Introduction
Dr. B and his wife live outside of Los Angeles in Moreno Valley, Southern California. When he connected with Practice Transitions Group (PTG) about selling his dental practice, the practice didn’t have a ton of profit or EBITDA. Combining this with the state’s heavy tax burdens and almost two years of strict COVID-19 lockdown restrictions, finding buyers was going to be a challenge.
Challenge
PTG found a great buyer – someone who wanted to get into the Southern California market. However, the cash Dr. B would get at the close was too little; he had a lot of loans.
After Dr. B reviewed the first offer, he became discouraged. His dreams began to seem farfetched, and he told PTG just to let it go. Dr. B didn’t think selling his practice was possible.
But PTG saw everything Dr. B had worked for. PTG did not let it go. They continued to walk Dr. B and his wife through the selling process and kept reaching out to potential buyers, doctors, and DSOs.
The PTG underwriting team also went back to work behind the scenes with Dr. B’s front office to organize the practice’s finances.
PTG approached the challenge as a team and was instrumental in educating Dr. B’s front office. PTG knew that Dr. B’s accounts needed to be clean, especially when working with a sophisticated buyer.
Through incredible diligence and persistence, PTG found a DSO whose business development representative was equally invested in making sure that Dr. B’s sale was a “win-win.” Not all dental service organizations (DSOs) are created equal and not all are interested in a win-win. However, the representative openly communicated with the PTG team and was transparent about what reports and financial organization the DSO needed to move forward.
The DSO requested call after call, but PTG took that as a commitment from the DSO to work together and an opportunity to educate his client.
Approach
PTG’s Lead Sell Side Advisors began working with Dr. B to overcome these obstacles. While on the surface clients say they just want the most money for their practice, the Practice Transitions Group team consistently gets clients the prices they want, if not much more. The PTG team has seen over the years that there needs to be a why behind the sale. If not, then there’s often no relief, no joy, and no true celebration of what has been accomplished at the end of the process.
To find the why, PTG took a lot of late-night phone calls with Dr. B and his wife about their motivations for selling their practice. This is one of the key pieces of PTG’s process.
Dr. B’s why was quality of life: he wanted to retire within five years of the sale and he wanted to stay in California.
Roadblock
Dr. B and his wife, despite finding an amazing DSO buyer, continued to feel anxious. Initially, Dr. B worried about his income dropping. There was almost A guaranteed drop in pay if he went from a business owner to an employee.
He also worried about how much cash he would receive at closing to pay off his debt. After the initial offer, he feared that if anything changed with the current buyer, the payout might not suffice.
Together with his wife, Dr. B also worried about whether the sale combined with his wages would cover his expenses.
Dr. B owned only one office. He had only one shot to capitalize on the years of work and service. His sale would be his retirement plan.
Solution
PTG listened to these fears and heard them. The team cast a vision for Dr. B that connected back to his why. With this sale, Dr. B was going to get to travel. He was going to enjoy flexibility he hadn’t had in 30 years. He would no longer have to come in on weekends.
Results
Dr. B ultimately decided to reinvest himself in the process and work with the DSO to go through with the sale. PTG negotiated a price 8 times the value of Dr. B’s practice. Dr. B has retired with the cash and equity he needs to live life outside of practice ownership now.
Call us at (512) 761-7101 or send us an email at info@practicetransitionsgroup.com to explore your healthcare real estate needs.