, I’ve loved to, I’m gonna give you guys final words. Uh, Jake, let’s go you first and then I wanna finish up with Chris. Any final words on, on this case study or just anything else we’ve talked about?

Jake Elm: I don’t think I have any, you, you said my final words is, let’s just be intentional about this. Again, financial planning and your business should all be geared towards. Your life, what do you want? Make it work for you. Um, which is hard. I wanna be sympathetic towards, I know a lot of us do not know what we want and we’re all trying to figure that out as we go along. And that’s very human is just, I’m gonna do what heated. ’cause I don’t really know. And that seems good. That’s fine. but if we can step back and just try and be intentional about what you want, that makes these conversations a whole lot easier.

Matt Mulcock: Definitely. I love that, Chris.

Christine Uhen: And the sooner, the better, uh, stu time is on your side. When you have, you have more choices, the longer time you have. So be proactive. Do your research, talk to your advisors, and we’re here to help.

Matt Mulcock: Yeah. Which now talk to your advisors. We are now bolstered even more powerful at dentist Advisors with the, uh, wonderful Christine Uhen as our practice strategist on our team. So, this is amazing guys. I really appreciate your, the insights and you guys taking the time to, to go through this and Jake thinks you’re preparing and bringing this, this case study. We, we truly only have one goal, which is to add value and we hope it is educational. the foundation of everything we do is education. So if you’re out there listening and thinking, we have a study club or we have, you know, a group of dentists we get together with, if it even, it’s not an official study club and we’re trying to bring speakers in to educate and talk about things like what we talked about today, we would love to be a part of it. So you can actually go to dentist advisors.com/study, uh, and you can actually submit a form there and request for. to want to have one of us come out and actually speak to your group. If you’re super lucky, you might get Chris or Jake. Uh, you can actually request them personally, uh, if, if we wanna do that.

So, no, we, we would love to be a part of it. So dentist advisors.com/study. And we would love to come out and, and, and do, uh, educational group or, or study club and, and speak to your group. So let us know for now. Chris and, and Jake, thanks so much for being here. Everyone, thank you so much for listening. Till next time, bye-bye.

Keywords: dentistry, DSO, roll-up, dental practice, financial planning, practice ownership, case study, dental industry, practice valuation.

Practice Management, Practice Transitions, Practice Value