Randon Jensen’s Guide to Successful Transitions – Episode 32

Practice transitions expert, Randon Jensen of CTC Associates, stops by to discuss the most important considerations to make before buying or selling a practice. Topics include managing expectations, structuring the deal, and getting proper representation. Randon also shares a few stories to highlight the most common mistakes he’s observed in his 17 years of working in the dental industry.

Podcast Transcript:

Speaker: Views on this program are opinions of dental industry experts, and not necessarily those of Dentist Advisors. Opinions shared in the following interview do not constitute personal financial advice. This program is furnished by Dentist Advisors, a registered investment advisor. You’re tuned into Dentist Money Industry Expert Series. Now, here’s your host, Reese Harper.

Reese Harper: Welcome to the Dentist Money Show. I’m Reese Harper, your host on the Industry Expert Series, here with a close friend of mine, Mr. Randon Jensen of CTC Associates. How are you doing, Randon?

Randon Jensen: Hey. Great. Thanks, Reese. Pleasure being here.

Reese Harper: Yeah, man. I’m glad you came by. I just wanted to start out with letting people get to know a little bit more about you, maybe you can give us some background on yourself, on CTC and what you do and what it has to do with dentists.

Randon Jensen: Absolutely. Yeah. So, CTC Associates was started by my business partner, Larry Chatterley, in the late ’80s. He had been in investment banking in Denver for years, and his father was an ophthalmologist down in Cedar City, Utah, wanted to retire and asked his son, asked Larry, how to do it. Larry said, “I don’t know. Let me look into it.”

Reese Harper: “Let me figure it out.”

Randon Jensen: Yeah.

Reese Harper: Okay.

Randon Jensen: So, he looked into the whole concept of professional practice transitions, and found that there was a real need in the marketplace. So, he started that in the late ’80s and I came on with him in ’99. My background, I was in corporate America, degree in Business Management, was with a little company called Walmart, a few people have heard of.

Reese Harper: Yeah. A little guy.

Randon Jensen: And so, I met Larry. I was really impressed. Actually, I met him through his son. His son was working with him and decided, “I don’t want to just work with dentist, I want to be a dentist.” And so, he said, “Why don’t you come on? My Dad could use the help.” And I was really impressed with Larry’s approach to business, his ethics, and-

Reese Harper: Yeah. You guys have been together for a long time. So, when was this roughly? I mean-

Randon Jensen: … Yeah. ’99, so about-

Reese Harper: … So, ’99?

Randon Jensen: … 17 years now, we’ve been working together.

Reese Harper: Wow.

Randon Jensen: Yeah.

Reese Harper: You guys put up with each other for that long?

Randon Jensen: Yeah.

Reese Harper: That’s good.

Randon Jensen: Well, it kind of helps that he’s in Denver and I’m over here in Salt Lake.

Reese Harper: Yeah. Now, you guys are mostly the Mountain states right here, but mostly Denver and Salt Lake?

Randon Jensen: Yeah. The majority of the business we do, Utah and Colorado. We also cover Idaho, Wyoming, Nevada, Arizona and New Mexico.

Reese Harper: Great. So, back to your story here, I kind of interrupted you and got you to pivot, but from there, you probably wanted to leave a little bit more background info.

Randon Jensen: Oh, no. Well, just interesting, I remember the first time I met with him, he said to me: “Hey. Before you come into this business, you got to realize that most practice brokers don’t have a great reputation.”

Reese Harper: Yeah.

Randon Jensen: And rightfully so. He said, “I probably wouldn’t do business with a lot of my contemporaries.”

Reese Harper: Why do you think that was the case at the time? I mean, I think today, there’s a perception a little bit of almost like a predatory industry that people are looking to… they want to sell the practice to make money, and the dentists are a little bit threatened by that sometimes. I don’t know.

Randon Jensen: Yeah. No. I think that’s part of it. I think you hit the nail on the head. A lot of guys are opportunistic. It’s more about the commission and less about helping out the client.

Reese Harper: Finding the right fit and the right timing. That’s a good context to kind of have this discussion today. The reason I wanted to bring you on was because I felt like you have a unique insight into some of the challenges that buyers face and sellers face when approaching transition. And I wanted to start by kind of hitting what some of the major challenges that you see with transition, some of the big mistakes that occur in the transition, maybe not huge mistakes, but maybe common ones, anything that comes to mind regarding transitions for buyers or sellers, you know?

Randon Jensen: Yeah.

Reese Harper: What are some of the things that you feel like are the most common or the most challenging issues that these guys face?

Randon Jensen: Well, it’s an excellent question. And I think something really good to explore on both sides of the equation, both seller and buyer, because they are generally different. On the seller’s side, probably the biggest mistake I see relates to what you do, is the seller not properly planning financially for retirement. Now, there are a lot of different reasons that a seller will sell, right? There may be relocation, there could be health issues, they may be bringing on… maybe they’re managing growth and want to bring somebody on as a partner or what not. But if we’re talking about the quintessential-

Reese Harper: Mistake.

Randon Jensen: … Well, yeah.

Reese Harper: Or situation?

Randon Jensen: Situation where a dentist is retiring and say, another dentist is coming in and taking over the practice, that outgoing dentist needs to have prepared themselves financially so that whatever proceeds they may recognize from the sale of the practice, that’s butter. That’s cream on top of… meaning, they can afford to retire without getting anything for the practice.

Reese Harper: Isn’t that pretty rare, though?

Randon Jensen: Well, not as rare as you might think.

Reese Harper: Okay.

Randon Jensen: If they’ve hired professionals, again, like yourself, that have set them up properly, then a lot of times, I will get doctors say, “Hey. I don’t really need anything for the practice. Yes, it’ll be great to have it.”

Reese Harper: “I just want the best situation for my patients.” Or, they can have the luxury to do the right kind of transition?

Randon Jensen: Exactly.

Reese Harper: Yeah.

Randon Jensen: And then, they’re focused more on, “Who’s somebody that I feel really comfortable with bringing in and that I can endorse wholeheartedly?”

Reese Harper: Yeah. “My reputation’s on the line.”

Randon Jensen: Right. “Because I want to leave a legacy.” Right?

Reese Harper: Yeah.

Randon Jensen: “I’ve worked so hard to build this practice, to make these connections with patients and with staff, I want to make sure that they’re taken care of.”

Reese Harper: Totally.

Randon Jensen: If I get a seller that comes to me and says… and they’re not concerned about that, they’re going to say, “I need to have X dollars for the practice.” That’s usually a red flag.

Reese Harper: Yeah.

Randon Jensen: They haven’t properly prepared for it, and it’s going to place stress on the transaction.

Reese Harper: Totally. I mean, it affects the type of transaction that can occur too, right?

Randon Jensen: Absolutely.

Reese Harper: I mean, whether it has to be all bank financed, all seller-financed, partial, I mean, it depends on how much desperation I guess is on the plate of the seller.

Randon Jensen: Exactly.

Reese Harper: I guess, from my perspective, I’ve found that if a dentist can be more flexible, right, with that exit, timing, the amount that they need up front versus taking a cash flow stream, I mean, if you can be flexible, you have a chance of getting more for your practice from the buyer.

Randon Jensen: Oh, yeah.

Reese Harper: Right? And so, people that are in a situation where they have to get all the money right now up front, can sometimes get less than if they can take a stream of payments or get some seller finance or some bank combined with seller finance. It seems like you can negotiate better when you’re flexible.

Randon Jensen: Yes.

Reese Harper: Do you think that’s fair?

Randon Jensen: Yeah, absolutely.

Reese Harper: It seems like, sometimes too, one thing that… this is something I wanted to bring up is, that the proceeds from the practice are some of the most tax-favorable proceeds that you’re going to ever get in your career, right?

Randon Jensen: Right.

Reese Harper: Tax-favorable retirement income, right? Because your 401K, your IRAs, a lot of the retirement accounts you’ve built up, you don’t have to pay ordinary income tax on those as you make withdraws. But the sale of that practice is taxed at a capital gains tax rate, and a lot of times, they have some basis in that company that they won’t be taxed on at all. So, they’re going to pay a lot lower tax on the sale of that practice than they would on the 401K withdrawals. So, if you’ve positioned yourself well to be able to flexible with when you get the money and not necessarily needing to use it right away, you have a lot of options on which accounts you’re going to pull money out of at retirement, too. You can delay those 401K accounts our further, not take the money out as soon, I mean, if you can wait until you’re 70 to take 401K withdrawals and spend down the practice sale or other savings that you’ve had that’s after tax, it’s just so much… it’s amazing how much more wealth people can preserve over a longer period just by having been flexible up to that point, having enough money after tax and in the 401K to not be forced to take all the money and spend it all right then, you know?
Anyway, that’s just a side note. I wasn’t really planning on getting on it, but I’ve been writing on that this week on how people force themselves into withdrawals out of certain accounts that they wouldn’t be if they had planned five years out, 10 years out, 15 years out, of when they are going to spend that money down that they get from the practice, if they can delay spending that because they’ve accumulated other monies. It just helps the situation from a tax perspective, which people don’t think about as much. So, it’s a side note, but I’ll stop getting onto detours that are in my brain, and we’ll stick on the practice transition issue.

Randon Jensen: Oh, it was an excellent detour because you bring up an excellent point about the taxation, right? Yeah. The bulk of it… there will be some, generally, some recapture, some ordinary income there.

Reese Harper: Yeah.

Randon Jensen: But 70, 80% of the value of the average dental practice, goodwill, patient records-

Reese Harper: Totally.

Randon Jensen: … taxes, capital gains, get that lower.

Reese Harper: Yeah. A lower rate. And it makes a big difference when you’re talking a million plus dollars or hundreds of thousands of dollars.

Randon Jensen: Exactly.

Reese Harper: Anyway, what’s another issue that you see that kind of comes into play? A challenge or an issue that either a buyer or seller faces?

Randon Jensen: Well, I think on both sides of the equation is expectations, having realistic expectations, both in terms of, “What will my practice sell for, but how long will it take? What can I expect in terms of prospective buyer candidates?” Or, “What can I expect in terms of prospective practice opportunities?” On the buyer’s side. Educating yourself early on, like you said, having that flexibility… if you have prepared yourself in advance and have started learning about the industry or the market for practice sales and what’s involved in the process and so forth, that gives you more flexibility. It gives you more options if you’ve educated yourself and prepared yourself in advance of the transition happening.
So, a lot of times, sellers… we see this on both sides of the equations, but they may have unrealistic expectations of what they can get for it. And so, on the buyer’s side, for example, they may expect to be able to get a practice that’s a strong practice in a desirable area with strong cash flow for a certain dollar amount. And you know, there’s the ubiquitous rule of thumb, right? A percentage of gross, we hear that all the time.

Reese Harper: Yeah.

Randon Jensen: Because it’s so simple. The problem is, with that simplicity, you lose accuracy.

Reese Harper: Totally.

Randon Jensen: And so, oftentimes, buyers may have a certain figure in mind thinking, “Well, I shouldn’t have to pay more than this.” And they may forego excellent opportunities because they think that they’re not properly priced because they haven’t done their research or they haven’t hired somebody to help them analyze the practice and doing their due diligence.
On the flip side of the equation, we have a seller who thinks, “I should be able to get X dollars for the practice.” And I’ve seen this happen, I saw this a few years ago from a doctor who was told by somebody who he trusted who was in the business that he could get X dollars for the practice. He accepted that. Went into that with an expectation, marketed the practice at that dollar amount, and it was unrealistic, and it sat on the market for a couple of years. And after a while, it starts getting this stigma: “Well, what’s wrong with the practice?” Right?

Reese Harper: Yeah.

Randon Jensen: “Why hasn’t it sold yet?”

Reese Harper: Yeah. It’s something that you don’t want the buyer market to have in their… the stuff passes and spreads around really quickly.

Randon Jensen: Exactly. And so, what ultimately happened, he passed on excellent offers, but they weren’t as high as what he was expecting. And ultimately, after a couple of years, he ended up accepting an offer that were lower than those that he had turned down-

Reese Harper: Interesting.

Randon Jensen: … just to get it sold.

Reese Harper: I mean, that’s one thing that I’ve been kind of surprised about. I wanted to ask you this: do you think that sometimes, sellers wait too late to sell? When even they… like, in my experience, I guess, sometimes, the time to sell the practice is when collections haven’t started declining, right?

Randon Jensen: Well, it depends on what your end objective are, right?

Reese Harper: Yeah.

Randon Jensen: Yeah. And that’s why it’s so good to understand the needs of the client. Because I get this question a lot from sellers, right? “Hey. I made my apex, but I want to start cutting back.” Right? “That little extra time on the golf course every week is beckoning to me.”

Reese Harper: It’s meaningful.

Randon Jensen: Right. And so, “Should I sell now when I’m at my apex, cash out and then… but I still enjoy dentistry. I still enjoy what I’m doing.”

Reese Harper: So, my thought for that guy is, is there a situation where it makes sense for a seller to sell at the peak? Maybe he’s a few years away from wanting to wrap up because he still wants to work. Do you think people stay in their own practices when maybe sometimes, they should just get a job… sell their practice and get a job and preserve the value of what they had? Because I’ve seen practices decline sometimes substantially in value for someone to stick around because they still want to make an income for a few more years, but they passed up on a lot of the valuation that they probably could have gotten. And you can always go get a job, right, as an associate for a few years if that’s an option for you?

Randon Jensen: Potentially, yeah. It’s an option.

Reese Harper: I’m not saying that’s a good strategy for everyone, but I see a lot of people making that mistake where they’re collecting a million five, they stick around for three or four more years, and then they’re collecting 700, and 650, and 550, and then… but they’re still there because they’re like, “I want to save a little more for retirement.”

Randon Jensen: Right.

Reese Harper: When it would have been maybe better to get that value and just get a job for three or four more years. I don’t know.

Randon Jensen: Yeah. No, absolutely.

Reese Harper: It depends on your energy level probably, right?

Randon Jensen: Yeah. Well, and that’s the answer right there, is it depends, right?

Reese Harper: Yeah.

Randon Jensen: And that’s why it’s so important to understand the needs of each client because for some client, yeah, selling at the apex, and if there are opportunities for continued work… now of course, it’ll have to be outside of restrictive covenant range or what not.

Reese Harper: Covenant range, yeah.

Randon Jensen: So, we have to look at opportunities available. There may not be opportunities available. Or, we look into an opportunity for them to stay in the practice, if the practice can support it. But, they need to understand that if they buyer… if things get slow for the practice, someone may have to exit sooner.

Reese Harper: Yeah.

Randon Jensen: So, if a seller wants to be guaranteed a job, the best is to hold on to it. And sometimes, when we sit down to do the math, “How much do you want to cut back?” And we look at, “Okay. Let’s say you’re three to five years out and let’s say you could sell the practice for X dollars today or Y dollars five years from now assuming you cut back in the interim period”… well, if we do the math, the income stream that they would take from the practice will more than offset the decline in value.

Reese Harper: In value, right? Yeah.

Randon Jensen: So, we have to look at that, then maybe their best option is to hold onto the practice.

Reese Harper: Yeah. It’s probably a good general rule of thumb is, if it’s making money and it’s profitable, there’s probably a situation when you can stay on and adjust how much you take out of the practice to bring someone on to preserve the collections that were there if you feel like you want to cut back.

Randon Jensen: Absolutely.

Reese Harper: I mean, is a gradual transition always better than a sudden transition?

Randon Jensen: Not always, no. Yeah. And I think that’s another misconception in the marketplace is that in order for a transition to be successful, we have to have this long, protracted transition period, right, where we’re both working together. And we find that, in some instances, yeah, particularly with specialty practices where we’re really trying to connect with referral sources and maintain those, then yeah. An overlapping transition may be beneficial. But in a lot of other instances, an outright, we call it turnkey or a sale walk-away transition is a better route. There are complications that come with an overlapping transition that we can avoid by having an outright sale.

Reese Harper: What are some of those complications? Is it staff and having to kind of respond to two alpha females or alpha males, whoever’s buyer or seller?

Randon Jensen: Buyer or seller? Yeah. A lot of it’s the staff loyalty. Who does their loyalty go to? Even if a buyer takes over and the seller stays on, they’re so used to answering to the seller, right?

Reese Harper: Yeah. That can be a challenge.

Randon Jensen: Plus, patient’s given a choice: who will they want to see?

Reese Harper: The guy they knew.

Randon Jensen: Exactly.

Reese Harper: Or the gal they knew.

Randon Jensen: Or they gal they knew. Exactly.

Reese Harper: Yeah.

Randon Jensen: And so, if a buyer takes over and they’re used to seeing the seller, and the buyer now has the responsibility of covering the overhead and paying the debt service, but his schedule’s empty because everybody wants to see the seller, it could be counterproductive to have the seller stay on.

Reese Harper: No question.

Randon Jensen: So, we find if it’s handled correctly, right, if we have continuity in certain areas… and this is another part of talking about mistakes that are made, we need continuity as much as possible. Continuity with the location, with the staff, with insurance plans, that’s another one where I see buyers come on and say, “Well, I’m not going to take the same plans.”

Reese Harper: “I’m going to change everything.”

Randon Jensen: Right.

Reese Harper: “Switch it up.”

Randon Jensen: And then, of course, an endorsement, a strong endorsement from the seller, and that comes back to what you were saying earlier on your little tangent. Sometimes, buyers like… a mistake that they’ll make is really trying to stick it to the seller, maybe not intentionally, but they’re trying to get such a good deal for themselves that they don’t stop to consider the impact that’s having on the seller.

Reese Harper: Yeah. I think that happens so often where… I mean, it happens in a lot of cases. I see it with how dentists… it’s not the case with everyone, but as a general rule, in financial personality types, a lot of them tend to be what we would call accumulators or independents. It’s a type of persona that they really… they don’t have a ton of financial background and they tend to be very cautious about any expense at any level.

Randon Jensen: Right.

Reese Harper: And every expense for a service or an asset, no matter what it is, you know, sometimes, they’ll ho-hum over one percent price fluctuation for months, you know? Or obsess over a small valuation change and kind of miss the forest through the trees, you know?

Randon Jensen: Yeah.

Reese Harper: And especially when it comes to buying something, buying a practice from a selling dentist, I mean, you really want that person to be your advocate-

Randon Jensen: Absolutely.

Reese Harper: … for years.

Randon Jensen: Yeah.

Reese Harper: I mean, it could be-

Randon Jensen: Because you know, without fail… Sorry. I didn’t mean to cut you off, Reese.

Reese Harper: … Yeah.

Randon Jensen: But yeah, the seller’s going to be bumping into those patients, right, at the grocery store, on the golf course.

Reese Harper: There’s a good chance that those patients, when you’re trying to sell a full mouth restorative case, they’re going to call the dentist that they used to be with and say, “What do you think?”

Randon Jensen: Yeah. “Should I go to this guy? Is this guy legit?” And if you’ve stuck it to the seller-

Reese Harper: “Should I accept this treatment?”

Randon Jensen: … Right. Or this gal, and if the seller has a bad taste in his mouth, how likely is he going to say, “Yeah. You definitely want to see this guy.”

Reese Harper: If you don’t have a good reputation with that selling doctor, it really could make the difference between patients actually accepting treatment or not in some cases. I don’t want to over-accentuate that, but it’s just… it wasn’t something that was on my radar.

Randon Jensen: Yeah.

Reese Harper: I didn’t really think that that would be a dynamic, but it really is. So, is there anything from a DIY perspective that you’d caution against from a… I see a lot of people writing up their own agreements, sometimes, their own contracts. Is there really a lot of risk in that? I don’t think a lot of people have a clear understanding of, “What’s involved when I have a gentleman’s handshake sale or I write up agreement with a friend?” What usually comes up in situations like that that they may not be thinking about?

Randon Jensen: No. That’s a great question. Well, and think what emboldens a lot of doctors is they’ll see a colleague that may skate by on it, right?

Reese Harper: “Someone did it and it worked out fine.” Right?

Randon Jensen: Yeah. Or they found a contract online and filled in the blanks or whatever and it worked out all right. And the biggest issue though is not necessarily the contracts, right? It’s important to have attorneys involved and to make sure that you’re Is are dotted, Ts crossed, et cetera, but we always say that people perform, contracts don’t.

Reese Harper: Yeah.

Randon Jensen: So really, the issue is, how do you develop that relationship with the other party to the point where you have a relationship of trust? And probably, the more important thing is that you’ve addressed issues that could come up in advance while you have a good relationship so that if an issue comes up that could be a bit contentious, “Hey. We’ve already addressed that. We’ve already planned for that. We’ve already anticipated that.”

Reese Harper: Yeah. So, the contract itself is almost… it just reflects the understanding that’s already inherently there between buyer and seller. Or, the agreement’s clear-

Randon Jensen: Right.

Reese Harper: … and it’s transparent. “We know what to expect from one another.”

Randon Jensen: Right. So, it’s the process of putting together the agreement, I find, is more valuable than the actual agreement itself.

Reese Harper: Yeah.

Randon Jensen: Because it forces the parties to discuss jugular issues, what we call jugular issues, before they get into it, particularly with like partnership arrangements where they’re going to be working together for a long term. But even in an outright transition, if the parties haven’t discussed beforehand, “Well, how are we going to address things like re-work? If a patient comes in and needs something redone, how are we going to address that?”

Reese Harper: Yeah.

Randon Jensen: Well, after the fact, if that hasn’t been defined in advance, that could be a real issue.

Reese Harper: Yeah.

Randon Jensen: And the problem with a lot of do it yourself-ers, there are so many issues associated with the transition that they’ve never considered, whether it’s patient credits or trade work or reimbursement rates with insurance plans, maybe a seller had that the buyer didn’t get. So, it’s so many different things that they don’t consider in advance.

Reese Harper: Let’s talk a little bit about fee structure because I know this is an issue that people have. It’s not like the most… I mean, no one likes to talk about fees because they tend to be a sensitive subject especially in transitions. People, in my experience at least, dentists tend to feel like, “Yeah. I’m glad I had someone to help me, but I sure paid a lot for it.” And I think people say that about most services that they pay for, regardless of what it is. But you know, “If I have someone that I already know that we are friends and this person really wants to buy my practice, sometimes I feel like I get a little bit stuck if I’ve got to go and pay 12, 14, 10%, right, to sell my practice. But there’s this guy right here and we know each other really well. I mean, when we’re talking about why I pay to sell my practice, what am I paying for specifically? You know? Am I paying for someone to find me a buyer? Am I paying for someone to coach me through the process? Is it the accountability?”
I know kind of the answer to this, but I want to highlight this for me. You know, “There’s all these things that I could be paying for.” How do you describe the value proposition, I guess, of why someone should go through, even if they know someone, even if they have someone close to them that they want to sell the practice to, what’s the value of a practice broker beyond the fact that they’re finding maybe a buyer, you know?

Randon Jensen: No. That’s an excellent point because particularly in the Utah market, where the demand for practices exceeds… there are more buyers than there are sellers. It’s ease of supply. We find that probably half or better of the transitions we facilitate, the buyer and seller have already found each other. So, I guess that question a lot, right? “Hey. We’ve already found each other, so whatever else”… and I’m saying, “You know, finding somebody is maybe 10, 20% of the overall process.” I mean, that’s when the work starts, once you find somebody. So, there’s a great analogy-

Reese Harper: It probably depends on the market, too, right?

Randon Jensen: … Exactly.

Reese Harper: Especially in a market where there is a high demand for practices, that’s definitely the case, right?

Randon Jensen: Right. Absolutely.

Reese Harper: Yeah.

Randon Jensen: So, there’s a analogy Larry had shared with me years ago. It says, this woman has a clogged drain, right, or some plumbing problem. Has a plumber come over… You may have heard this before. The plumber pokes around in the pipes, pulls out a hammer, bangs on the pipe a couple times, the clog drains out.

Reese Harper: Yeah.

Randon Jensen: And he hands her a bill, $150. “$150? All you did was bang on a couple pipes.” Right? “How do you justify that?” He says, “Well, it’s $50 for the house call, and $100 for knowing where to hit.”

Reese Harper: Yeah.

Randon Jensen: Right?

Reese Harper: Yeah. Exactly.

Randon Jensen: So, it’s really that knowledge base so to avoid… because we often say, a transition really, you should do it right the first time. And you may not get a second chance if it’s not done right the first time because the practice value could be affected. You know, you could have significant patient attrition if it’s botched or whatnot and then you’re trying to sell a salvaged business, absolutely.

Reese Harper: So, let’s talk just to maybe wrap up any final thoughts that you have to leave people with about transitions, things to kind of plan for if anything, or any just final parting thoughts. Time has flown here. I’m been surprised how fast it’s gone.

Randon Jensen: No. It’s been a great conversation. And thank you again, Reese-

Reese Harper: Yeah. It’s been awesome.

Randon Jensen: … for the opportunity to come on. So, probably in leaving I’ll leave kind of a parting thought. I’ll leave you maybe with a quick story. The key, if I could share anything, because I get this question a lot. We see practices in a transition where a seller’s maybe done really well with a practice and a buyer takes over and the practice tanks. Or, we may have a practice that’s struggling and a buyer takes over and it thrives.
And so, the question comes often, well, what’s the difference, right? Is there market… is there something that you can look at in the practice and determine, “Oh. This practice is going to succeed.” Or, “This one’s going to fail.” And so, Larry and I… in fact, we had a very specific experience where we had two dentists that both bought practices right next to each other in the same building within about a year of each other. And within a year, a year later, the one dentist called and said, “Hey. I’m struggling. I’m facing bankruptcy. I can’t pay my bills anymore. I’m in solvent.” So, we called the other dentist next door… and we asked, “Well, what’s the problem?” “Well, it’s the market. It’s, I’ve got terrible staff. It’s just bad patients. It’s insurance.” Right? It’s everybody else’s fault, right? I call the dentist next door and I said, “Hey. How are things going for you?” “I’m having the best year ever. I’m buried, in fact.” He said, “I can’t handle the work. I need to bring on an associate.” I’m thinking, well… So, that kind of shoots the theory that it’s the market, right?

Reese Harper: Yeah.

Randon Jensen: So, I asked permission to interview staff, interview patients and find out what’s really going on here. Overwhelming response, what do you think?

Reese Harper: I don’t know. I’m curious.

Randon Jensen: It’s the doctor.

Reese Harper: Well, I was going to say something about the doctor. I just didn’t know what the problem specifically was.

Randon Jensen: Yes. Specifically, it was the doctor was not connecting with patients, right?

Reese Harper: So, they just didn’t like him as much. Or maybe they thought he wasn’t friendly, “He didn’t care about me.” It was something about his demeanor.

Randon Jensen: Exactly. And in his particular instance, he was a super nice guy, but he just didn’t exude a lot of confidence, right?

Reese Harper: Yeah.

Randon Jensen: “Well, Mrs. Smith, I think you need a crown on number 19.” “I do? Do I or don’t I? You think I do?” You know?

Reese Harper: Yeah.

Randon Jensen: And so, not making eye contact, wasn’t engaging. And that’s another thing: in terms of success… so overall, what we see in terms of success, parting shot is really, it comes down to people, right, making those connections with people. Do they feel like you care about them? Are they just a mouth with money in it to be reaped?

Reese Harper: Totally. And I think that patients really know if you care, and they can sense how much effort and energy you put into their treatment and how concerned you are about their wellbeing. And when you said that, I was waiting, like, “Well obviously, it’s the doctor.”

Randon Jensen: Right.

Reese Harper: But you know, I was wondering if there was like, some other formula that I’m like, “Yeah. Of course.” You know?

Randon Jensen: Well, see, that’s the thing is that it’s so obvious that people overlook it.

Reese Harper: Yeah.

Randon Jensen: Right? And so, the guy that was struggling, “Well, it’s not me.” Right? “It’s not me. It’s got to be somebody else. It’s got to be some other problem out there.”

Reese Harper: Well, thanks Randon. It was a really great conversation. It was awesome to have you in here in the studio today. How would people go out and get in touch with you or know how to reach out in order to find you and ask questions they might have?

Randon Jensen: Well obviously, online. Our website, www.CTC-Associates.com. A little tricky, C as in cat, T as in Tom, C as in cat and then a hyphen, associates spelled out in plural.

Reese Harper: Okay.

Randon Jensen: There, you can find all of our contact information, email, phone number. Of course, you can always email me: randon@CTC-Associates.com. Or we have info@CTC-Associates.com if you just want general information.

Reese Harper: Great. That’s awesome. Well, you guys heard it from the legend himself, Sir Randon Jensen, CTC Associates. We appreciate you coming by, man. We’ll look forward to another interview at some point down the road.

Randon Jensen: Thank you, Reese. It was a privilege. I appreciate the invitation.

Reese Harper: Yeah. Signing out, this is Reese Harper, host of the Dentist Money Show, industry expert series with Randon Jensen. Thanks everybody and carry on.

Practice Transitions