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New Dentist Committee
The Good, the Bad and the Ugly
Report from the Committee on the New Dentist
Christopher M. Johnson, D.D.S.
At the most recent meeting of the New Dentist Committee, we were discussing upcoming CE events that pertain to new dentists. We were presented with a list of ADA-recommended topics, such as transitioning from associate to owner and contemporary removable partial dentures. It seems to me that there exists a plethora of speakers eager to espouse their opinions on various topics. Many of these speakers are not dentists. They might be dental assistants, motivational speakers, accountants, magicians or, better yet, transition specialists. Sometimes itÍs hard to find a course taught by someone who is in the trenches every day dealing with the art, science and business of dentistry. For example, I am yet to find a CE course on how to actually purchase an existing practice. IÍm not talking about a transition or how to value a practice, but more important issues like not signing in blood with the broker or how to deal with junior bankers who will use your soul if necessary to leverage your practice . I wonÍt even mention the thick contracts developed by lawyers who seem to get paid by the word.
Maybe I might go on the lecture circuit. IÍm a good speaker, and I can work cheap. IÍve bought at least one practice. IÍm sure I can fudge my way through this topic; I could call it ńSure-Fire Practice Acquisitions.î Heaven knows, IÍve paid for similar presentations of equal or lesser value. Then again, the more I think about it, how does one even scratch the surface on this topic? Take a new dentist, for example. I was there once, not so long ago. Heaped in debt, short on experience, I decided to swim with the sharks, so to speak. My first step was to pick a location and find a practice to move into. After about six months of practice brokers, site visits and various odd jobs to stay busy, I met a dentist who liked me. We talked for about five minutes, and before I knew it, we struck a deal, shook hands and closed on the deal in three weeks. I thought it was too good to be true, but it wasnÍt. The dentistÍs accountant worked out the financial details, and I was ready to practice. I have since found out that this scenario is extraordinary in the sense that it required very little leg work. For most new dentists or any dentist, for that matter trying to acquire a practice in our present economy, buying a practice does not follow any mold or formula, and there are many pitfalls. Too many for a CE course, I think.
Allow me to elaborate. I have been practicing solo for almost three years. Things are good patients keep breaking teeth, and I restore them. The only setback has been the isolation factor: You know the feeling you get working by yourself and wondering if there is a better way to do it. So I decided to bring in a partner. Not just any partner, but my old dental school roommate and trusted hunting buddy. Despite warnings, I am throwing caution to the wind and proceeding full speed ahead. Or so I thought. We found a little practice to acquire from a dentist who will soon retire. Entranced by my earlier prowess, I proceeded with the handshake deal, only to find a glove on the hand. That glove was the practice broker/lawyer/contract writer/mediator/roadblock.
I was instructed in no uncertain legalese that I was not the first buyer interested in this practice and I should review the prospectus, which is a fancy word for ńread three pages of projections leading to a bottom line that will introduce you to sticker shock.î I called my trusty accountant, who was also a little alarmed at the asking price. He developed his own projections, much more favorable, in my opinion. An offer was made in writing to the aforementioned practice broker that elicited no response, which was a subtle hint that the offer might be a little light. So I reached for the heavy artillery, my banker, who assured me that we could up the ante as long as the seller was serious. So I called the broker, explained a new, painfully higher offer which he agreed to. Or so I thought. It turns out the selling dentist wanted proof that I had the money. The broker insisted that the banker provide him with proof that financing was secured before he proceeded any farther. The banker wanted a written agreement that the practice would be sold to me before guaranteeing financing. What a mess!
I promise you, no road-tested CE expert wants to tackle this conundrum. ItÍs a classic game of ńflinch,î and I am reminded of the timeless spaghetti western ńThe Good, the Bad and the Ugly.î In the final scene, Tuco, Blondie and Angel Eyes find themselves in a three-way gun duel for the treasure. For the sake of argument, I am Blondie (only because IÍve always wanted to be Clint Eastwood), the selling dentist is Tuco (it turns out he was out of bullets), and the shifty Angel Eyes is the practice broker (seems like a good fit). All three of us are staring each other down while Ennio Morricone music blares in the background. In the movie, Tuco tries to shoot Blondie while the practice broker, oops, I mean Angel Eyes, grazes him with a quick shot only to be gunned down by Blondie. Ah, if only life imitated art. In the real world, I hired a lawyer to represent me, and after a few reams of paperwork, we have a deal that will work. The process has taken nearly four months to complete.
Okay, so maybe IÍm not ready for the lecture circuit. First of all, IÍm not believable as Clint Eastwood. Second, it has become abundantly clear that I have a lot to learn about the art and business of buying practices. Besides, dentists might get a little dismayed when I use shootouts for the sake of argument. My advice to potential buyers, especially new dentists, is to make sure to have an advocate you can trust, whether it is a banker or lawyer or even a practice broker. Make sure your advocate has experience in this arena. There are great resources available.Unfortunately, nobody really has experience in gunslinging anymore. ItÍs a crying shame.
Copyright 2003. Minnesota Dental Association
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