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What are your options when it comes to buying or selling a practice? Will it be a gradual buyout or a clean break? In this episode of Dentist Money™ recorded at the Greater New York Dental Meeting, Reese Harper, CFP® welcomes Wayne Oplinger, Transitions Analyst at Benco Dental who shares the most common mistakes dentists make when going through transitions. He talks about the current state and future outlook of the dental practice market, observations he’s made during hundreds of interactions with practice owners, choices and variables to consider when planning a transition, and the biggest regret dentists usually face after selling their practice.
Wayne Oplinger’s Cell: 570-760-1069
Benco Phone Number: 1-800-GO-BENCO
Reese Harper: Welcome to the Dentist Money™ Show, where we help dentists make smart financial decisions. I’m on the show floor at the Greater New York Dental Meeting, and I’m about to have one of the more interesting interviews that I’m going to do on this tour with Wayne Oplinger, who is a transitions analyst at Benco Dental. Wayne, thanks for coming on the show.
Wayne Oplinger: Thanks for having me, Reese. I appreciate it.
Reese Harper: Tell our listeners who do not know what it is what a transitions analyst is, Wayne, because that’s a new role that’s been created at Benco that was pretty important for some specific objectives that they wanted to accomplish, and I want to just kind of get your perspective on what that job is like.
Wayne Oplinger: Absolutely. Because it is a new role, a lot of dentists, when I first call them, they say, “well, what do you do? Are you a financial advisor by background? Are you a CPA? Why are you even doing this role?” I like to tell them that the role was created because a majority of dentists are older than the ADA. It’s an aging profession, and we see a lot of transitions happening over the next ten years. So, my role was created to be more of an educational role. When dentists ask me, “what do you do?” I tell them I’m an educational resource, but a third of my time, I’m helping dentists sell a practice, a third of the time I’m helping dentists buy practices, and a third of the time, I’m helping associates find positions.
Reese Harper: Tell me a little bit about what surprised you most as you have kind of gotten into this new role and interacted with a lot of dentists as they’re looking at transitions. I’m sure you’ve had feedback or questions in Q&A around a lot of subjects, not just transitions, but what surprised you the most about the role?
Wayne Oplinger: I could probably talk about ten or twenty things, but I’m going to give you the top three that really shocked me. I’m surprised at how many dentists are working full time in their late 60s. I thought I was going to encounter dentists in their early 50s or late 50s that were looking to transition. The majority, more than half of my dentists, are older than 65.
Reese Harper: Interesting. So, as you have encountered this, what do you feel like the logic has been around that? I mean, the average American is probably earning 55,000 a year, and they’re retiring at 63. You have the average dentist making probably 250+, you know, and retiring in their late 60s; I think ADA’s last dental survey said 69. So, tell me a little bit, though— I get mixed feedback when I asked that question to dentists, why they are working later. What do you feel like the rationale is in your experience?
Wayne Oplinger: The dentists who are humble and willing to admit it said that they’re not good savers, but I would say 80% of it is because of 2008. I started at Benco Dental in 2009, and they told me when I asked them, “how much longer are you going to be doing this?” they said, “Wayne, I only wanted to be doing it for another four to five years, but I’m going to be working at least four or five more years later because of 2008.” So, you add on that the majority of dentists are poor savers, and add 2008 in there, and they said half of their portfolios were—
Reese Harper: So they’re not telling you, “I’m still here cuz I wanna keep working. I enjoy it. I’ve got plenty of money, and I just enjoy practicing still.” They’re telling you they want to retire, they want to transition, but they don’t have the resources.
Wayne Oplinger: It’s a necessity for them to work. Now, is that everyone? No. There are dentists who—
Reese Harper: And maybe selectively, you’re bumping into the people that are still in the workplace for whatever reason.
Wayne Oplinger: I just talked to a dentist yesterday that’s 74, he looks like he’s 50, and he said, “I wanna practice another four years.” But I like talking to a gentleman like that because he said, “I could do a transition on my own terms. I don’t need to sell just to anybody.” But I’d say that’s less than 5%, based on the dentists that I talk to on a monthly, weekly basis.
Reese Harper: Yeah. How many interactions do you have on a monthly basis? Do you have access to view the whole Benco system, or is it people that just contact you, or how does it work?
Wayne Oplinger: My goal is to talk to about 50 a week. When I was testing the position and asking what— and that’s an interesting story, too. Benco gave me the opportunity to test this and say, “ask the dentists what they want in a transition position.” I thought, and like all of the other Benco reps, that Benco should do the brokering. They should do the placement services. We have the lawyers, and we have the customer service to do it. My position switched 180 degrees after I asked the dentists, “what would you like?” They all said, “well, that would be great if Benco would do the transitions, because we trust them, we’ve been with them.” But they said, “I don’t know if Benco could do this, but if someone could tell us if we should sell this on our own, if we should use a company, if we should sell it and walk away, if we should hire an associate, when we should hire an associate. If someone could help us understand that whole process,” they said “I don’t know if Benco could do this.” I went back to Benco and I changed my mind, Reese, 180 degrees, and I said, the majority of the feedback needs more help understanding the whole process better than actually doing their process.
Reese Harper: It was an educational role. That became more clear that what they were lacking was the knowledge?
Wayne Oplinger: Yes. Absolutely.
Reese Harper: And they just didn’t want to feel like the person they were going to was going to have a bias to push them one direction or the other?
Wayne Oplinger: You’re reading my mind. A lot of them said, “we like getting an opinion from someone who’s not selling us something.”
Reese Harper: Yeah. It’s always tricky, I think, in today’s world, because when we think of where we get advice from, right, in our lives, a lot of the places we get advice from— pretty consequential advice— it doesn’t come from people who are compensation neutral, right? And I can list a variety of people that give advice. Let’s take a real estate agent for example. So, there are a lot of decisions to be made when you’re thinking about a real estate decisions. You’ve got, maybe I should move, maybe I should remodel my house and stay, maybe I should build a new home, maybe I should downsize, maybe I should increase the size of my home based on a relocation that I should do or not do. I mean, a lot of people, when they go to make a real estate decision, they don’t have 100% clarity on what the best decision is for them. They’ve kind of made one that they think is the right decision, and then they engage a realtor. Well, a realtor is only compensated to help with giving advice around one of the six decisions. But we get our real estate advice from that residential realtor. Now, that does not mean that there are not realtors who are capable of giving entirely objective, independent advice. There are! But it’s rare, okay? It’s rare! And it’s really hard for those people to do that, because the incentives of their industry aren’t setup that way. I gave that example because I don’t want to pick on transitions people since that was kind of the premise of the conversation somewhat.
Wayne Oplinger: And I have partners I work with.
Reese Harper: Yeah, that get compensation that way. I guess what I’m saying is, just because people are paid that way doesn’t necessarily make them unobjective. It’s just really hard when you don’t develop education around all the options. Like for example, in my real estate example, if you don’t have education around the six choices, just one of the choices, then you start to develop some preferences on how you see the world. How you see the world is kind of tainted.
Wayne Oplinger: And speaking of choices, that’s one thing that I never heard on a podcast, and hopefully your viewers will appreciate a lot of this new stuff we’re bringing up, so thank you for giving me this opportunity, because I didn’t realize there are different choices and options in transitions. There is sole representation. There is dual representation. There are transition companies that if a dentist like I talked to yesterday said, “my spouse just had a stroke, I need to sell my practice sooner than later,” I have a transition partner who is great at selling a practice quickly. But on the opposite end, if someone says to me, “I want to do my transition over the next five to ten years,” I have a great partner for that who appreciates that stands, and understands that stance. So, that’s where I’m learning constantly and this job is evolving, but there are different choices. And I think when a dentist looks at transitioning his company, he’ll just google transitions and go, “ope. They all do one thing! They all sell practices.” But there are different kinds of transitions.
Reese Harper: Well, you said there were a few things that surprised you about the new role. One was how late people are still working, and most of those people are working because they didn’t prepare well. What’s the second thing that kind of surprised you?
Wayne Oplinger: This was something that when I tell dentists they say, “Wayne, I’m glad you shared that today. I didn’t realize this.” I’m finding out— and I’ll go back to the 2008 crisis— right now, it’s a seller’s market in the industry. I’m starting to talk to dentists who were in their 50s and 54, 52, 53, and they’re telling me they’re going to sell in the next few years, and I was starting to hear more of that over this past year. I was like, “geez, how could that be?” Well, when I started to ask them more deeper questions, I figured out that in 2008, they were either a junior in dental school, they were either first year residency, or they were only one or two years out. They started saving money in the past great market that we’ve had. The bull market. They didn’t see any decline in any of their assets. If they retire in the next five or six years, they’re going to have the best market conditions for their money that any dentist ever saw. They can afford to retire early. The problem with that is, there is going to be two groups that are coming together. The baby boomers who lost a lot of money in 2008, they’re going to be retiring between 65 and 70. I don’t want to make a market prediction that someone could look back on this and say “hey Wayne, you said this,” but sooner than later, the market is going to turn, and there are going to be the group of dentists who are the younger generation selling between that 55-65. Because I can tell you that the dentists that I talk to in their 50s— I always quote a great survey that Dentaltown did, and it asks dentists, “will you retire at age 65?” 52% said no, and 48% yes. So, they are the 48% that is going to— I mean, they adamantly tell me, “I’m no way working until 65.”
Reese Harper: As soon as I can—
Wayne Oplinger: As soon as 62, they’re out. If not sooner. So, there going to be retiring and trying to sell their practice and do a transition, and so is that group that is sticking around a little longer. Those two groups are going to collide, and it’s not going to be a seller’s market anymore.
Reese Harper: Yeah. there’s going to be a big vacancy in the industry. Yeah. It’s interesting. Well, tell me a little bit about— I guess, is there anything else that really surprised you outside of those two?
Wayne Oplinger: Yeah. One last thing I would like to mention to dentists, because this comes up all the time, the older dentist who wants a sell says, “I can’t afford to give patients to a new associate. I can’t afford to retire now or do a transition.” And I tell them, shockingly, the numbers bear out. If a dentist has at least 1,500 active patients, and he’s only working— some of these dentists are only working three-and-a-half days a week, four days a week. If they bring on an associate and they only overlap 20% of the time, say, and they split their schedules, they both could— I mean, dentists will say, “Wayne, I can’t take a hit,” the selling dentist will say to the owner, “I can’t take a hit of 50,000 to 75,000. If I bring on an associate, I’m going to.” And I go, “well, if you have the room, and you have the staff—” 80% of staff do want to work more hours, believe it or not. I mean, most dentists only work 30 hours, 35 hours. I mean, staff likes to work a little bit more than that. So, I’ve seen the numbers bear out, but few dentists take that chance or that opportunity to expand their hours. Hire a dentist. But the numbers bear out the associate makes a great income, the dentist only goes down 25 or 30%– or $25,000, I should say, I’ve seen— but they make it back up in the profits. That was shocking to me.
Reese Harper: That’s interesting. I think that these are kind of interesting observations that you’ve had, in my opinion, just seeing how many conversations you have had that have led to some pretty unique insight, I think, into the industry. There are just not a lot of roles where people’s sole objectives are to go out and figure out maybe what the pain points are, what people are talking about, trying to understand how to—
Wayne Oplinger: Oh, I love the job, because I’m changing constantly and evolving. Like, I’ll tell dentists now, if they talked to me last August and they said “Wayne, I want to sell my practice in two or three years, let’s talk in a year.” August of 2016, I’d say, “great. Let’s have a conversation in a year or two.” Now I tell them, because of talking to the 50-year-olds that are going to retire, I’d go, “you know what? I don’t want to make this urgent, but let’s get out of first gear, or let’s get into first gear. Let’s get the practice appraised. Let’s start looking. Not that you have to sell tomorrow, but I don’t want to wait a year or two to talk to you.”
Reese Harper: What’s the question that dentists ask you the most that you find?
Wayne Oplinger: This probably won’t surprise you, but they ask, “should I do it on my own, or should I use a professional company?” That comes up every time.
Reese Harper: How do you give them coaching around that issue.
Wayne Oplinger: Well now, because of the knowledge I have— it was a little difficult in the beginning, because they would say, “geez, I want to save that money, Wayne!” It’s expensive, and I don’t like to hear that they say, “Wayne, I’ve gotta sell my practice for x amount, and I can’t give away 50,000. I need to keep that.” And I especially don’t hearing that now, because now what I say is—I figured out now that the dentists, again, they share this information with me, and I’m glad they do. It’s going to cost you money whether you use one of the professional companies or you don’t. One of the great examples I could give you is a dentist who is doing it on his own because he found a friend who had a daughter who went to dental school, she was perfect to take over this practice, she worked there an entire year, they had everything figured out, and a month before, she walked in and said, “I can’t do this.” And the dentist spent $20,000 on an attorney drafting all the documents and going back and forth to the attorney, spent money on their accountant, so they spent $27,000 on what they thought was absolutely was going to be a perfect transition, and now they’re back to square one. So, when dentists say, “hey, I really want to do it on my own,” I say, “you know what? One of these professional companies, you don’t owe them anything until it goes through.”
Reese Harper: Yeah. I think that’s really good advice, and I want to clarify the context earlier, too. It reminds me of the realtor issue. I think there’s a difference between understanding the advice you’re being—paying someone on a commission basis to do a specific job that you know is already the right job is not a bad thing to do. It’s actually a good a reason—people get paid commissions to execute something, and it’s nice that a life insurance agent that’s selling life insurance, if you go to ask him what kind of life insurance I should get, that might be a little bit different than if you just go to him and say,” will you help me get this type of life insurance that my advisor or my CPA has recommended,” or “I’ve done my research, and this is the type I want, and I’ve asked these people. They’re unbiased, and they’ve told me that this is the right thing to go do.” It’s okay that that person gets paid a commission to go and implement, because it takes a lot of work to go and sell a home, buy a home, sell a practice, sell an insurance policy and place it properly, make sure it’s updated regularly—
Wayne Oplinger: What you just said is a great example. When you know what you need, it’s alright to pay someone a commission. When a doctor comes to me and says “I want to do this transition over five years,” I say, “well, I think you should talk to this partner and this partner, and see which one fits with you. Because that’s another question: how do I evaluate these companies? And I say, you know what? If they try to fit you into their box and tell you how to do things, that’s not the right partner for you, you know?
Reese Harper: The key is, get advice from a neutral party before you go get advice from someone who gets paid for a specific type of transaction. Or at least in conjunction to talking to that person, have someone else who’s a neutral third party help you through the decision. I mean, there are a lot of people who can be that person for you. But I think a financial advisor, someone like Wayne, a CPA, a family friend, another dentist who has been through your situation, just get a neutral third party to corroborate what you have heard from that person who is going to get paid to do a transaction. Now I think especially as it relates to transitions, in my experience, whether it is realty or whether it’s transitions or whether it’s business brokering, there is a reason that these jobs have existed for a long period of time and have persisted during many different market cycles, and it’s because the volume of things that can go wrong in a major transaction are a super long list. And you have seen as many as I have! There are just a lot of things that can go wrong. I think it’s just important— I’m not judging dentists at all when I say this, but saving money on a fee that you could pay to a provider does not necessarily mean that overall, you’re going to save money. That’s just a—
Wayne Oplinger: Well, I like that I’ve had dentists that were humble and said, “share with my peers. I ended up spending more doing it on my own that I would have with a professional company, and it may have cost me some money.”
Reese Harper: Yeah, I think it’s good to compare providers. You’ll find that if you have various providers to compare, there’s always some flexibility around pricing, and sometime you’ll get a better value than if you only talk to one provider. It’s always important, I think, for service providers to know that you’re debating on using them or someone else, because it will make them put their best foot forward, and you’ll find out right then if that’s the real price they charge or not, you know? And it doesn’t mean— some people’s pricing is not negotiable, and some people will hold firm to whatever price they have put out in the market, and other people, their prices get cut in half just because you ask and have someone else who is in a price competition.
Wayne Oplinger: That’s what I tell dentists, that our partners have even changed the model a little bit, then they’ve customized it to where if you have an associate that you’re selling to, that’s a different structuring transition package.
Reese Harper: Totally. So, if you had to say look, these are the biggest challenges— just in summary— that I see right now, in your new role, what are the biggest challenges that you see that dentists are facing?
Wayne Oplinger: The hardest one is deciding, should I sell to corporate, should I start a transition over time, or should I sell and walk away? I mean, there’s no easy answer to any of those things. And that’s why I tell them, start the process early enough so that you can ask some resources. Ask your spouse. Ask your children. Ask your peers. Get as much feedback as you possibly can, because deciding on, should I just sell and walk away? Should I work another three years? Should I liquidate some of this now? Should I transition? There’s no easy answer, and there is a huge challenge, and I just encourage dentists to start the process. If you ask the number one thing, I’ll ask dentists, “what could I share with your peers? Tell me the number one thing.” By far they said, “share with my peers, I wish I would have started earlier. I which I would have done it over more time.”
Reese Harper: Yeah, I think that’s a common issue that dentists face in a lot of areas. Not just dentists, but a lot of us face that, you know, “I wish I would have started this earlier and kept with it a little bit longer.” Tell everyone how they can get ahold of you, Wayne, as we wrap up here. Tell everyone how they can get ahold of you if they have any questions about either getting your help on something or getting involved with Benco. I mean, how do they get in touch with you?
Wayne Oplinger: The easiest number is 1-800-GOBENCO. I don’t mind giving my cell phone number, it’s (570) 760-1069.
Reese Harper: And what’s an email address for you?
Wayne Oplinger: Yep. It’s firstname.lastname@example.org.
Reese Harper: Well Wayne, thanks so much, man. I really appreciate all of the advice you have given us today. It’s a lot to think about. Congratulations on all the impact you’re having in this new role. We look forward to having you back on soon!
Wayne Oplinger: I will, Reese. Lot’s more for us to talk about. I appreciate it. Thank you.
Reese Harper: Thanks!Real Estate, Practice Transitions