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  • MB2 Dental- Anyone consider selling to them?

    I've been thinking about exit strategies and started looking into MB2 Dental as a possibility. I would like to continue working 1-2 days a week for several years to come, so the MB2 model looks interesting. They take some of the management issues away, give you a lump sum up front, they take some of the profits of course, my wife doesn't have to deal with the books and other practice headaches, you get to participate in a recap event if it happens again, additional investment opportunities, and hopefully you can pass off the practice to another doc when the time comes. I see this as a good way to have the ability to keep working in the practice. If I sell to a private buyer, they could ask me to leave at any time.

    Anyone else considering this path, or maybe have already sold to them?

    Thanks!

  • #2
    Not just no but h3ll no. They need to stop sending junk mail to our house. (Not to the office, but to our home.)

    Just because they cold called you (or sent junk mail) doesn’t mean that this is the best EBIDTA multiple or most favorable terms you could get to stick around for a few years with a dental services organization.

    Make sure your practice numbers are on a strong upward trajectory for the final three years before you sell all or part of your practice. Favor cash upfront vs the opportunity to “earn” the rest of the putative sales price. Plenty of bad terms in many DSO sales contracts that let the buying company weasel out of paying what they promised.

    Better to sell and make a clean break. Don’t sign an onerous non-compete. Don’t actively solicit former patients, staff, or referring docs, but if you want to practice for a few more years, lather-rinse-repeat the practice growth and sales process. Plus you can start a new defined benefit plan and sock away a bunch more money towards retirement.
    Last edited by Hank; 06-29-2021, 05:32 PM.

    Comment


    • #3
      Not a dentist, but my wife is.

      Why not bring on an associate (assuming you don't have one already) and come up with terms so they can buy the practice directly? You can build the contract to where you're part-time and get a day rate; no management headaches for you.

      I hope you can find a good solution that avoids any corporate/PE/DSO situation. These set ups are really screwing the future generation of dentists (medical docs, too).

      Comment


      • #4
        I have tried associates with varied success. One was great but left because he was a bit stressed out trying to keep up with me (I'm not that fast) and other family reasons. The others just did not have good skills. I'm pretty disappointed, frustrated about the whole experience with associates. Yes if I found a great fit, I'd love to plug them in to the system and I can cut way back on hours. I'd take two associates and I go down to one day. That sounds dreamy.

        Comment


        • #5
          Do you want to hire an associate or a future partner? There’s a world of difference between a doc who just wants to punch a clock indefinitely and be a W-2 employee (especially one who’s willing to work for a giant corporate chain like Aspen, Heartland, or Western Dental) vs. someone who wants to put in the effort to grow the practice and buy into the practice. You want someone who owns their job and eventually wants to own a piece of the business.

          True, you could find someone like a retired military dentist or someone whose spouse is a higher earning MD, lawyer, etc. They do competent, ethical dentistry, may already have much or all of their student loan debt paid off, and just don’t have the inclination or timeline to buy into the practice. That doc might make a fine long term associate. You also might find that he or she doesn’t have the hand speed to do good work at the pace necessary to succeed in the real for-profit work.

          Finding a great associate who is content being an associate long term is tough. (Frankly, even finding a decent hygienist is tough post pandemic. )

          Comment


          • #6
            “the opportunity to “earn” the rest of the putative sales price.”

            ”continue working 1-2 days a week for several years to come,”

            “hopefully you can pass off the practice to another doc when the time comes”

            The end point is you will be selling a practice that’s generating revenues for 1-2 days per week but the costs will be for 7 days a week.

            Good luck hitting any “earn out” metrics.
            You have greatly damaged the potential value of the practice and turned off some potential buyers.Your desire to cut back personal services is damaging the value of the practice, regardless of MB2.

            Sell first then decide if you want to work as an employee or 1099. Not a good exit strategy for getting value out of the practice.

            Comment


            • #7
              Have you checked out DT? Lots of MB2 -related threads there.

              I spoke to MB2 and other DSOs.
              I have nothing bad to say about MB2. I met (virtually) with their executive team, and found them very nice people. I was referred to them by a friend who sold to them and was very happy with the transition.
              My goal was similar to yours. Cash out on the goodwill and continue working in a greatly reduced capacity.
              Unfortunately, that's not the DSO's goal. If your vision is to bring associates and work limited hours, that's great - but YOU will be the one responsible for finding the associates, training them, and dealing with the associate carousel.
              And they don't have a farm system of associates ready to be plugged in - it's going to be the same process, with the only difference they'll be the ones paying for the Indeed ad.

              All DSOs will all talk about how this is a partnership and you're not an employee... but if the associate doesn't work out, one of the partners is expected to come off the bench and pick up the handpiece.... and it's not gonna be the partner who's the CEO.
              At the end, it seemed I'd be giving up all the control but none of the responsibilities.
              Plus, the paycut was absolutely massive. Even if all the earnouts and metrics were hit, I'd be taking a million dollar paycut. At the end, the numbers just didn't work.

              I came very close to selling to a different DSO with a very strong local presence. They actually have several associates ready to be put into my practice. Even with that, I'd be obligated to keep my current schedule for 1 yr. If I do that, I might as well continue owning.

              Comment


              • #8
                Thanks Molar Roller. Yeah I have read most of the threads on DT. I have had the same thoughts about still having to deal with the headaches while giving up so much of the profit. MB2 makes it seem like they are going to take a huge load off your plate. It seems to have worked out great for the docs that wanted out and sold in 2020 right before the recap. Those guys got way more for their practice than selling directly to a solo buyer. When you are that far ahead, you can just walk away from your remaining equity. That could be one reasonable strategy to stay the course for a few more years and then sell to MB2 before the next recap. I'm a bit surprised by how happy the docs are who have sold to MB2, they seem genuinely pleased.

                Comment


                • #9
                  My wife and I partnered with MB2 in January of 2021. A few things come to mind as I read y'alls thoughts. First, DSOs are as varied as any other business entity. Including our dental practices! Trying to apply thoughts about one DSO to another, assuming those same thoughts apply to all will only make one misinformed. To learn about a specific DSO (or DPO in MB2's case), you need to investigate that specific organization. Prior to our partnering with MB2, we researched and received offers from several. These different organizations were all, well...different. I'm an unabashed cheerleader for MB2 because it worked out extremely well for us. Exceeding our expectations. But it may not (will not, actually) be a perfect fit for everyone. I've spoken with at least a dozen interested docs. I always tell them do you due diligence! Investigate, compile, research. Then compare. If what a specific DSO/DPO offers fits what you are looking for, then great. If not, then you will have learned about the industry, and have figured out that maybe staying private is what is right for you. Knowledge is always a good thing.

                  One more think, Molar is correct. MB2 would not wave a magic wand and 'poof' an ideal associate will appear! MB2 is a partnership and support organization. Their mission is to buy good practices and help you run them. They are there to SUPPORT. Not take the running of them 100% out of the owners hands. I retired just yesterday. But first had to find the right person to take over. MB2 helped. They ran the ad that found the new doc. But we had to interview and find the right fit.

                  There are other DSOs that take a more hands on approach...will do more of that work for you. But they are also organizations that will be more hands on with how your practice will be run. MB2 did NOT come in and change our practice. What makes our practice special. They came in and asked me what kind of support I felt I needed to help me. I love this about MB2. Others might be looking to allow a DSO to really take over. That never would have worked for me. As a matter of fact, one of the DSOs looking at our practice wanted to build us an 8 op practice down the road. We have only 4 ops. They wanted to completely remake our 'wheel'. That's just not what I was looking for.

                  Anyway, I think the crux of what I'm trying to say is...do your homework! Don't assume you know everything about the industry because of an experience with one or two DSOs. These organizations are often very different. My experience with MB2 is vastly different from stories I've heard from docs who have sold to other organizations.

                  Good luck!

                  Phil

                  Comment


                  • #10
                    The crux of my (long, now erased ) post was this.....there is a high degree of variance with DSOs. MB2 is very unlike other DSOs that might currently be better known. We partnered with MB2 in Jan. of 2021, only after investigating a handful of possible suitors. You can not take the information you hold about one and assume it applies to another. MB2 has been fantastic for us (practiced with my wife, retired just yesterday), but it will not be the right fit for everyone. So do your homework and compare for yourself. Don't make assumptions. My experiences with MB2 have blown many of those assumptions out of the water.

                    Best of luck!
                    Phil

                    Comment


                    • #11
                      Its true, Doctors and Dentists are stupid money. MD's seem to be the early suckers but DDS just fall for the same stuff, despite watching what happened to our medical colleagues, right in front of our eyes. First it was getting in bed with insurance companies now its consolidation by PE Firms. Nearly every thread on this great website that involves compensation, work quality, burnout etc can generally be linked to the invasion of PE money into medicine.

                      These are sales people, they will tell you what they KNOW you want to hear. These deals work out great for a small, and I mean small, amount of people. Those people are the ones who start or are very high up in the capital stack.

                      The horses are out of the barn, practitioners have fallen for the pitch that you need to sell ASAP for taxes, the opportunity wont be here long, etc. Actually sounds very familiar to a pitch by a Pyramid Scheme and not sure there wont be a lot of poor dentists carrying those in the up line.

                      This is not an attack on the OP. Just a vent.

                      Comment


                      • #12
                        Originally posted by Phil Z View Post
                        My wife and I partnered with MB2 in January of 2021. A few things come to mind as I read y'alls thoughts. First, DSOs are as varied as any other business entity. Including our dental practices! Trying to apply thoughts about one DSO to another, assuming those same thoughts apply to all will only make one misinformed. To learn about a specific DSO (or DPO in MB2's case), you need to investigate that specific organization. Prior to our partnering with MB2, we researched and received offers from several. These different organizations were all, well...different. I'm an unabashed cheerleader for MB2 because it worked out extremely well for us. Exceeding our expectations. But it may not (will not, actually) be a perfect fit for everyone. I've spoken with at least a dozen interested docs. I always tell them do you due diligence! Investigate, compile, research. Then compare. If what a specific DSO/DPO offers fits what you are looking for, then great. If not, then you will have learned about the industry, and have figured out that maybe staying private is what is right for you. Knowledge is always a good thing.

                        One more think, Molar is correct. MB2 would not wave a magic wand and 'poof' an ideal associate will appear! MB2 is a partnership and support organization. Their mission is to buy good practices and help you run them. They are there to SUPPORT. Not take the running of them 100% out of the owners hands. I retired just yesterday. But first had to find the right person to take over. MB2 helped. They ran the ad that found the new doc. But we had to interview and find the right fit.

                        There are other DSOs that take a more hands on approach...will do more of that work for you. But they are also organizations that will be more hands on with how your practice will be run. MB2 did NOT come in and change our practice. What makes our practice special. They came in and asked me what kind of support I felt I needed to help me. I love this about MB2. Others might be looking to allow a DSO to really take over. That never would have worked for me. As a matter of fact, one of the DSOs looking at our practice wanted to build us an 8 op practice down the road. We have only 4 ops. They wanted to completely remake our 'wheel'. That's just not what I was looking for.

                        Anyway, I think the crux of what I'm trying to say is...do your homework! Don't assume you know everything about the industry because of an experience with one or two DSOs. These organizations are often very different. My experience with MB2 is vastly different from stories I've heard from docs who have sold to other organizations.

                        Good luck!

                        Phil
                        FYI, Phil is being genuine in his experience. He has been posting in great detail for years on DentalTown.
                        I have followed along on DT, congrats Phil! Enjoy your retirement!

                        Comment


                        • #13
                          Originally posted by uteomfs View Post
                          Its true, Doctors and Dentists are stupid money. MD's seem to be the early suckers but DDS just fall for the same stuff, despite watching what happened to our medical colleagues, right in front of our eyes. First it was getting in bed with insurance companies now its consolidation by PE Firms. Nearly every thread on this great website that involves compensation, work quality, burnout etc can generally be linked to the invasion of PE money into medicine.

                          These are sales people, they will tell you what they KNOW you want to hear. These deals work out great for a small, and I mean small, amount of people. Those people are the ones who start or are very high up in the capital stack.

                          The horses are out of the barn, practitioners have fallen for the pitch that you need to sell ASAP for taxes, the opportunity wont be here long, etc. Actually sounds very familiar to a pitch by a Pyramid Scheme and not sure there wont be a lot of poor dentists carrying those in the up line.

                          This is not an attack on the OP. Just a vent.


                          I share your sentiments, and also did not mean for my prior comments to be an attack on OP. I get the reasons, but this whole process seems like history repeating itself.

                          While I admit my thoughts are fairly rigid on DSOs and the like, what do the dentists here feel are the value these firms offer? Are they just getting better collection rates, cheaper supplies? I'm trying to wrap my head around what value one gets without losing the benefits of owning the place

                          Comment


                          • #14
                            Read through some of the very long threads on dentaltown and you can get a picture of what MB2 can bring to the table and why many people do or don't agree. My intention was really to get some feedback from people who have directly considered MB2, not to hash out all the DSO emotions and ethical dilemmas. This has all played out on dentaltown, doesn't need to happen again here please.

                            Comment


                            • #15
                              Originally posted by wheels View Post
                              Thanks Molar Roller. Yeah I have read most of the threads on DT. I have had the same thoughts about still having to deal with the headaches while giving up so much of the profit. MB2 makes it seem like they are going to take a huge load off your plate. It seems to have worked out great for the docs that wanted out and sold in 2020 right before the recap. Those guys got way more for their practice than selling directly to a solo buyer. When you are that far ahead, you can just walk away from your remaining equity. That could be one reasonable strategy to stay the course for a few more years and then sell to MB2 before the next recap. I'm a bit surprised by how happy the docs are who have sold to MB2, they seem genuinely pleased.
                              Really depends on your math.
                              Economics of my practice made most DSO offers an easy "no". My OH is very low, 35% or less.
                              Most DSOs wanted me to continue my schedule for some period of time, so I'd essentially be doing the same work, but for 30% instead of 65%. They say they offer support - 35% of my gross is close to a million dollars. That's a lot to pay for phone calls.
                              When comparing private vs DSO offers, make sure you look at it from a total comp over time perspective.
                              Working for 2 yrs and selling to private was a lot more than sell to DSO and work the 2 yrs for them.

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