#asdanet @asdanet wendy pesavento owner, chicago practice sales managing partner, cutting edge...
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Wendy PesaventoOwner, Chicago Practice Sales www.ChicagoPracticeSales.com
Managing Partner, Cutting Edge Practice www.CuttingEdgePractice.com
Associate, Buy, or Start, Which is Right For Me?
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• Associateship• Buying Your First Practice• Starting A New Practice
Overview
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• Employment Arrangement• Independent Contractor
Associateship Options
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Independent Contractor Agreement Provisions• Parties• Term • Conditions• Use of your
name for marketing
• Compensation• Covenant Not to
Compete
• Termination• Assignment• Rework• Notice• Enforcement• Severability• Right to Counsel
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Who are the parties who are bound by the agreement?
Personal or Corporate?
Parties
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• Usually 12 months• Renewal Options• Employment at Will
Term
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ConditionsWhat The Owner
Provides• Office Space• Dental Equipment &
Supplies• Utilities & Maintenance• Salaries, Taxes, and
Benefits for Support Employees
• Marketing• ½ of Lab Costs
What You Provide
• Your Payroll Taxes• Malpractice Insurance• Current Dental and DEA
License• Continuing Education• Professional Dues• Health Insurance• ½ of Lab Costs
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• Website• Social Media• Other Marketing
Use of Your Professional Name
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ADD + Gross collections for services rendered by CONTRACTOR
MINUS - Amounts of any returned checks or refunds
MINUS - Any outside collection expenses for CONTRACTOR'S
account
MINUS - CONTRACTOR incurred laboratory expense paid by
OWNER
EQUALS = CONTRACTOR net collections
TIMES X thirty-five (35%) percent
EQUALS = Net compensation due CONTRACTOR
Compensation$10,000
($200)
($100)
($1,000)
=$8,700
X 35%
=$3,045
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• Distance – One location– Multiple Locations– Varies from Urban to Suburban to
Rural
• Years• Violations or Unprofessional
Conduct• Damages
Covenant Not To Compete
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Buying Your First Practice
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• Who are the professionals who will support me in buying a practice?
• Where do I find practices for sale?
• How will I know if a practice is a good fit?
• What is the process to buy a practice?
• Is it better to buy or start?
Wendy Pesavento and Sharon Bogetz, Managing Partners www.CuttingEdgePractice.com
Key Points
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• Attorney– Incorporation, sales documents, lien
search, lease negotiations, real estate purchase, closing
• Lender– Financing approval letter and loan
• Appraiser familiar with dental valuation• Accountant to assist in asset allocations• Building inspector• Transition consultant
Who Will I Need To Help Me Buy A Practice?
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Where do I find practices for sale?
• Dental Society Journals
• Business Brokers
• Internet Business Brokerages
• Grapevine
ILLINOIS PRACTICES FOR SALE Bartlett SOLD! Congratulations to Dr. Mark Prosniewski! Chicago 6 ops. Beautiful build. FFS and PPO. Collections $565k. Owner retiring. Gold Coast Collections $850k. Seller will associate upon request. 100% FFS. Cicero SOLD! Congratulations to Dr. Monil Shah! Elgin 4 ops in a spa setting. Newer build. 100% FFS. Financial data pending. Mt. Prospect SOLD! Congratulations to Dr. Bindu Gulati! Lansing 4 ops at streetlevel. Building available for purchase. FFS and PPO. Oak Lawn 4 ops in a busy strip mall. Collections $900k. FFS and PPO. Peru area Coming soon! Data pending. Palatine 3 brand new ops in a highly visible strip mall on a busy corner. $250k collections. FFS, PPO and kids first. WISCONSIN PRACTICES FOR SALE Milwaukee 4 ops at streetlevel. Building available. Collections $600k. INDIANA PRACTICES FOR SALE Dyer Coming soon!
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How Do I Know If A Practice Is A Good Fit?Due Diligence
• Equipment• Financial • Systems• Patient Files• Data and Reports• Staff• Clinical Work • IDPR• Google• Social Media
SWOT
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SWOT – Objective AssessmentStrengths What does this practice do best?
WeaknessesWhat are the problems in this practice?
Opportunities What are the untapped opportunities?
ThreatsWho are our competitors?
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How Do I Know If A Practice Is A Good Fit?
• How much will I earn?• Is there a credible practice
appraisal?• Do the Seller and I have a
similar philosophy of care?• Are there any procedures that
the seller is referring?• Does the practice have a
predictable and emulatable new patient flow?
• Are there opportunities for practice growth?
• Are the equipment and facility desirable?
• Does the practice have modern office systems?
• Is the staff willing to support a new doctor?
• Can this location draw walk in patients?
• Does this office have a good online reputation?
• Is the Buyer a reasonable substitute for the seller?
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Cash Flow Opportunity
Practice A Revenues $800,000Expenses ($400,000)Net Income $400,000Loan ($80,000)Pretax Salary $320,000
Practice BRevenues $800,000Expenses ($600,000)Net Income $200,000Loan ($80,000)Pretax Salary $120,000
PRACTICE INCOME
EXPECTED GROSS COLLECTIONS $492,228 100.0%HYGIENE COMPONENT $0 0.0%DENTIST COMPONENT $492,228 100.0%
RETAINED SELLER $0 0.0%
ASSOCIATE $0 0.0%PURCHASER $492,228 100.0%
VARIABLE EXPENSES
WAGES, PAYROLL TAX, ETC. $135,363 27.5%
LABORATORY $37,808 7.7%
CLINICAL SUPPLIES $33,073 6.7%OTHER VARIABLE EXPENSE $10,788 2.2%
TOTAL VARIABLE EXPENSE INCREASE $217,031 44.1%
FIXED EXPENSES
RENT $10,380 2.1%
PHONE, UTILITIES $7,396 1.5%
LEGAL & ACCOUNTING $2,575 0.5%INSURANCE $3,605 0.7%OTHER FIXED EXPENSE $10,202 2.1%
TOTAL FIXED EXPENSE INCREASE $34,159 6.9%
DEBT SERVICE
INTEREST $27,440 5.6%PRINCIPAL $22,498 4.6%
TOTAL DEBT SERVICE $49,938 10.1%
SUMMARY
EXPECTED COLLECTIONS $492,228 100.0%
EXPECTED EXPENSES $251,190 51.0%DEBT SERVICE $49,938 10.1%
EXPECTED NET INCOME & PERCENT OF PERSONAL PRODUCTION $191,099 38.8%
PURCHASER PRODUCED PRODUCTION $492,228 100.0%EQUITY INCREASE & PERCENT OF PERSONAL PRODUCTION $22,498 4.6%TAX SAVINGS FROM DEPRECIATION & PERCENT OF PERSONAL PRODUCTION $9,987 2.0%
TOTAL ECONOMIC BENEFIT-CASH, TAX SAVINGS, EQUITY & % PERSONAL PROD. $223,585 45.4%
THIS CASH FLOW EXAMPLE IS BASED ON THE FOLLOWING ASSUMPTIONS:SALES PRICE & PERCENT OF GROSS $319,000 67%WORKING CAPITAL $24,000 4.9%
TOTAL LOAN $343,000 69.7%LOAN INTEREST RATE 8.00%LOAN TERM IN MONTHS 120
MONTHLY PAYMENT $4,162 10.1%ESTIMATED MONTHLY HYGIENE/ASSSOC PROFIT $0 0.0%
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• How many new patients does this practice receive each month?
• Where do these patients come from?• How much does it cost to attract each
category (referral source) of patients? (ROI)
• Are any of these patient referral sources not likely to continue under new ownership?
Predictable and Emulatable New Patient Flow
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• Preliminary financing approval• Practice data• Visit practice• Financial due diligence• Offer• Patient base and equipment due
diligence
Purchase Process
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• Loan• Sales contract• Lease or buy space• Close• Transition
Purchase Process continued
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Is it better to buy or start?
BuyPros• Immediate cash flow• Loan easierCons• Need to transition patents
and staff• Sellers build, staff,
patients, and systems• Seller quality of work
StartPros• Usually better location• Your build, equipment,
staff, and patientsCons• Slower cash flow• Takes longer to build• Learning curve is steep
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Sharon Kantor Bogetz, MBA, MEdOwner, Midwest Dental Solutionswww.MidwestDentalSolutions.com
Managing Partner, Cutting Edge Practice www.CuttingEdgePractice.com
How To Start-Up A Dental Practice
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Strategic Business Plan
1. Financial Plan2. Construction Plan3. Dental Equipment Plan4. Technology Plan5. Staffing Plan6. Marketing/Internet Plan
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Develop The Master Plan
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How Is That Accomplished?
• Knowledge• Support• Financing• Location
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Assemble The Team
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Start – up Consultants
Attorney
Accountant
Lender
Architect & Construction Team
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Business Planning Marketing & Advertising
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1. Financial Plan• Incorporation• Quickbooks• Pre-Construction Budget• Business Plan• Loan Acquisition• Construction Budget• Operational Budget
Forecast
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2. Construction PlanOnce the site is selected
and the architect completes the drawings: • Interview Contractors• Interview Cabinet Makers• Solicit Bids• Compare Costs• Check References• Review the details• Select Vendors • Review Contracts
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3. Dental Equipment Plan
• Interview Equip Reps• Interview Factory
Reps• Make Equipment
Selections• Entertain Bids• Compare Costs• Review the details• Select Vendors • Review Contracts
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4. Technology PlanMake the Decisions• Digital X-rays• Digital Pan – Cone
Beam• Practice Mgmt Software• Paperless• Wireless Reception• Cable/Phone System• Wiring• # Screens in Operatory
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• Interview Contractors
• Entertain Bids• Compare Costs• Check References• Review the details
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5. Staffing & Systems Plan
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• Budget For Staff• Salary & Benefits• Work Schedule• Job Descriptions• Office Manual• OSHA/HIPAA• Employee Forms• Recruitment• Interviewing / Selection• Reference Checks• Training / Scripting• Staff Evaluation Forms• Standard Operating Procedures• Payroll Management• Uniforms
Experienced V.S. Non-Experience
• Customer Service Training• Productive Scheduling• Cash Flow Management• Dental Insurance • Recall System• Huddle
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6. Marketing & Internet Plan
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• Practice Name Selection• Practice Marketing Niche• Target Population• Logo Design• Domain Name Selection• Stationery Design• Brochure • Signage• Direct Mail Campaign• Print Ad Campaign• Internal Referral Program• Employee Discount Program• Personal Networking
• Website Design• Social Networking• Internet Campaign• SEO & PPC
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• Consider signage opportunities when selecting a site
• Consider walk-in opportunities• Consider window views/street
visibility• Review the demographics
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Start Marketing During Site Selection
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Selecting A Location
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• Who are your top 3 competitors?• How do you find out about the
competition?• Who gets the most patients?
Why?• What are they doing?
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Complete a Competitive Analysis
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2 Most Cost Effective Ways To Market
1.Website
2.OutsideSignage
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Differentiate Yourself
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Which office would you call?
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Integrated Marketing Theme
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Manage Your On-Line Image
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Thank YouSharon Kantor Bogetz, MBA, MEd
Midwest Dental Solutions847-370-9131
Wendy PesaventoChicago Practice Sales
773-502-6000Partners, Cutting Edge Practice, Inc www.MidwestDentalSolutions.com
ChicagoPracticeSales.comwww.CuttingEdgePractice.com
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