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MB2 Dental- Anyone consider selling to them?

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  • uteomfs
    replied
    I have discussed opportunities with a few DSO’s. It’s better to understand your enemy than your ally. Their end game is the same, increase revenue and sell. If they tell you otherwise, run. As for enthusiasm, their are plenty of HerbalLife representatives with passion and enthusiasm, doesn’t change the fact they are with HerbalLife.

    Here is the typical pitch....

    Pitchman: Hi Dr Dumass, I mean Johnson. Thank you so much for your time today. You can came highly recommended from Dr. Justgotfleeced. He said you are the highest regarded Oral Surgeon in your area, congratulations on a stellar reputation.

    Me: Who said that, he’s never referred a patient to me.

    Pitchman: Really, everyone we have spoke to said you are top notch. Anyway, we will make this brief. There are a bunch more suckers we need to get to today. As you know taxes are going way up, Biden’s plan will probably increase your taxes 2X. Their is massive consolidation in the dental space and we think you would benefit from being our first Oral Surgeon to sell to us. We have a lot of interest, bu5 because of your stellar reputation our partnering dentists have identified you as their preferred surgeon.

    Me: But I’ve never worked with them.

    Pitchman: Like I said, you have a great rep. What we offer is an opportunity to partner with a company who puts you first, we want to be your partner. We want to grow together.

    Me: so like 50/50.

    Pitchman: Not really, we need to buy 100%.

    Me: So I’m now just an employee.

    Pitchman: No you have equity in the corporation. So when it does well, so do you. You continue to run it your way.

    Me: Great, so I control future decisions about the practice.

    Pitchman: No, those are made by the Board.

    Me: Oh, who’s on the board.

    Pitchman: some really smart guys in New York and Chicago, they have tons of experience flipping these companies at huge multiples. They did a bunch of Radiology and ED groups. These guys made a crap ton of money.


    Me: How did the Dr.s do.

    Pitchman: Not sure. It’s mostly PA’s and FMG’s their now.

    Me: So what multiples are we talking about.

    Pitchman: 5-6. But you can invest in “the company” and we expect to sell at 20 EBIDTA.

    Me: Sweet, can I invest all my equity in the company.

    Pitchman: No, just 20%. But good news is that company will likely sell again for 30X.

    Me: Wow, that seems like a lot. Have you seen many sell for 30X.

    Pitchman: There is 3 Trillion dollars on the sideline, of course a dental practice in Omaha will go for 30x.

    Me: it seems like I’m giving up a lot of future income for 2-3 net earnings.

    Pitchman: Have you not heard about the Biden Tax Plan. There are rumors of 90% taxes.

    Me: so what do we do with this lump sum.

    Pitchman: Funny you should ask. I want to connect you to a partner we have. He has a risk free/tax free product that many of our partnering doctors invest in.

    Me: We are screwed,

    Leave a comment:


  • RDB
    replied
    Originally posted by Hank View Post

    Gotta say, I appreciate you vouching for the long time posts over at Dental Town. This was quite enthusiastic for a first time poster. I’m happy our new poster had a genuinely good experience with his practice transition.

    Phil,

    Welcome to WCI! (Or at least welcome to posting if you’ve been lurking for a while.)
    Happy to! Phil’s enthusiasm, in general and for MB2, was the reason I posted. I am saying this not knowing Phil at all (couldn’t pick him out of 2 people). I think because he is very enthusiastic about MB2 (from the details I have read on DT, he has reason to be high on them) his opinion is easily disregarded. To sum up his 100+ page thread on DT…..he got paid more than he would have in a private sale and also feels as if he found a great replacement who is set up well. I have no opinion on the matter.
    On another note, enthusiasm is often pegged negatively on these boards, which is strange

    Leave a comment:


  • molar roller
    replied
    Originally posted by Hank View Post

    Gotta say, I appreciate you vouching for the long time posts over at Dental Town. This was quite enthusiastic for a first time poster. I’m happy our new poster had a genuinely good experience with his practice transition.

    Phil,

    Welcome to WCI! (Or at least welcome to posting if you’ve been lurking for a while.)
    there are a few of us here that have known each other on DT for 10-15 yrs or more. In fact, Phil was the friend from my earliest post who referred me to MB2. Didn't know he was here now. Hey Phil

    I spoke to a few DSOs. Can't say any of them seemed different from the rest.
    Every one started their pitch with "We are not a "DSO" DSO".
    Every one said how this is a partnership.
    The pitch was remarkably the same from all.

    I did have a very informative conversation with one guy. We determined pretty early on we weren't a good fit, so he talked to me what a good fit might be.
    What they and all the other DSOs are looking for, is a practice doing $2M or more, in 7 ops or more, with multiple associates, primarily PPO.
    That's what gets the highest valuation. Any deviation from that - the valuation gets nicked.

    To OP, if you do speak to DSOs, make sure you understand the total package. It's nice to get a pile of cash on the closing day - much more important is what happens the day after.. and the month after, and the year after. Clinically, most DSOs seem to want to give you autonomy, which is great. Financially, if you're there for a long haul, it gets much trickier. All DSOs talk about how they expect you to be "the leader of the practice".. which is great, except you're no longer compensated as one. This was a deal breaker for me.

    I had several offers from DSOs and a private buyer that were in 4-6x EBITDA range. The difference was the length of employment - from 6 mos 2x week from private (4x EBITDA), to 1 yr FT/3 yr PT (6x EBITDA). MB2's offer was in the middle. I passed on them all...

    Leave a comment:


  • Phil Z
    replied
    Originally posted by Hank View Post

    Gotta say, I appreciate you vouching for the long time posts over at Dental Town. This was quite enthusiastic for a first time poster. I’m happy our new poster had a genuinely good experience with his practice transition.

    Phil,

    Welcome to WCI! (Or at least welcome to posting if you’ve been lurking for a while.)
    Thanks Hank. I've done some lurking, and decided it was time to contribute because this is a topic I am able to speak about from personal experience.
    I should add I was emotionally and vocally anti-DSO for many years. As I saw the industry changing, my thoughts on the subject became open enough for me to launch into an investigation into the ins and outs of corporate dentistry. My studies taught me that not all corporate entities operate the same. I found one that was seemingly different. I was shouted down on DentalTown that I was wrong. That I would discover after partnering, I'd see the 'true deal'. Well, I have. And it's been better than what I had expected. I know a lot of people won't be able to swallow this, and I'm ok with that. I just thing we should all be pushing people to do a ton of research before making a choice like this. That's all I've ever advocated for. A lot of people will make a lot of generalized statements not based on their own experience, but based on what they've heard from others. It's fine. We all do some of that. But the idea that all DSOs are similar, and all are bad? That's simply not the case.

    Hey Hank. Is your avatar supposed to be Hank the Tank? If so, that is LOL hysterical.

    Leave a comment:


  • Phil Z
    replied
    Originally posted by wheels View Post
    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.
    Thank you to the person who restored my original post. Much appreciated!
    What I found out on DT is that DSOs elicit a visceral response by many. I went round and round with a bunch of people. It's mostly a waste of effort. If you hate DSOs, I'm certainly ok with that. But there are people that are trying to gain information so they can make educated choices for themselves. For themselves. I think these folks deserve answers, and I'm happy to share my experiences...which with MB2, have been fantastic.

    Leave a comment:


  • Hank
    replied
    Originally posted by RDB View Post

    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!
    Gotta say, I appreciate you vouching for the long time posts over at Dental Town. This was quite enthusiastic for a first time poster. I’m happy our new poster had a genuinely good experience with his practice transition.

    Phil,

    Welcome to WCI! (Or at least welcome to posting if you’ve been lurking for a while.)

    Leave a comment:


  • molar roller
    replied
    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.

    Leave a comment:


  • wheels
    replied
    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.

    Leave a comment:


  • SerrateAndDominate
    replied
    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

    Leave a comment:


  • RDB
    replied
    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!

    Leave a comment:


  • uteomfs
    replied
    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.

    Leave a comment:


  • Phil Z
    replied
    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

    Leave a comment:


  • Phil Z
    replied
    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

    Leave a comment:


  • wheels
    replied
    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.

    Leave a comment:


  • molar roller
    replied
    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.

    Leave a comment:

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