Latest / Dental Mentors / Building a $600M Dental Empire with The Legendary Mitch Olan

Transcript

Building a $600M Dental Empire with The Legendary Mitch Olan · Dental Mentors

• Dental Mentors: When you stopped working full time at at DCA, approximately what were the annual revenues? When I left DCA as a CEO, it was about six hundred million. Man, that's incredible. I'm surprised that you're not totally gray haired at this point, because I mean, gosh, we're at like a hundred and something million in revenue at Oak. And that boy, it is a challenge. I can't even imagine, you know, three hundred and fifty practices. That's crazy impressive. I hear people talk and brag about their production, their sales, and then they say they collect ninety percent of it. That's a problem because they're staffing to their sales, but they're collecting at a much lower rate, and that's an EBITDA squeeze. That's a margin squeeze. If you collect what you produce and you do it efficiently and you keep your days outstanding low, you're gonna have a successful business at just about any size. Hey everybody, and welcome to another episode of Dental Mentors. I'm your co host, Matt Ornstein, here with Neil Zemba. And we have a very, very special, totally awesome guest today. It's Mitch Olin, ⁓ who is the former COO, CEO, and executive chairman of Dental Care Alliance for a career spanning, if I'm if I remember right, twenty nine years. Is that is that in the ballpark? ⁓ yeah, well it's ⁓ it's I think it's ⁓ it's up to thirty thirty two now, but it's ⁓ it's in the ballpark, yeah. Yeah. So Mitch has had an extraordinary career. I actually met Mitch before I even got into dentistry like six years ago. ⁓ Amal near good car invited me down to Tampa and I don't know if you remember this, Mitch, but ⁓ I do. ⁓ yeah, you, me and Amal and Pat Bauer had dinner at this awesome restaurant. We sat outside and I wasn't even in dentistry at the time. And we just had a great time and then oddly enough I ended up, you know, buying ⁓ a a DSO and but I knew Mitch before I even got into that and Mitch was on our board of advisors for a couple of years. Just an extraordinary human being and we're grateful to have you here. Thank you. I know everybody, ⁓ everybody watching will get a lot out of this one. So, you know, we're here to have fun, just have a good time and and and just talk. But the first thing I I wanted to go over if it's okay with you is love you to tell our audience ⁓ you know, about your your journey ⁓ at Dental Care Alliance, maybe kind of start in the beginning and, you know, ha whatever you want to share and ⁓ throw in some you know, I've got a bunch of questions, but I'd love you to along along the way when you're when you're talking about that, you know, any of the keys to success that were really im impacted your career and the success of ⁓ Dental Care Alliance, everybody'd love to hear about it. Sure, sure. Happy to. ⁓ well actually Matt, I ⁓ I've been in the dental space for forty two out of my forty-five year career. ⁓ so it's ⁓ it's been quite some time in the DSO space, about ⁓ thirty ⁓ just ⁓ you know, about thirty three, thirty-four years of that, some give or take. w I came out when I came out of college actually went I started as a sales rep carrying a bag for a company called Ormco in the orthodontics space. And I rose up through the ranks with that company and they're now the largest ⁓ marketing and manufacturing of orthodontic appliances in the world. I left ⁓ left dentistry for a few years and went into the home infusion therapy business and then ⁓ was recruited back into dentistry by a college buddy of mine that ⁓ we were we were fraternity brothers back in the day and he went on to become a dentist and I was in the business world and he had this idea to ⁓ to to consult ⁓ for other dentists because they weren't ⁓ overall weren't the greatest business minds in the world. They were great clinicians. And he had a lot of ⁓ a lot of dentist friends that were struggling with the running of their practices. So we started a consulting business back in 93, 94 timeframe. And ⁓ that quickly evolved into a partnership with the Henry Schein to ⁓ to promote their their technology package back then, which was, you know, sort of laughable what it is, you know, what what what it was back then, it was, you know, it's basically an in neural camera. ⁓ easy dental software, and ⁓ some, you know, ⁓ new hand pieces. And that was their technology package, which is, you know, today would ⁓ would was pretty ⁓ archaic. But with so we did that for a few years and then we had a number of doctors say to us, Hey, look, you know, I appreciate all the advice you're providing, but I'd rather just have you guys run the practice. Can you just own the practice and it'll work for you and ⁓ gives me an an opportunity to just get it all off my plate. And some of them wanted to transition into retirement, some of them just didn't want the headaches of wanting to practice. ⁓ and ⁓ so that's how we evolved into the running of dental practices. ⁓ my my partner had already had a couple of practices and was very successful back. Sold them off and ⁓ we had this nice consulting business and then it morphed into you know into what ⁓ what was known as a dental practice management company back in the mid-90s. And ⁓ we did that for a few more years, and ⁓ we then in nineteen ninety-seven chased a ⁓ a dream like a lot of small dental practice venture companies back then we took our company public. We were a micro camp business. ⁓ there were seven companies back in ninety seven on the on the the tails of the ⁓ the dot com boom that went public. And ⁓ we we were one of them. ⁓ you know it's ⁓ it was it was insane to think, you know, how we did that back then as a small company, I think we had fifteen million dollars in that not EBADOC but and ⁓ we were able to go public. ⁓ got a crazy valuation, brought down a lot of money, and then went out and had to start buying practices aggressively because we'll you're judged in ninety-day spreads. So it's you know, accordingly earnings pretty good. ⁓ did that for a few years, we outstripped our infrastructure, and then we merged with another company that did the same thing and went public out of California called General Dental and created an entity called Internet, which still exists today. ⁓ Internet at the time we did that ⁓ became the largest ⁓ DSO or dental practice manager in the country. And were the Eastern Division, they were the Western Division, and we kept on going nicely for the next few years. Then 2001 hit and that stock market crashed. ⁓ the stock pretty much became worthless because we were still pretty much a microphone company, even though we had about 250 million in in revenue. ⁓ it was still relatively small. ⁓ got sucked down by the ⁓ the stock market that were taking such a hit. And ⁓ we being the guys that ⁓ were running the East Division, the old Dental Care Alliance Division. Decided that we would try to buy our piece back off of the colour company, which is what we did successfully. So we took a private 12 management buyout. ⁓ and then we ran it ⁓ separately and individually for about 10, 11 years, and then we sold a private equity in 2012. ⁓ we recapped in 2015 and then recapped again in 2022. I was the COO until 2012, then I was the CEO till 2018. And then I morphed into the chairman role ⁓ as I stepped aside and and went into ⁓ retirement, ⁓ which ⁓ I did for a couple of years, then found out that that really wasn't my strong suit. And you know, my wife was telling me I better get out and find something to do because I was driving her crazy. And ⁓ and I started started answering the phone and taking on some ⁓ some board roles ⁓ in ⁓ in in healthcare, primarily physician practice management, ⁓ predominantly ⁓ in the dental space. ⁓ today I still sit on six companies boards and ⁓ four of them are in the dental space, one's in the ophthalmology space and one's in the pathology space. And the commonality is ⁓ they all they all are f in some way, shape or form, ⁓ physician practice management, ⁓ you know, dealing with ⁓ with patients in one shape or another. And ⁓ and the r the the behind the scenes management of those type of entities is very similar. So the that's what I do today. ⁓ you know, it keeps me busy enough. ⁓ and I've got ⁓ you know, I've ⁓ I've ⁓ I'm enjoying I'm enjoying a a a better work life balance than just being ⁓ full throttle or or dead stop. Yeah, that that's amazing. I I have a question that I think everybody's gonna want to know. When you when you when DCA started, ⁓ I mean did it start with one practice? We actually ⁓ we had three. we had three practices here in ⁓ s southwest Florida, ⁓ based in Sarasota, Florida. and then ⁓ we grew it to ⁓ you know to what I think today DCA is around four hundred in change practices. ⁓ I I was there until it was about 350. So and and you know, that was 350 when we left, but there was probably cumulatively through sales and purchases and partnerships, probably had relationships with were probably closer to 450. And the reason I say that is when we went public, we were chasing everything. You had to make your quarterly numbers. So we were buying a lot of businesses, a lot of practices that candidly didn't fit into what we wanted to be when we took it private in two thousand and one. So we actually sold off some divisions. We sold off some some practices back in two thousand and one to ⁓ reshape the company into what we felt was a stronger, better core business for us. So we went from about a hundred and ⁓ hundred and twenty million in revenue at two thousand and one to about ninety million. ⁓ so we sold off a number of practices and then ⁓ and then you know from there we took off again. That's that's amazing. What what ⁓ when you left as ⁓ when you when you w stopped working full time at at DCA, ⁓ approximately what were the annual revenues? ⁓ approximately when we stopped when I s when I left DCA as as as the CEO or as the ⁓ chairman? CEO. I was a CEO. It was about six six hundred, about six hundred million. Man, that's incredible. I'm surprised I'm surprised that you're you're you're not totally gray haired at this point because I mean, you know, gosh, we're at like a hundred and something million in in revenue at ⁓ at Oak. And ⁓ boy, it's a you know, it is a challenge. I can't even imagine ⁓ you know, three hundred and fifty practices. That's Crazy impressive, Mitch. Crazy impressive. It was it w it was it was, you know, I I would say, you know, I I I definitely burnt myself out. ⁓ you know, I was I was burning the candle at both ends, Matt. I wouldn't I wouldn't ⁓ recommend the route that I took to anybody. ⁓ you know, I I learned through through ⁓ my mistakes and through my my ⁓ my challenges as well as my success. And as I said to the folks whose boards I sit on now, ⁓ You know, don't turn to me for what to do. I'll I'm much better at telling you what not to do. And ⁓ you know, that that will give you ⁓ hopefully a better ⁓ go ⁓ guidance than ⁓ than what to do because there's there might be two or three things that we could do and do it right, but I'll tell you what not to do and what ⁓ where where you you know where the what ⁓ what lies around the corner. Yeah. I think ⁓ for for doctors that are are either growing one practice or building a a practice group of multiple locations, you know, knowing what to do is super important. But if you can know what not to do, it's equally as important because mist you know, costly mistakes can set you back years ⁓ in many, many situations. So I have a a bunch of different questions I'd love to ask you. When you were the CEO, ⁓ what were the top five KPIs that you focused on as CEO? Well, we we we we didn't ⁓ back then we didn't have as much data as we do today. ⁓ so it was it was pretty simple. We were looking at, you know, we're looking at collections and revenues. We'd look at over the counter collections because, you know, what what gets these a lot of these companies into trouble is their their RCM ⁓ business ⁓ side of the ⁓ of of the ⁓ the company. ⁓ and ⁓ so we we watched very carefully our collections. We were we we were proud in that we collected ninety eight to ninety nine percent of every collectible done one. And ⁓ so that that was a very closely watched and monitored ⁓ you know, KPI. ⁓ we obviously we monitored new patient and new patient activity, revenue per, you know, I probably I'm giving you more than five. But ⁓ you know re rev reven revenue per visit, ⁓ you know, revenue per chair hour. and ⁓ you know, some people look at revenue per visit, some look at revenue per hour, some look at revenue per day, some look at ⁓ you know, dollars per chair hour. ⁓ there's a lot of different ways that you can slice the ⁓ slice the ⁓ the the apple. But I would say that ⁓ you know, th they they all give you essentially, you know, the the same thing that you should be looking for. That's your productivity measurement. ⁓ you know, your your ⁓ you know how much capacity you have and how you're filling that capacity. I mean are you are you filling up your schedule and still coming up, you know, w short with your in your re with your revenue? That means, you know, are are they not are they not properly scheduling you know, a a full a full book of of ⁓ business for the day. and and how are you know, how is the doctor's time being best utilized? How is the hygienist time being best utilized? And ⁓ that that we all very much concentrated on in our consulting business way back in the day as well. That's ⁓ incredible. I so ⁓ Neil if you want to jump in, I've got like five more questions. I just I'd love to rip through ⁓ but so y your collection rate was ninety eight to ninety nine percent. I mean Yeah, I've I've seen practices with like it's crazy like seventy percent collection rate. You know, we ch we we shoot for ninety-five percent plus at my dear. So how are you able how are you able to get to ninety-eight to ninety-nine percent collection rate? Well, I think the first thing is having the proper fee schedules in the ⁓ you know, in your ⁓ in your system, ⁓ then having the proper collection systems at the front desk and the proper, you know, the proper collection ⁓ protocols. wa with insurance. And you know, we had one of the first hires that I made, Matt, when I when we when we started scaling up was somebody that star that that was dis that was there to build relationships and negotiate contracts with the insurance companies. And that person stayed with me for over twenty five years. And that that individual really knew every insurance plan inside and out. They knew every insurance company inside and out. They had a contact that was close to them at every insurance plan. And so we would, you know, we didn't let things go stale. We stayed on top of it. It's it's it's all about cash flow, right? ⁓ and you know, I mean, you know, I I I you know I I hear people talk and brag about their their their production, their sales, and then they say they collect ninety percent of it. You know, that's That's a problem because they're staffing to their sales, but they're collecting at a much lower rate, and that's that's a that's an EBITDA squeeze. That's a margin squeeze. And so you you know, I mean, if you collect what you produce and you do it efficiently and you keep your days outstanding low, you're gonna have a successful business at just about any size. Yeah, that's gold, man. I love that. Thank you. ⁓ oddly enough, that leads right into my next question, because you mentioned EBITDA. And I don't, you know, I'm fifty seven. I don't remember like when the term EBITDA became fashionable, ⁓ especially in dentistry. I don't know. ⁓ so two questions. Was was the term EBITDA ⁓ you know, used a lot when you first started your career at DCA? And then secondly, ⁓ once the term EBITDA became widely known and and why it was so important, ⁓ how important was the was your focus as CEO on EBITDA growth? Yeah. Good question. You know ⁓ when I started at DCA, EBITA was not in the vocabulary. It was it was it was all about, you know, ⁓ sales and and and profitability. It was it was cash, ⁓ it was ⁓ you know, cash accounting. And ⁓ when we went public, EBITA really wasn't in the vocabulary as well because we were micro cap. And what they were looking at from a from you know, what Wall Street was looking at from us was top line growth. If you grew your top line, you grew it aggressively and you became a a mid cap. the the the EBITDA will eventually be there. So the focus wasn't on EBITDA, it was about revenue growth. And every quarter I was chasing revenue. Where EBITDA really became very common ⁓ part of the vocabulary in ⁓ in the DSO world is when private equity came into the mix. ⁓ and you know then then they start valuing businesses on EBITDA much more so ⁓ than prior to private equity, we were we were a lot of ⁓ a lot of the valuations when we were buying practices or partnering with practices was based on a ⁓ a a percentage of their twirling twelve months revenue. If ⁓ if you've been in dentistry long enough you can remember the days when a dental practice pretty much sold at between sixty and eighty cents on ⁓ on previous you know previous ⁓ twelve months revenues, sixty to eighty percent of previous twelve months revenue. And then EBIT came into the mix and it became a multiple V then valuation started going up and then they st you know they started chasing further and further as competition ⁓ came into the into the park marketplace. And ⁓ and so, you know, I would say EBITDA's been part of the vocabulary in the space for probably eighteen to twenty years, but prior to that it wasn't. Yeah, I I would agree with that. I've got a coup I've got four or five more questions and we'll open up to Neil and and anything else you want to talk about. But I've got three fun questions for you. Yeah. ⁓ because boy, I could I'm not going to talk about it on this episode, but I could go on and on with this first one. But What what was one of the funniest things you had business wise? ⁓ one of the funniest things that you experienced ⁓ as CEO of Dental Care Alliance, something that was like kind of crazy or funny. You just shook your head and said, like, ⁓ I can't even believe I I just t witnessed that. Well, yeah. you know, physicians or dentists up on a pedestal because of their their the level of education and the degrees that they have. But the reality is, you know, we're all just human beings. And some of the you know, some of the funny things that I that I I encountered were, you know, which were were really head scratchers too, which sometimes, you know, pertain to what the dentist would say or do. And ⁓ you know, sometimes it would it would it would it would be funny, sometimes it would be sad. ⁓ but ⁓ you know, I the funniest I I I d I one doesn't really come to mind. ⁓ but ⁓ there there are a number that were were truly funny. Some others were just really head scratchers. And ⁓ you know and and and I say that with all due respect too because I I you know I come from a family that ⁓ had dentists in it. And ⁓ you know I I think that you know when I when I talk about the funny or the ⁓ the head scratchers it it really pertains to you know getting involved or doing something being being pushing pushing an envelope where you don't have all the answers and you don't have the education. And you you might be you might be taking ⁓ you know a a vendor for you know at face value. You might be taking a a a staff member at face value and you know th they're they're just you know they're they're just being led down a a path that that you know you just wonder how how you got there. And and so you know that that is That's where a partner, that's where we would we would actually be of a great benefit to the to the dentist and you know, be a a sounding board and a partner to help them navigate through challenges like that. Yeah. So I'll I'll just take a quick detour. One of one of my buddies founded one of the most successful ⁓ group of mutual funds in the US. He was like number one in the country for a couple of years on best performing. And he he told me this story where they just landed. It was like a a billion dollar plus account with ⁓ UPS to manage their pension fund. So he had to this was before like Docu sign. So they had to send out the the documents to be signed. And the guy that that worked for him, my friend said, Hey, you gotta mail these documents out to be countersigned ⁓ by UPS. My buddy gets a phone call the next day and he goes, I'm not gonna name any names. He goes, ⁓ yeah, we got the documents ⁓ you know We're really excited that UPS is gonna, you know, be investing like two billion with with your fund. Are you aware that the person who sent them sent them in a FedEx envelope with their main kit editor? And ⁓ my friend was like, ⁓ my gosh, I'm so embarrassed. But anyway, th it still went through. All right. Okay, well in in that in that vein, let me share one silly funny story with you. ⁓ I was I was going to the airport with the doctor once, so we had to jump on a plane. And ⁓ he he dropped me off ⁓ because you know, I was gonna go check in. And ⁓ he was he had a he had a flight ⁓ not not that far after me and I said, Okay, just you know, go hurry up, put it in the budget lot and ⁓ and get get back here so we can, you know, catch our flights. Well, he gets back and ⁓ turns out he put it in the budget car rental lot. And so he took his car to the budget car rental. ⁓ my gosh. That's crazy. It was like You've got to be kidding me. But you know, the the so the the the funny part of that is they held on to it for him and he was able to park for a week for free. Yeah. Probably got it back like meticulously cleaned. That's a great one. All right. So here's it here's two more that are related. ⁓ when you were CEO, I'm gonna ask you ⁓ w if you're willing to share it, what was the biggest business mistake you made? And what was also the most like intelligent, positively impactful decision you made as CEO, if you can think of either of those? I think the biggest mistake I made was not scaling up quickly enough as the company grew. And you know, that was, you know, w we like I said early on, we outscript our infrastructure when we were public. and ⁓ we we shouldn't have you know, in my estimation, we should have been able to bring in the people we needed instead of having to merge the company ⁓ with ⁓ with with another company to create ⁓ a third entity. And ⁓ you know, so I I would say knowing when to scale and and what positions to bring on at what time frame. is ⁓ is a challenge that many many within the space ⁓ either overshoot or undershoot. And ⁓ and I think we undershot that. The good news is I learned from them and as we went forward and ⁓ we took the company private, ⁓ we we we did have the proper infrastructure to be able to scale the business, you know, effectively ⁓ and ⁓ and continue to grow it nicely. when you say infrastructure, just for the people watching this, scaling the in infrastructure ⁓ you know properly In a timely manner. Can you just elaborate on what you mean by infrastructure? Yeah, well there the the infrastructure is the support ⁓ the the the support ⁓ team at ⁓ at the central ⁓ central support office or corporate office or home office or whatever you want to call it, as well as the field team that supports the offices in the field, regional managers, clinical leadership. ⁓ you know, how how far are you spreading those folks? ⁓ how many people do you have doing do you have one person doing two or three jobs? Or do you have, you know, two people doing one job? That's over that's you know, that that's that's that's too much overhead. And and knowing that balance and and making sure that you have the right people in those roles. You know, when when when doctors, you know, many times we we we we built we we bought and partnered with a number of docs that had multiple offices. And, you know, they had challenges, some of them that they had overbuilt their infrastructure to support. four or five locations. ⁓ and in other cases they had underbuilt it and they were burnt out because it was all on their shoulders. That change that challenge doesn't change as you get larger. It constantly evolves with you. Whether you're five offices or your fifty five offices, your five hundred and fifty five offices, you're gonna continue to have that challenge. You know, the larger you get hopefully you have more senior management around you that that is watching you know, watching their their departments and and properly staffing them and with the right people, but ⁓ that that challenge never changes as you as you scale up or or unfortunately as you have to scale down in some cases. That that is a a balancing act that is like mathematically impossible to nail, like to nail it perfectly. I mean if you if you're growing and you're scaling, the it's like a it's like a pendulum at ti in my opinion. It's at sometimes you're overstaffed and then sometimes you're understaffed. It's like and then you hit a you might hit a period of time where you're perfectly staffed. But it's almost impossible to stay in perfect equ equilibrium in terms of like scaling or overscaling, underscaling, or perfectly scaling w when you're trying to grow. ⁓ what was what was the ⁓ like most awesome decision you ever made as CEO that that you were like, wow, what a great decision. It had such a positive impact on the value of the company. I I think, you know, having a You know, it it it it basically was doing things for the staff. You know, things like ⁓ matching four ⁓ one K, putting together a non qualified plan for for those doctors that had more that they wanted to put into a retirement fund than than a four one K would allow. ⁓ you know, doing things that that provided benefits to the team, which created more stickiness with the team, th which minimized your turnover, which stabilized the business, which allowed you to grow faster. I love that. And what makes one successful versus the next. I agree with you on that. That's the number one thing I'm hearing right now in the in the industry is the the turnover rates. ⁓ so here's another one for ya. ⁓ If ⁓ what do you like better as a growth strategy? I assuming you're not trying to hyperscale, right? Like like someone saying, I want to get to fifty offices in in five years. But someone who's like, you know what, I have one or two offices, I'd like to get to ten in the next, you know, couple years. Do you have a preference over de novo using a de novo strategy versus a a a buy and grow strategy? We pr we we preferred the buy and grow strategy. if you if you bought the right practices with the right doctors and the right philosophy, you're buying a you're buying a cash flow. And if the you know if you're buying correctly, that cash flow should pay for your debt. And it should also spin off additional additional ⁓ income to be able to reinvest in the growth of the business. ⁓ we we didn't have we we did some de novos, but we didn't have as much success with it because ⁓ we we just we're not that refined in and we didn't have a refined system And ⁓ we weren't s we didn't do enough of it to to build muscle memory around how to do it successfully. So I I really admire the companies that have the ability to do both. But if you look at it most most organizations out there, it's one or the other. And ⁓ we stuck more to the, you know, buy and grow. Okay. Yeah, that's I mean that that's what we do. It's it's a lot f it's a lot faster ⁓ road to get where you want to go. ⁓ But de novo, if it's done right, you know, in terms of just sheer profitability in in dollars, you know, in my opinion, de novo can deliver higher ⁓ you know, higher end results, but it's a it's a slower, more arduous ⁓ process. ⁓ you know, you you really have to have ⁓ the the guys that I know that do de novo successfully, they really have an engine that is good at identifying locations, at ⁓ at standing those locations up, at ⁓ marketing to bring in new patients. ⁓ you know, before the doors even open and to and to recruit s doctors that can go into those practices and hit the ground running. So those are all different components to a successful de novo strategy. And ⁓ you know, if you don't have all those pieces in place, any one of those pieces is is is failing, ⁓ you're gonna have a ⁓ you're gonna have some hiccups in your de novos. Yeah, no doubt. ⁓ I d I don't have the patience for that, quite frankly. But I admire the people that do and the people that do it well. Man, they're they're just cleaning up financially. What it ⁓ what advice would you give to dentists that ⁓ want to grow using a a a buy and build strategy, going out and buying other dental practices? Like if you could give advice on the positive side, like, hey, if you if you're buying buying practices to grow, ⁓ this is this is some advice I could give you to be s to be successful, more successful using that route. And also part two of that is what pitfalls should a a a doctor be aware of and try to avoid if they're using a buy to grow strategy. Yeah well I think the the things that they need to do if they're using a buy to grow strategy, are they buying a practice where the doctor is looking to stay on or looking to retire? You know, I mean there there are there are groups out there that look to buy practices and move the seller out as quickly as possible, like the the gentleman that's or lady that's in their sixties or seventies that is looking to monetize and leave. And then there are those that ⁓ and more and more today we're f we're seeing more more doctors in the forties and fifties that are looking to sell and stay on for another ten, fifteen, twenty years and monetize their equity, have a some sort of partnership going forward. ⁓ and I'd say that that is that's the sweet spot today. But the the key is bringing in doctors that have an aligned philosophy. You know, you can and and an aligned strategy around how they want to run their practice because what you don't want to do is ⁓ I you know, and I shouldn't say you don't want to do what we I d what I didn't want to do was have to, you know, buy something and fix it and change it and turn it all upside down to to get it to where it you know, where it it should be in line with the others. ⁓ you know, but on the flip side, I never went in and told anybody nothing's gonna change. Because, you know, things are going to change. And you need doctors that have a mindset that understand it's not necessarily change, but it's evolution. And it they if they ⁓ if they evolve, whether they're with me or they're not with me, they have to evolve to be relevant, to stay on top of the game, you know, especially with today's technology. So I want I want open-minded individuals that are gonna be open to ideas that you know might not be theirs and ⁓ and and be willing to work and function in a team environment where they're used to working in a as a ⁓ as as a lone wolf. ⁓ and so you have to really vet those those mindsets ⁓ and make sure that you're bringing in the right people. Because if you don't, that's just going to create a lot of aggravation and challenges for you going forward in terms of trying to ⁓ integrate. Because you know when when when you go to sell your five practice group or your ten practice group or your five hundred practice group, you know, the buyers today are a lot different than the buyers five, six years ago. They're looking for they're looking for continuity to this to the from the standpoint of, you know, is this business scalable? ⁓ how are they growing organically? What types of systems and processes do they have in place? I mean, five, ten years ago, there were the you know, there it was the it was the wild west. There were groups just buying practices, putting them together, putting a bow on it and selling it to the next the next guy. That that doesn't fly anymore. You now need to have a business that is functioning at some level that is ⁓ that that looks you know, looks like a a a a a you know, a a c consolidated entity. well I'm sorry, in the second half of that question was ⁓ yeah, so there's ⁓ the next part of that was ⁓ what like if someone's using the buy to buy to grow strategy, can like what what would what's the number one mistake that that they should try to avoid based you know, based on the stuff you've been through? Well, I I I think, you know, they should try to they should try to stick into one lane. ⁓ you know, they don't need to be, you know, if they're if they're going to, you know, be in the fee for service lane, stay in the fee for service lane. Or if it's the insurance business, the you know, fee for service, stay there. Or Medicaid, stay there, or PETO stay there. ⁓ you know, the there there's differences in running all those verticals within dentistry. And I think where we see some mistakes being made. is that, you know, th some folks think that is, you know, they they can they can run all different types of practices without having all the knowledge necessary ⁓ for the intric intricacies and idiosyncrasies of those of those respective businesses. Yeah, that's great great advice. So you you had touched on something about ⁓ how important it was to have doctors or associates that are are willing to evolve with with the you know the the the group and be willing to to change and evolve ⁓ you know to match the desires of who whoever owns that group. This has been a huge challenge for for our organization. I think most how did you go about like properly vetting doctors or associates ⁓ in practices that you were buying or doctors and associates that you were hiring while you were in growth mode? How did you vet them properly to ⁓ or consistently to make sure that they they had the right personality ⁓ that was aligned with with your growth strategies. Well I I early on we didn't. Okay. So I mean I learned from our mistake, ⁓ our mistakes. ⁓ you know and and I think today, you know, you know, in in some of the companies I work with, as well as some of those that I'm friendly with, ⁓ they there's a model that has been created within the company. And, you know, they know what they're looking for. And I think the most successful are very disciplined on only executing deals with those that fit within the box. And ⁓ you know, th there's ⁓ it's just the aggravation and the the frustration and the ⁓ the issues that come with trying to, you know, make a round ped fit into a square hole or vice versa, is just not w the the juice isn't worth the squeeze, as they say. ⁓ you know, and and there's there's plenty of there's plenty of people out there that are philosophically on the same page. they they have a ⁓ an an aligned vision f with what you have and you just have to dig into that. And they could it could they could have the prettiest practice, but you know, it might not exactly be what you you know, what what your base business is and you gotta look at is the aggravation that the is is it gonna be worth it? And so I mean Yeah, it I mean some some I know some groups do ⁓ personality tests. You know, others you know, others look at ⁓ you know, market considerations more closely than than they would in the past. ⁓ while others look at ⁓ you know, ⁓ profiles of the ⁓ of the staff of the team. And ⁓ you know, because if you don't ha the staff and team can undermine a ⁓ a a practice just as quick as anything. Yeah. So I thi this doesn't really relate to dentistry, but ⁓ over probably the last fifteen years or so, when I would interview somebody to work at our corporate office, if I if I liked that person and was considering making a job offer, I would always walk them. I'd go down the elevator and walk them to their car because ⁓ this is just me. I want to see what what their not what type of car they had, but what it looked like inside the car. And some cars were just immaculately clean on the inside. And then I will tell you, like, if I went and had an interview for somebody and I walked them to their car, and their car was literally looked like a a dumpster with the fast food, you know, trash all over the place, paper, just filthy on the inside. It's just kind of a pet peeve of mine. But I'm like, if you don't even keep your car clean and organized, you know, are you really going to do a a good job keeping the your your line of business clean and organized. That's just me, but ⁓ I don't think you can do that with dentists, but that was just something that I always do when I when I interview people, if I if I'm if I want to move forward, I always go down to their car and say goodbye just to see what the inside of their their car looks like because ⁓ we obviously try to hire, you know, A A plus ⁓ people at our organization. This is my last question before I turn it over to Neil. Neil, sorry for hogging the mic for so long. Look I I love the I agree with the car thing, by the way. Neil Neil's a big tech and AI genius. This is my last question for you at this point, Mitch, is for the ⁓ dentists and doctors that are listening to this that that eventually do want to sell their practice or group, what advice would you give them? You know, there's one or two or three things that that the doctors should be doing ⁓ prior to the sale to really maximize their exit price when they sell? Are there any things that they they they should focus on to maximize the exit price? Yeah, well, I think getting their financials in order. You know, that's something that is ⁓ you know, the someday, sometimes you know, a doctor wakes up and says, I'm just ⁓ I've had it, I'm tired, I want to sell my practice, but they haven't really put any effort into over the last couple of years getting their financials in order. They're running a lot of things through the through the practice that then become a you know bone of contention with a buyer. ⁓ you know, is you know, and and ⁓ you you you you're smiling because you probably lived it. ⁓ you know, and and you know, I think, you know, looking at their staff. ⁓ at you know, I I I always like the doc that is was very ⁓ open with their staff on what's going on, especially their office manager. When we talked about, you know, just recent just just previously, about you know, what we look f what, you know, one of the things that ⁓ that I look for when you you know how to vet a practice. I d I ⁓ a big part of vetting the vetting the practice is is getting to interview that office manager or practice manager ⁓ and and find out you know where their heads at. I've s I've had them undermine practice ⁓ practice sales, I've had them be you know great assets and I've had them be you know huge liabilities that weren't necessarily gonna stick around. And ⁓ you know yeah you're gonna buy a practice and then week number two you lose the office manager. You know that's that's a setback. So I I I look at I look at that as well. So you know office manager aligned with the doctor, aligned with their financials. ⁓ and what they shouldn't do, which unfortunately is done too often, is they try to juice up their revenue and ⁓ yeah, I'm gonna sell and you know, I'm gonna just work harder for the next year so that my numbers look better and ⁓ and then I'll sell it. Well, if you're sticking around and you've got you you're cutting a deal where you've got to maintain a certain level of production or whatever the case might be, but you're planning to sort of take your foot off the pedal a little bit ⁓ after you sell. That can create some conflict with your new partner. And so the the that's a real balancing act. I I get wanting to maximize your revenue and what maximize the value prior to sale, but you also have to look at what that's gonna look like what's that gonna look like day one, day fifty, day three hundred after the sale. And, you know, how's that gonna be with the relationship? Because you unless you're unless you're able to sell and walk away, which those those deals are few and far between, you know, you you need to be prepared for a a a ⁓ a partnership with ⁓ hopefully a good partnership, a good marriage with ⁓ with the the the the the proper suitor. Great advice. I'm gonna turn it over to Neil and Neil Neil's in his mid thirties and just brilliant tech AI guy. So Neil, why don't you take it take it from here? Sure. Well I I prefer the term geek Mitch, but that's very kind of you Matt. Thank you. ⁓ I'm I'm just a nerd. ⁓ so I I'm really fascinated by Mitch. You talked about the philosophy that you guys wanted to see in practices. I'm curious on the flip side of that for for our audience listening, you know, our audience is comprised of kind of across the board. You know, you've got you've got a lot of single ⁓ practice owner operators, you've got folks that are starting the journey and thinking about, you know, potentially do I expand out and start a group. And then you've got folks that are kind of more advanced on that journey all the way up to kind of Matt's level. ⁓ you know, with almost a hundred locations, kind of kind of a kind of a scale. ⁓ I'm curious about what you said from the dentist, from the owner's perspective. If I'm an if I'm an if I'm a practice owner and you I know you touched on it, ⁓ what kind of philosophy should I have? What are things that that you would look for that I could do in prep ⁓ in addition to what you've mentioned, that would make me a good either acquisition target or, you know, I'm curious your thoughts on this too, but You know, my advice to a lot of owner operators too is just like just just prep. Even if you're never gonna sell, it's always kind of good to just kinda know what your options are. I don't I don't think that hurts anybody. ⁓ what are your thoughts on that? Well, I think the first thing first thing, Neil, that ⁓ a seller needs to do is look the look in the mirror and say, Do I really want to be part of a larger organization? You know, I mean, you know, I think a lot of sellers are attracted to the multiples that they might get from a DSO. But they really don't look at what this what is this gonna look like after I sell. And they they are used to being their own boss. They're used to having the you know the you know calling all the shots, and now you you've got a partner and you've taken a a check from that partner. I mean, it's no different than when I sold we sold our business to private equity. Once you take that check, you now, you know, you you now have somebody else to consider ⁓ and and and you know, ⁓ philosophically are we on the same page? do we have the same the same goals? Do we have the same timelines? ⁓ you know can can I work within this environment? Can I be a team player instead of just my own boss? And I think that's a hard transition for a for a lot of docs that have been running their own practice for twenty, thirty years, forty years. And ⁓ you know, if if in fact they can't really come to grips with being in a marriage? ⁓ professional marriage, ⁓ they probably should look at just finding an associate that can buy them out, then s trying to sell to a DSO for an extra couple hundred thousand or you know, or a million dollars because the aggravation's not going to be worth it. And ⁓ and the results might not be what you're what you really hope for. That makes sense. I'm gonna like Matt's favorite quote. Is the juice worth the squeeze? Yeah. As And there's look, the DSOs, you know, as much as the d ⁓ the mainstream dentistry thinks DSOs are are the are the ⁓ the the death of the the profession. I mean we're we're not you know, I used to have docs coming and screaming at me, you know, you're you're changing our profession, you're changing you know, it's not for the better. I said, Look, I'm not changing anything. I'm responding to the changes. You know, the changes are here because you know, the the the graduates coming out of dental school can't afford to open their own practice, they can't afford to buy into a practice. Half of them are are female or or foreign born and they don't want to own their own practice. They want to have a work life balance today with the Gen Z or the Gen Z Gen X's and and ⁓ you know and and so you know I'm I'm responding to the changes. But you know, I think the same thing needs to be looked at from the private the solo practitioner when, you know, when the when they're selling the practice, you know, how are they gonna respond to you know to to the changes that they're they're gonna be inflicting on themselves if they sell their practice to the wrong person or the wrong group. Yeah. Well, one of my buddies in Atlanta is an orthodontist, very successful practice. And he did exactly w what what you said. ⁓ he brought in an associate and he trained her for several years. And now my buddy works like I mean, he probably works like eight hours a week just 'cause he likes being in the office, but he still owns fifty percent of of the practice. It's a very, very profit profitable practice. It nets about a million six a year. So instead of selling, he did exactly what you said, still gets to come to the office. You know, he he practices when he wants and lives an incredible ⁓ life now. And he's still, you know, knocking down eight hundred thousand dollars a year and still still an owner. Over time, like he's allowing her to buy him out completely, but that that way he could still run the office the way he wanted. He knew he was in like perfect philosophical alignment with ⁓ with the doctor he brought in and I think that was like a really, really smart decision. It might not have like maximized his exit value, but it maximized his like return on life for sure. And it's a best it's a better fit for him. Look, I mean, DSOs are not going to take over a hundred percent of the dental space. I mean, you know, at at at you know, I think yeah, at most they're gonna get the fifty, fifty five percent, sixty percent of the market over the next twenty five years. ⁓ you know, with about thirty percent of the market now. You know, when we started it was at zero. ⁓ so I mean it's you know, it's it's it's it's there there's still always gonna be room and space for that solo practitioner or that, you know, that group practice that's got two or three doctors that run four or five practices. But when they build something like that, they have to have an exit strategy. And unless they're buy unless they're selling it off to piece selling pieces off to associates that are coming in and carrying paper for ⁓ you know, the the exit strategy at least the last twenty years has been the DSO. Yeah. Neil, you have any other questions? Yeah, you know, th this is a this is a question that ⁓ Matt and I have talked a a lot about that I'm very passionate about. ⁓ I'm a partner in the nine office ⁓ practice in southeastern Michigan. And the question comes up a lot what's that golden ratio if there is if there is such a thing about sort of EBITDA to, you know, sales multiple, ⁓ Goldilocks of of, you know, return. ⁓ you know, high highest return, lowest operational pain in the ass, you know, overhead kind of a thing. ⁓ that metric is something that ⁓ I love to ask people. And Matt and I have have had a lot of conversations about this. And ⁓ Matt, I know you're saying you're kind of you're you're kind of talking about that 10 million in EBITDA seems to be kind of this ideal if there is one range where you you, you know, you kinda if you're if you're a group, you try to get to 10 million in EBITDA, you're gonna get the maximum return. on that EBITDA as opposed to trying to get to you know some crazy high number because then you know you're gonna get a higher multiple, but again, maybe the juice isn't worth the squeeze. Do you have any thoughts on that? Yeah, I think, you know, first off, strategic buyer or financial buyer? You know, that's question number one. You're you're gonna get different valuations based on who you're you know who you're talking to. I mean a strategic buyer is going to s wring the synergies out of your business where a financial buyer is gonna make you stick around and and hump for the next five years until they can sell it to the next the next group or seven years or eight years or whatever it is. you know, I I think the the valuation number is one that it it's come down. I don't think it's gonna go back up. I think the r the the the multiples got a little bit silly. And ⁓ that that's why we're finding so many companies in ⁓ in in challenge situations right now. You know, everybody was ⁓ was was a genius when money was free and then money you know is n no you know interest rates go up and and companies are choking on their debt. and you know we we're seeing a lot of that go on. I I think the the the s the sweet spot is is really not so much ⁓ the size, but it's you know w you know how much you want how much time and effort you want to take it to the next level. I mean going from five to ten is is easier in my estimation than going from you know ten to twenty. ⁓ or twenty to forty. ⁓ you know, and and so I you know, you you can have a really nice business, a ten million dollar EBITDA business and and and get a hell of a hell of a valuation for it. ⁓ is it is is it worth the the time to get it one fifth turn more or ⁓ full turn more? I I don't know. I think what what you're finding is and you're in this space now, I mean what technology is gonna bring to these groups. is I think gonna help them sustain growth down motions with not improve the valuation. You know, the technologically oriented ESO I think is going to ⁓ is going to be a heavy growth, certainly a heavy solar practice. ⁓ and and but they need to show the growth that supports that. You need to be growing above the market. If you if you if you got all these things going for you and you're just growing at or at or or or below the market, your your valuation's not going to be good. If you're doing all these things and you're growing above the market and you're showing how you're using all this technology to ⁓ to to scale your business, your valuation's gonna be at the high end. ⁓ but you know, I I don't know if I answered your question because there's so many variables in it. ⁓ but ⁓ you know, give me a ten million dollar business and ⁓ I'd I'd be happy. Yeah, that I I can tell you from ⁓ you know, being ⁓ one of the owners of Dental Pitch Brokerage, ⁓ there are a lot of buyers out there at a really great multiple. ⁓ if you've got, you know, five to ten million of EBITDA, ⁓ obviously the higher your EBITDA, the pool of buyers starts to starts to shrink, even though you might get a higher multiple. ⁓ but are you talking about DSO buyers, Matt? ⁓ that that ⁓ for the Yes. Yes, yes indeed. Well this has been great. ⁓ so Mitch just a couple I don't even know if we'll put this in the podcast but How many times a year do you actually go to the dentist for ⁓ a cleaning? I I go three. Okay, me too. I go every four months. Yeah, me too. Do you floss on a daily basis? No. Okay. ⁓ busted. Busted. But ⁓ but I do floss a week before I go to the hygienist. Yeah, no doubt. No, no doubt about it. It's like cramming for an exam. Yeah. Yeah, exactly. It's funny. I sh shockingly Dude, I made a lot of dentists that don't floss, which is like it's it's crazy. ⁓ I I'm addicted to flossing. I'll floss like three times a day. I always floss before I go to bed. Always I just I can't, this is weird. It's like a little quirk. I can't sleep if I haven't flossed before I go to bed. But you use the little do you use the pick thing or that like actual floss? I use the floss. Yeah, with the thread around it. Yeah. That's awesome. Well, Mitch, I want to tell you this has been ⁓ really, really ⁓ a pleasure. I know ⁓ Gosh, you're just such a wealth of knowledge. Thanks for being my friend. You you are always like the nicest, kindest, most giving person, man. I like when I first got in this industry, I was calling Mitch all the time. I'm like, ⁓ geez, what do I I need some advice here? And and you've always been such a such a nice, kind ⁓ person, but the amount of knowledge you have, the wealth of knowledge you have is is just mind boggling. So I really appreciate you g giving us an hour of your time. And ⁓ I know all our viewers are gonna love it. And I just wanna say Thank you very, very much for being on Dental Mentors and I hope to see you see you again soon. Yeah, stay in touch. I enjoyed it and ⁓ you know, as as always, Matt, it's a pleasure catching up. And Neil, hopefully one of these days we can meet. I'd love to. Thanks so much, Mitch. If you enjoyed today's video, we'd love to invite you to join the Dental Mentors Facebook group. The group is completely free, but it is private at invite only. The group is for practice owners, dentists, specialists, and dental CEOs. If that's you, we'd love to see you inside. As part of Dental Mentors, you're gonna have direct access to the brightest minds in dentistry and the brightest mentors, and some of the greatest CEOs that have ever worked in the dental space. You're gonna learn all the best practices that you're gonna need to optimize the profitability of your practices, to properly scale your practices, and to achieve a high value exit. You're also gonna learn the closely guarded secrets that the rich and wealthy use for asset protection. And the access to private investments and investment strategies that will allow you and your family to create generational wealth. Inside the group, you'll also be able to speak directly with today's guest and all of the guests on the Dental Mentors podcast. You'll be able to ask them questions specific to your practice or group and get the specific answers that you need for that next big breakthrough. Speaking of exclusive, one of the great things we're gonna do at Dental Mentors is our events. In these events, what we've done is bring together the industry's top experts, people that you want to be in a room with. These are very curated, exclusive rooms just for the best of the best and the people inside of the dental mentors community. And I promise you, you're not going to want to miss these events. If you'd like to apply to the group, click the link below and we'll see you inside. And remember, it's completely free to join.