Dental Start Up to Dental Acquisition with Dr. Kari Mann and Dr. Glenn Vo
Dentistry has made many improvements and strides; we’ve broken many social barriers. That said, some dentists abide by a backward sort of thinking. Dr. Kari Mann faced such thinking firsthand when she was fresh out of dental school. During her hunt to own a practice in Seattle, a man told Kari that he wouldn’t sell to a “young female.” At the time, Kari and her father struggled to find a practice.
Despite the odds, Kari has found a way to rise to the top. I was super excited to sit down with Kari—a good friend—for this week’s episode of the Nifty Thrifty Podcast. Kari has a lot of stories to tell and advice to give as someone who has evolved from owning a start-up to completing the acquisition of another practice.
After graduating from dental school, before Kari moved to Florida. Kari’s father was eager to help with the business side of things. He would visit practices throughout Seattle—probably about 40 or 50 in all. Unfortunately, Kari and her father struggled to find a practice that was either realistically priced or willing to sell to a recent graduate.
Eventually, Kari found a practice that was considered a “Pseudo Startup.” The practice had been owned by a dentist for 40 years who—instead of selling it and getting out of it at its peak—had let the practice just drop off. In other words, his dental practice was struggling to stay afloat. There wasn’t much cash flow, thanks to a small patient base. Thus, Kari was left with the “bones of an office” with outdated and unreliable equipment. She had very little to go off of, building a brand new dental practice within a failing one.
Kari and her dad made do with 1,000 square feet to host four ops, a three-person front desk, patient lobby, staff room, bath, doctor’s office, a sterile lab, and a laundry area. Think about it: your marketing campaigns have yet to be launched, leaving you with a clean slate on the PR front—your reputation is yours to build. With a pseudo startup, on the other hand, you’re starting off behind the ball. And in Kari’s situation, she was starting when the business wasn’t just behind the ball but in full-fledged crisis mode.
You ought to consider Kari’s story for those of you getting pitched by those schmucks telling you that you need 5,000 square feet of space for a five-op practice. Kari owned this Seattle practice for four and a half years. It was on track to do $1.6 million when she sold it.
She worked four days a week—seeing patients about 30 hours a week—taking two-hour lunches every day so she could work on the administrative stuff. Kari’s Seattle staffs were two full-time hygienists and two full-time restorative chairs. And while there still was room for growth, Kari decided to walk away. She had had enough with the weather in Seattle, having a hard time during the winters especially—not to mention the living costs.
For Kari, being in a group practice or owning a thousand practices isn’t something she’d be interested in. One of the big reasons why Kari was all for owning her practice was because it meant she could do as much of the clinical dentistry as possible—she loves the process of sitting in the chair and treating patients.
And suppose Kari could say something to anybody looking to buy a practice? In that case, it’s this: set whatever prospectus a broker gives you on a practice aside and get an accountant—especially if you’re not a numbers person.
Next, go through the numbers. Get to know your P&L, tax returns, monthly costs, cash flow analysis, malpractice, tax burden, etc. But don’t forget to stay prepared for the future by understanding the expenses and numbers that’ll come with your objectives for the next year.
If the numbers don’t pass the “stress test,” it might not be worth taking practice on. If you’re not the type of person to go in and flip that practice, then it’s not a good fit.
In my opinion, too many doctors approach buying a practice like buying a house. Worse, some brokers love to break our wallets through coaxing. They’ll treat the process like a transaction, keeping the wall up and not letting you meet the doctors, see the office culture, etc. They never want to let us meet the team ahead of time. But buying a practice isn’t anything like buying a house—it’s different—it’s a business.
That’s why it’s important to find someone who knows a thing or two about the process and can offer you good advice. Oftentimes they’ll tell us things we don’t want (but need) to hear. For Kari, her dad was that person.
Kari agreed to come onto a future episode of the Nifty Thrifty Podcast, so you can bet on seeing her again. She’s currently remodeling her new practice down in the vacation land of Florida, so stay tuned to witness what path she chooses to take!
What’s the difference between a “true acquisition” and a “Pseudo Startup”?
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