How Practice Orbit is Modernizing Dental Practice Sales

There's no signup fee. The only thing you pay is 1% of the sale price if and only if you sell to a buyer that was introduced to you through the practice. We wanted to make this so you literally have nothing to lose.

Welcome, everybody, to our first episode of the Dental Sale podcast. I'm Wes Reed, your host, but I have today with me two who will be co hosts of this podcast. We are launching this with a ton of enthusiasm. We believe here, and you're going to hear us talk about this today, that there is so much value and change that can be introduced to this space of dental practice sales through this podcast and also through a technology called Practice Orbit, which is really what's driving this podcast. And we're going to spend some time talking about that today as well as a little bit about the industry, the state of the industry of practice sales. There's a lot going on there. Let me introduce our co hosts today. First, I have with me Matt Odgers, a dental attorney. Matt, I'll give you the podium here in second, and I have Drew Phillips, who is one of my colleagues here at our dental CP and financial planning firm called Practice cfo. I am the CEO and founder of that firm. So let me. Yeah, let me kick off a little bit more with me. Is that cool, guys? Yeah, let's do it. All right, so I'm Wes Reed. I'm a dental CPA and a dental cfp, which stands for Certified Financial Planner. I've been working with dentists since 2009. I founded and started this company called Practice CFO, which is, as it sounds, an outsourced CFO service for dental practice who typically can't afford a full time chief financial officer. And so we provide the accounting and the tax and payroll services, but then we layer on the most important services, which are financial planning. We now have 40 people at the company, and we have probably 300 dentists we work with throughout the country on the side. We have now created. I've created a technology called Practice Orbit, and you can find that@practiceorbit.com we're going to launch into that. I'm super excited to go over the details with that, but that is me introducing technology into a space that I think very, very much needs it. And a good portion of my heart and soul and resources and time are now going into this second item in my career called practiceOrbit.com so very, very excited about that. All right, let's pivot to you, Matt. Give us a little intro.

Yeah, thanks so much, Wes. And I really like your energy. It's going to make this podcast go smooth and quick, which I really appreciate. So as Wes said, my name is Matt Odgers. I'm a California dental attorney and I've been doing dental law for the past 10 years now. And I got into dental law actually through Wes. I had started my practice right out of law school and was doing general business law and some estate planning. And then kind of networked and connected with Wes, who asked me if I wanted to help one of his clients set up a dental corporation. And I was all about it and just kind of went from there. Started getting more and more involved in corporate setups and then got into practice acquisitions, buying and selling practices, and then partnerships and lease reviews. And now that's about 95% of the work that me and my firm does. I'm a San Diego native and split my time now between Lake Tahoe and San Diego and been working with Wes and Drew here on the Practice Orbit website and the launch of the technology. And I'm super excited about it. I think it's a great product. And the three of us, us have kind of used our experience in going through so many of these transactions and all the pain points to come up with a product that hopefully alleviates a lot of those pain points and makes it easier for all of our clients to be able to get deals done.

Cool. Yeah, we are glad you mentioned that. We are here in San Diego. It's beautiful down here. We work with clients all over the place as well. You do too. Although do attorneys just have to limit their work to the state that they live in?

So it's a bit of a gray area to a degree. I've got relationships with attorneys in a lot of states and so we co counsel when there's a state specific issue. But we do do transactions all throughout.

The US and just for clarity, your firm is Odgers Law, correct?

Yeah, that's right. Odgers Law.

D G E R S Law. Matt and I met when we were working in these little dungeon suites in these executive spaces. We were just getting started up and I was just trying to make it and launch with a couple clients. And you were down the hallway. I looked you up on the directory. I think I slipped my business card under your door.

That's right. And then we went to the cafeteria for lunch.

I remember that. And since then we've worked a lot together and I've. And I've worked with a number of attorneys over the years. You know that, Matt, on both the buy side and the sell side. But we sure have had a good chunk of experience working together, and it's always been such an awesome experience to do it. And I'm so happy that you're a part of this, this podcast, and the Practice Orbit initiative, because I think you know so much about the space, especially from a legal standpoint, that would become very valuable for our listeners and also for the users of the podcast. Welcome to the show. All right, Drew, give us a little intro. I'm sure some people may already know you since you host co host the Dental Boardroom podcast for Practice CFO with me, but go ahead and introduce yourself.

Yeah, so I'm happy to be here. This is a great new segment of our journey and in the dental space, and I'm really looking forward to it. It's a revolutionary technology that I really think is going to shape transactions from here on out. I got my start in public accounting. I am a cpa. I worked with private equity companies in the valuation of their target companies, mainly more so as an income statement audit on the CPA side of things. And so I got pretty familiar with the transaction space more generally in the middle market. So we were doing much larger deals than you find in the typical dental space. You know, 100 million to $500 million per transaction. And so when I went over to dental, I took that experience with me in the transaction space, and I really hunkered down in the transaction space specifically to learn the ins and outs of the dental business, the operational side. And then ultimately, you know, what separates, you know, financially independent dentists from those that may not have found the way to make that happen for themselves. And I made it a mission alongside my good friend Mr. Wes Reed here to get as many dentists financially independent as I possibly could throughout the remainder of my career. And I think we're doing a pretty, pretty dang good job of that so far.

You know, so much of what we put our emphasis on is creating value for clients. And as CPAs and financial planners, we do a lot of that on the practice CFO side by integrating their accounting and their personal financial planning in this new space where we're extremely targeted. I mean, just working with dentists is a niche of ours, but now we're going inside of that niche to niche even further here with Practice Orbit and emphasize that juncture, that inflection point in the life of a dentist where a lot is happening. This is the sale, and it's not something you want to wait till the month of or even the year of this should be staged well ahead of time in order to make it a successful event and to also maximize the equity value out of your practice, to apply that to that next step in your life, whether that's retirement or, or buying another practice or whatever that may that may be. And there is a lot of complexity. There's a lot of anxiety that can take place during that experience. There's a lot of mistakes that can be made. There's also a lot of, I think, exploitation in some ways of the seller, who doesn't know that space of law and accounting and tax and finances around the sale of a dental practice. So we are very niche in this one. If you're thinking about selling your dental practice in the next five years, I hope you listen to every episode because I think we're have some great content for you. All right, let's go ahead, Matt, and.

Let me jump in there real quick. Wes, you really hit the nail on the head with the sellers. But I just want to quickly talk about buyers. And the other kind of the other leg to this, to our system, is going to be getting the buyers into the system and then also helping them figure out exactly what they want and introducing them to a practice that has exactly what they want. And so through our platform, the goal is to make sure that buyers come in happy and completely educated on the process so that they can find that perfect practice and kind of create their career around it.

And we'll address the question, do you need a traditional dental practice broker in order to access qualified buyers to make that transition successful? So stay tuned. We will touch on that subject. Why are we doing this podcast? Well, obviously, one is for to make the industry and dentists aware of this new technology called practiceOrbit.com, which I'll dive into a little bit here in a moment. But I would like to say first, we really want to educate clients. All of us here in this room are in a space where every day our job is to educate clients on critical decisions they're making, whether that's around the legal aspects of their practice and their life or whether that's around the financial aspects of their practice and their life. And education is such a huge theme for us. In fact, we created a separate website called associatesonfire.com for associate dentists to educate them on the process of buying a dental practice and running a dental practice. We just believe doctors will be empowered through education. I think that's the first reason for the podcast. Second is stories. Stories are so powerful, and we work with A lot of dentists who have sold their practice, and I love to hear their stories. Why did they sell? What went wrong? What do they regret? What did they learn? And so we're going to invite dentists who have sold to come on and just share their story. So people who are going to sell later might learn directly from the doctors themselves what that process was like. So we're going to have some really cool content there.

Absolutely. And on the stories, the more of these transactions that I've done as an attorney, every single one has a different set of facts, and those facts can either make or break the deal. So the more of the stories that you listen to, the more exposed you are to those facts. And when you're in the middle of your transaction, whether a buyer or seller, you'll be able to look back on some of these stories and see the way it played out. This will help with stress management. This will help to be able to predict what the outcome's going to be. But hearing what other people have done, short of being like Wes, Drew, and myself, and actually living through so many of these transactions, hearing third parties tell what happened and what came up and how they overcame it or how it ended up not being an issue or how it killed the deal, is going to be incredibly valuable.

Agreed. Drew, anything you want to add to some of the education aspect of our podcast and what we're trying to accomplish with it?

I'm looking forward to getting in the meat and potatoes of how Practice Orbit works, and I think we're ready.

All right, so that's really the other reason, the third reason. I'll say so education stories and creating this community that's built on a platform, a technology platform. Let me talk about this concept of technology that creates community. There are technologies called multisided platforms. Most of you probably have never heard of that term, multi sided platform, although you probably interact with it every single day. Guys, let's go ahead and talk about some examples of multi sided platforms and then we'll sort of pivot into how Practice Orbit is a multi sided platform and what it's intending to do as a multi sided platform. One example would be OpenTable. I think a lot of people are familiar with OpenTable. OpenTable is a company that doesn't own a single restaurant. It's not a customer of a. Of a restaurant. It simply creates the ecosystem, the space for those two parties to come together easily, find each other and have tools to connect up and have a positive experience as a diner in a restaurant. And so every time I Go out to a restaurant, it's almost always through OpenTable. I just love that technology. Another one would be Uber. Uber is a company that doesn't own cars. It has very, very few assets which are physical, you know, physical things. It's a technology that invites into a space, layered on that technology, riders and drivers together and gives them tools to make that a very efficient and economical process. That is what a multi sided platform are. Now, both those cases, those are in some ways dual sided platforms. A multi sided platform gets more complicated when you have more parties involved. One that I think of is Amazon. Amazon is a multi sided platform. It brings together vendors, it brings together buyers, it brings together content producers in video and movies and TV series. It has AWS for storage space and building websites on. And it brings this whole massive community together and they find that their job is more productive and more beneficial, more enjoyable just doing it through that community and in that technology rather than outside of that technology. And there are pros and cons with all of these technologies as well. That's always the case. But in general, net net, these technologies have changed our industry. Any other examples you guys want to throw out there?

Well, maybe not another example, but to kind of look at Practice Orbit, you've given some examples of how Open Table, Uber and Amazon kind of bring different people together. What are the different areas that Practice Orbit is going to be bringing together? Or is that something that we're going to be diving into?

I say now's a good time.

I say now is a great time. As long as I just want all the listeners to grasp what is the concept of a multi sided orbit platform?

Yeah, absolutely. So like you said, the dual sided would be Open Table and Uber. And the reason that those are dual sided is that you have a restaurant and then you have the customer and the transaction is getting a reservation or paying for food. Then you have Uber, which started with just a car, a taxi, and then the person who needs a ride. Now when you look at Amazon and it's multi sided, there's just a lot more complexity there. And I feel like what I love about Practice Orbit is all of the different areas that go into any dental transaction. It's just, it's juggling. And to be able to have one place where somebody can go and manage that juggling in a clear and organized way to come to the solution I think is going to be a game changer.

What multi sided platforms do exceptionally well and really what is behind the whole purpose of a multi sided technology platform is number one, it creates the community. It consolidates supply and demand of a given product or a given service. And there is significant value when you have 30 potential buyers as opposed to two potential buyers. Yeah, it may require you do a little bit of vetting, but the ultimate outcome is going to be such a better solution. That's number one. Number two is that it crushes transaction costs because technology has this ability to automate what have been complex processes. Technology automates those processes and makes them so much easier to apply in a given transaction. So it brings together the community and then it crushes transaction costs.

And then maybe as important is when you have more options, more supply, you end up getting better quality for the same lower price. Which I think is one of the most great things about multi sided platforms is that increase in quality.

And I think the only other thing I might add here, because I think it's so important that it should be emphasized is that a good multi sided platform technology makes the experience inside of it almost pleasurable because the tools are so helpful. I mean, I think about logging into OpenTable and it's so great how I can filter, I can save, I can filter by price, by reviews. It's just so great. Amazon too, like it's almost like an addiction to buy on Amazon. It's like, oh, I need new toothbrushes. Yes. Let me open my Amazon app on my phone and go buy new toothbrushes by going to my prior orders, throwing it in there and swiping. You know, it's almost like a pleasure.

Oh, absolutely. And the efficiency for some people, it may not be a pleasure like you're talking about, but it's not going to be a hassle. And I think that that's going to be the huge, like the bridge. Some people it's going to be the thrill of their life. Other people, it may just mean that they're able to get through a deal and get it done right.

So I want this to tee up, this next part, I want it to tee up into going into practice orbit as a multi sided platform. But I think to do that we should talk about the a little bit the state of the industry of practice sales, what's happening. Because there is a lot going on right now. It's different than 20 years ago, 25 years ago. Matt, you've been in a lot of these deals. Give me one or two points where you're seeing things different now as somebody prepares to sell their dental practice than say two decades ago.

I would say the biggest point is deciding whether they're going to Go with a DSO or sell to another individual practice owner and then once they've made up their mind how the deal points and how everything plays out from there forward, I think that that's probably the biggest change that I've seen.

Drew, anything you want to add to that? What's the state of the industry today in dental practice sales?

So Matt highlighted probably the biggest difference. And I think that for the listeners, what I've seen is when you have changes in the industry that are so massive, so radical relative to how historically it's been done, there inevitably will be a lag in the educational pieces that ultimately come together to consummate the deal points that Matt was alluding to. And I think right now one of my biggest initiatives is to continue to educate private practice owners so that they feel empowered when they do go to sell, regardless of the option that they choose, making it as familiar as private practice sales have been historically. And I think through that process, you highlight so many different deal points across all the variety of DSOs and DPOs that are out there. And there are clear cut, better options in that space. But unless you know how the contracts are written, how the deal points are consummated, you will never know for sure if you got the better end of that deal or not.

I would say that deals have always been a transaction where you're selling your business, especially as an asset sale, not a stock sale, which is a subject for another episode. It's already complicated. So now you throw in a DSO or these new emerging DPOs into the equation and their proposals are like five times more complicated. And they talk about EBITDA and they talk about all these provisions in the contract. And now you have an associate agreement that has also a lot of provisions because now you're essentially going to be an associate. They almost all require you to work back for a period of time. So it's only increased the complexity, I would say. I do feel like there's more buyers possibly today because these DSOs are just on the hunt constantly. And there's quite a few dental practice brokers. So I feel like there might even be a little bit easier access to supply than historically, but I think the landscape is a lot more complicated now.

Yeah. And going off of what you were talking about in the complexity, majority of my clients, when they call and they're making that decision, the only thing that they're looking at is, is the valuation, the ebitda, how much more can I get on the closing of this transaction? And so really the goal should be to look at the transaction as a whole, whether you want to keep working, which is usually something that the DSOs require, a work back for a period of time. So there's a lot of moving parts and the complexity you really need to kind of look at it holistically, not just who's going to give me the most money for my practice.

And it's a little bit more straightforward for someone on the tail end of their career that was making a natural exit anyway. But the complexity is greatly heightened when you're in the early or mid stages of your career because when you most of these deal points in order for a DSO to make money and pay you this higher valuation up front, they're ultimately exchanging future cash flows for exit value and how you can exit and how long you have to maintain your working status with that DSO in order to exit at their higher recapitalization events. Very critical to understanding how much income loss and tax efficiency loss that you're going to have while being partnered with them. Because all things being equal, you will typically, generally speaking, if you're producing, say a fixed amount of a million, regardless of its private practice, you're going to make more money after tax as a private practice owner because you don't have you're being paid based on the margins of the business and you have freedom on the tax planning strategies that you deploy, wherein as you're an employee of a DSO or a dpo, you're going to be beholden to their income arrangements and ultimately that's going to lead to not only income loss, but also tax efficiency loss.

Are you looking to buy or sell a dental practice? If you're a seller, how do you find a strong list of potential buyers? There's no MLS or Zillow for dental practice sales. In such a fragmented market, many dentists selling their practice feel discouraged. That's why I built practiceOrbit.com practice orbit is modernizing how dental practices are bought and sold. It's a platform technology. Y' all know them Zillow, Airbnb, Uber, and OpenTable, just to name a few. These technologies do two things. First, they help match buyers and sellers by centralizing the marketplace. Second, once the match between buyer and seller is made, these technologies help them navigate the sale to a successful close. Here are a few of the features inside a Practice Orbit users can determine a reasonable sale price for practice in just minutes. All they need is the most recent business tax return. Practice owners can use the directory to find important service providers like practice brokers, attorneys, accountants, and bankers. Practice owners and and their brokers can invite those service providers into the platform so all parties are coordinating the sale together. Practice owners will have a beautiful digital listing of their practice like a home on Redfin. And importantly, the listing will be anonymous and personal information like your address, name and pictures are only released after an NDA is signed and approved by you or your broker. Practice buyers can create saved search purchase to be auto notified when new listings come on the platform that fit their desired specialty and location. And hey, dental practice brokers, you can list all your practices on the site for free. By doing so, you'll get access to Practice Orbit's large pool of buyers, all of whom have created profiles and saved searches to be auto notified when new listings come for sale. You can use the platform to introduce your listings to a targeted set of buyers. Additionally, and optionally, you can use the platform tools such as a built in NDA, a customizable LOI and a workflow tool to navigate the sale from LOI to closing. In fact, you can manage all your listings on the system from listing the practice to NDA to LOI and finally to closing the deal. Create your free account today at www.practiceorbit.com.

Lot of good content there. I think there's more sales occurring these days than there were say 20 years ago. It seems to me like a lot of the practices I see selling aren't just selling for retirement. And I think you're 100% right that those ones are usually more straightforward. There's some provision you work back for a couple years and then you retire and you're done. If you're mid career, you're selling for totally different reasons. You're selling for an ROI on option B which might be a DPO or dso, as opposed to option A which is to continue to own your practice 100%. I also see people moving a lot more and selling their practice. I more, yeah, more group formation. I just see a lot of sales taking place these days. I in all of that. Speaking of institutional dentistry, dso. Dpo. One of my concerns and cautions for dentists has always been don't get caught up the fear of missing out. And we all know this concept. It's kind of a popular term now. Fomo. Fear of missing out. Oh, my cousin sold his practice. He partnered in a dpo, so and so sold to a dso. Look how much money they got. And what they often will hear is just the glitter aspects of it. But they're not hearing the dirt. And there's a lot of dirt sometimes under these. And I'm not going to necessarily be an advocate for or neither am I going to criticize. I just want to talk about all of it, the pros and the cons of all of this. And one, one more comment on this is that with these institutional practices, these large group practices, generally there is private equity behind it or there is a equity behind this. And if there's private equity behind it, one thing I guarantee you they want is they want a really healthy return on that investment. And so they are going to absorb out of that a decent amount of what is the value created by joining that. And they will paint a certain picture that's very easy to sort of see it from a certain angle, but not understand the full transaction. And so I think people need to have good representation when they're evaluating proposals from institutional dentistry.

One clarifying comment on what Wes just mentioned. The vast majority of the DSOs and DPOs that are going to potentially approach you to buy you are private equity backed, 100 of them or 105 of them as of a couple of weeks ago. But there are many DSOs that are not private equity backed and those may need to be risk adjusted when, when evaluating them comparatively.

Yeah. So I agree with everything you guys have said and that's been a big part of the change. But jumping back on that fear of missing out, one thing that I want to talk about that I have not seen change other than interest rates is banks willingness to lend for practices. And it's tough when you watch the news, especially today, and hearing everything that's going on with the banks and all of that, that people want to act immediately because they feel like that's going to impact financing for practices and their ability to sell and all of that. While the interest rate does fluctuate and it has been going up recently. Personally, I haven't seen any deals fall apart on the lending side recently. And the terms have, have stayed. Again, other than the interest rates, the terms have been pretty consistent, which is great for the industry, great for buyers, great for sellers, and, and just kind of creates a path for the future. So when looking at selling a practice or buying a practice, don't worry about the fear of missing out. There's opportunities all day long and I don't see that really going anywhere.

I always say you time your life circumstance. You don't time trends. That goes to investing in the stock market, that goes to buying a house. You time your life circumstance. At the end of the day, it's all about Supporting your life in a meaningful way. One thing that Jeff Bezos said, which I thought about often, here's somebody who created this revolutionary technology. It's such a huge part of our lives. He said. One of the things that's super, that's just so important in business is to remember and think about what isn't going to change in the industry. We get really excited and caught up about what is changing. And there is changing. I don't want to overstate that. But it is very true, though, that a lot isn't going to change. And so sometimes in my head I go back and forth. Is dental consolidation the second coming of medical consolidation? As we know, Medical saw a huge consolidation, but at the same time, I have a good friend who runs a practice management software for Medical. It's called Kareo, and he, he's the CTO of this company. And they're getting hundreds of new private practice medical doctors every month. So even in dental, I mean, even in medical, they're still private practice owners. I believe that in industries there's ebbing and flowing, there's consolidation, deconsolidation, and I think that will happen too in dentistry when there is money looking for a home, as there has been over the past 10 years. Right now we're 20, 23 over the past probably 15 years, where there was no time value on money because interest rates were basically zero and so inflation wasn't really a problem. People had all this extra money. Private equity had a lot of extra money. Investors, there's just a lot of money flushing around looking for a home. And dental had such good ebitda, which we'll talk about, which is basically the profits and the return back to investors that a lot of money went flowing into dental over the past five, seven years. It's still going there, although with interest rates rising, I think risk is being recalibrated a bit. I don't know, but I suspect that that flow won't stop. But I think it will lighten up a little bit in the dental space. And so I don't necessarily think there won't be private practices 10 years or 15 years down the road. I think there will come sort of this equilibrium point where it's not trending so aggressively in the private practice space. Do you guys agree with that, disagree with that?

Yeah, we have. We also haven't had a dso, at least a large caliber DSO or DPO fail yet. And so we haven't seen what the ripple effects will be when this bubble that is forming has downstream impacts to the entire system. And when things break, we end up seeing the root and real true intrinsic value of an industry. And that is yet to be seen here. But it will come at some point.

Yeah, And I totally agree with you, Wes. I don't think that everything's going to go consolidation and that all practices are going to be DSOs at some point. To a degree, I feel like they're almost apples and oranges. You know, there's a lot of overlap, But I think that there's always going to be a place for private practice, and I think that they'll be able to compete. I think that they can offer some stuff that DSOs can't offer. Some of the more personalized approach where you're talking to the owner when you go in and get your teeth worked on. And that's something that a DSO likely. I mean, just the concept of the model will never really be able to happen.

Yep. And I'm interested, too, in this sort of hybrid space of dental partnership organizations, where you're essentially partnering into a central hub, swapping some of the equity in your practice for equity in that central operational hub, getting kind of some of the benefits of scale. I think there's a lot of experimentation, honestly, going on in that space. A lot of doctors who are founding these and trying to, like, say, hey, we can maintain the sense of a private practice and not sell out, but we can sort of partner up together and get economies of scale that way and also be part of, like, this bigger camaraderie of dentists, too.

Yeah. Wes, do you think that there's a analogy that could be made? This might be way off, but do you think there's an analogy that could be brought between McDonald's and, like a standalone mom and pop restaurant? And when McDonald's first came out, you know, they did so much with putting in place systems and being able to scale that, you know, you would think that every single restaurant, that they would just eat up everything. But the reality is that they're kind of two separate models altogether.

They're very separate models. Yes. And how much control you give up and how much discretion you give up, I think is, at the end of the day, one of the biggest distinguishing factors. And of course also how much of your profits you give up through that sale are the big ones there. And there are some dentists who are going to say, I want to go in, do dentistry, walk out and go home and read a book to my kids, and that's all I want. And great. That is a life decision. And there's others who say, I want to create my culture, I want to hire, I want to create my process, I want to dictate what type of treatments I'm going to do, I want to put my name on the wall, all of that stuff, and I'm okay.

Spending the extra time on all of that.

Exactly.

That's not just pure, pure profit. More business minded.

And that's why I want to say there isn't necessarily one that is bad and one that is good. I just think it's a little more complex than that. I think the key thing for a doctor looking at any scenario is to make sure that they understand the full ramifications of making that choice of that model in how they want to operate as a dental practice. I do think that with interest rates going up, I mean, look at what happened with Silicon Valley Bank. Everyone thought this was like the bank in Silicon Valley. It was like if you had an.

Account there, as your name implies, you.

Are going somewhere as a tech startup on Silicon Valley. And then the great do fall. They really do. So when Drew says the jury's out on who's going to fall, I do believe there will be some pretty big ones that will fall when the music stops. Okay, let's now go back to Practice Orbit a little bit because we're talking about this space that there's a lot of dentists coming out of school. And I know when I go to school and I speak, which I do with some frequency, I ask how many of you want to own your own dental practice? And most of the hands still go up. I see it decreasing a little bit, but most still go up. And I say, how many of you will go and work for a large group practice? Most of the hands go up and that's okay. I think it's a great place to cut their teeth. They have to deal with student loans, get settled, all that. But I think at the end of the day, still a lot of people want to have that autonomy of owning their own dental practice. Which is why I think dental will always, always have a very strong, vibrant private space within the industry. So how does Practice Orbit now? How do we introduce Practice Orbit as a technology into all of this? Well, number one, Practice Orbit can help create a market. I want to talk about that for a second. There is no MLS multiple listing services for dental practice sales. Like there are real estate, like there is housing. And so what practices are available when you're looking to buy? Really, it's who do you know, who's the local broker who is your supplier connected with that they could share with you, maybe down at your dental society. And so you're just sort of like poking around, trying to get a name to surface and hoping that, you know, hoping you get lucky. That's sort of what it comes down to. And so what Practice Orbit is doing, as it gets out in the marketplace and awareness is gained around it, is it's going to create that marketplace. And right now we very much need that. This is very different than housing and real estate. I don't need an agent to find my house. To find a house. And when I bought a house, I didn't, I didn't have an agent when I found the house. Why? Because the agent doesn't make the market. The agent for me was helpful because after I put in my offer letter and it was accepted, I didn't have an accountant or attorney like dentists do when they sell their practice. I didn't have anybody. So the broker or the agent did sort of walk me through that, that process and I found some value there. Could agents in real estate eventually be phased out? Probably. Probably going to happen. I mean, technology is going to do that now. The real estate industry has a strong grasp on their territory and they're not letting up. And I don't know when or how that will ever happen, but I do think that there is, there's a threat there with technology. Well, in dental it's a little bit the opposite. Once a buyer and a seller find each other and the letter of intent is in place, usually the people who consult them through the process are the accountant and the attorney. Now obviously this is self serving a little bit because we're accountants and attorneys here, but this has just been my experience that there's not a whole lot of broker involvement other than to try to move things along from loi to closing. And so Practice Orbit first and foremost is to create a more efficient, more transparent market, that is consolidate the supply of dental practices with the demand for practices in one place. That is number one. Anybody want to add, you guys want to add to that marketplace creation component of Practice Orbit?

I think having a clear definition of our experience with brokers up into this point, which we have plenty of great brokers out in the market, this is not a smack to them at all. But if I look at the key fundamental pieces that they are held accountable to during the transaction, they have a brand in this market. It's a fragmented market, but they have a brand in their local community and they are a flagship for people to come and hopefully turn up a deal. So that's, number one, they make a market, although, albeit a smaller market. Right. More geographically centered market. And what's the next thing that they do? They help to aggregate the documents that they have found in their experience to be needed by all of the other assisting parties, bankers, CPAs, attorneys. And so they're going to help the selling dentist aggregate that information and compile it in a way that they know is going to be needed. And then third, they help to stick the deal timeline together. Right. When earnest money goes hard, which means when a deposit that you made initially no longer belongs to you because you're out of what they call the due diligence period. And so they're helping the deal stick to these sort of timeline dates outside of those three components, Unless Matt has more.

Yeah, I think I've got a fourth component, which is a huge part of a successful transaction, is managing the party's expectations and letting the parties know. I mean, your attorney and your accountant are also going to do that unique to their specific field. But there's so much outside of the contract and of the accounting that a good broker is going to step in and say, listen, this is how it's done, and preserve that goodwill and so that the parties don't hate each other at the end of the transaction, which.

Would kill the deal, especially if they're working back. If the seller's working. Looking back, they're going to be colleagues at that point. Go ahead.

No, I was going to say, I used to think that that was more true than I do today, but.

And I preface that with a good broker.

Yeah.

There are still plenty, just like attorneys and accountants.

Yeah.

There are grades of effectiveness and involvement and responsiveness and knowledge. And I have found some brokers to be extremely worth, I think, a lot of what they're compensated. And I. There's other brokers who. I would never say that. And the same for all of us here. Like. Like I said. But I also think, not just expectations, I also think emotions. Yeah. I think a good broker, what they could do after the LOI goes in is just manage emotions because things come up. Drew and I were on a deal where he was representing one side, I was on the other side. We were talking about membership plans. And how do you handle prepaid for the year membership plans from a patient who doesn't have insurance? How does that affect the price if they're essentially prepaid? Contract receivables and orthodontist ar. There's so many deal points and we're going to talk about a lot of these deal points in our podcast series, but they raise a lot of emotions and a lot of times a buyer seller wants to pull the eject lever over something small but just because they're emotional about it. So brokers can come in valuable there as as well. And if there's a broker listening, we want to say hey, we respect you like the way the landscape is today. There are some good value that you provide to it. And even practice CFO has had a broker to help a lot of our clients sell in time. So I'm not, this is not anti broker per se. This is just saying that there's a need for technology to improve the space. And I think most brokers would acknowledge that point.

Oh absolutely. And to be clear, we would love to work with brokers. That's part of our plan is to fold them into the system.

Or they can use Practice Orbit as a platform to prepare their prospectuses to deliver it out in the marketplace to, to manage inquiries, legal documents, things like that.

Yeah, yeah, exactly.

Cool. Well, let's talk about some of the tools inside of Practice Orbit. So number one value proposition is it helps make the market. Number two are the tools. Let's talk about some of these. So there's a search page just like in Redfin or Zillow with that, with literally a map. And you can search practices, you can filter it by, by, by specialty. There's a couple filters in there and the practices by default are not, they're anonymous. So a PIN will drop on the map, but it will drop in a general area. It won't drop on the street and the specific location, nor will the doctor's name be displayed. No personally identifiable information is going to be on that. We could call it Prospectus, but I like to call it a practice profile page. No personally identifiable information is on that until inside the system. This is another tool or feature is that it has a built in non disclosure agreement or NDA. Once an inquiry is submitted and the NDA is signed, then the full details of the practice open up to the person inquiring, that is the buyer. And once that connection is made, now a market is potentially made. Buyer, seller come together, they meet within the system. There's a chat room and they can chat and it keeps a historical record of the chat. And the buyer and seller can each also create their team that's representing them inside the system through that process. So there's a team page and they can indicate who's their accountant, who is the attorney, if There's a banker, maybe there's a practice management consultant. There's a list here of potential team members and you put their contact information in and then they can be invited into that transaction as well and into that chat room. That way everybody's on the same page. One of the most difficult aspects about practice sale is just how disjointed the process feels to everybody. In whose hand is the baton right now? Are we waiting on the banker? Are we waiting on the attorney for the lease? Are we waiting on due diligence to be done? Where are we? And so this starts to create that. Now we don't have a timeline built in yet, what's called a stepper, but eventually we will have that, that specifically shows where we are throughout the, the timeline. It has some sort of big blocks in there. It has the NDA is in, the LOI is submitted. Now we're waiting on the LOI to be agreed upon by the seller. There's the chat room where everyone can be talking. So there are some really cool tools right now to manage the flow, but that's going to get a lot better too, in time.

Well, and let me jump in real quick, Wes, on my experience with the deals. Goodwill is everything. And on the legal side, when we send out a contract and the other attorney hasn't responded for whatever reason, what my client automatically jumps to is, is this on the attorney or is the other party getting cold feet or do they just not have all the information they have right now? One of the parties tries to coordinate all that information to keep everybody in the loop. But with the practice orbit communication system that we've, we've got built in, everybody's going to be up to speed with, like you said, where the baton is. And so that's going to cut out all of the insecurities from the party who hasn't gotten a response yet. And everybody's going to know that, okay, everything's going perfectly, except a landlord hasn't responded yet and that's what's holding everything up. Even though that has, you know, nothing to do with the purchase agreement necessarily. Indirectly it does, but you know, the transactions going forward, we're just waiting on a landlord who generally aren't as motivated to answer.

Awesome. A couple other things. This is huge. A built in price assessment. I won't say use the term valuation. I like to reserve valuation to a valuation expert who will go through that full. There's a full process when you value a business and different modeling. This doesn't go to that extent I don't think it's necessary to be honest. I think most practices like houses sell at a comparable rate to other practices based on what are called multiples of earnings and revenue. And also lenders ultimately have a big effect on how much a practice is purchased for. So we've built in through just about eight or nine boxes on your tax return. If you pull up your 1120s corporate tax return, most dentists are corporations. If you're a sole proprietor, you have what's called a schedule C. If you're a partnership, you have what's called a 1065. And it will show you, you can click on the link and it will show you the specific page of the tax return and what boxes to pull from to enter. And then out of that it will, it has fairly complicated calculations behind the scenes that will calculate an average estimated price, a low price and a high price. And the more detail you put in, the more specific that price becomes. Eventually we'll add in how geography can play a role because in inner city practice can be valued differently than a remote farm style area. That's, that's going to be different valuation most likely. But what we have in right now is a really good context for somebody to get a general idea. What is the value of my dental practice in addition to that, because Drew and I are CPAs and we do taxes here, we understand taxes very well. We built in. What would the after tax proceeds on the sale be? Because at the end of the day, if I'm a seller, what I want to know isn't necessarily the sales price. What I want to know is what am I going to keep after all the dust settles? Because I got to pay off my debt. There might be a broker involved, I got attorneys and accountants and I got to pay taxes. So what's left for me to then financially plan for my life? A lot of time went into creating that. Also it calculates an estimated EBITDA which is always being asked for these days. Wes, what's my ebitda? And so it calculates your ebitda. Now you can create a free account and go in and put in the details of your practice. There's no skin off your back and it will help calculate your, your ebitda. That's another really cool, cool aspect to has the built in legal documents of NDA and loi. We don't have a built in purchase and sale agreement which is sort of the final document right now. A buyer and seller are moved to the point of letter of intent. Once the letter of Intent is signed, most of the transaction then bounces out. So think of like buying something on Amazon. You get to research it, you can, maybe you can even contact the seller, ask questions, that kind of thing. But once we don't have a fulfillment center, meaning that there's no sort of checkout room yet, that will be a later stage on our roadmap. But for now it's to create the market, give these great tools and get it to an loi and then your team can help carry you through the finish line there. There is transaction assistance. Now we are not acting as a brokerage firm. Let me make that clear. Practice Orbit is not acting as a brokerage firm. This is a platform that we are providing and there is a platform fee that both a seller and a broker can use as a technology, as a licensed technology. And I'll go into the fee on what Practice Orbit charges. But any other tools that you guys want to mention?

Yeah, the big one for me is verifying the information that's put in and you know, making sure that it's a real human plugging in this information that they're actually a dentist or potentially a DSO if they're not a dentist. And the first level is going to be the, the software that we have that verifies somebody's identity with their ID and through whatever the process is for that. But I know it's top of the line.

Take a picture, show your license. Many people are used to this. Now if you create like a Coinbase account or there's other highly secure accounts where trust is needed, there's third party vendors that do that and we built that in through an API. API into our technology.

Yeah. And then secondly is the conversation they have with us when they sign up. So the idea is that the information that's in there that people are going to be able to search is going to be good information that could be acted upon, you know, as soon as you're ready.

That's a great point. With these multi sided platforms, trust is paramount. You have to know that the person on the other end is a legitimate person, authentic in who they are and their request. So because that's so important and we don't have reviews built into the system yet, reviews are a great trust builder is I have this third party verify system. But then I personally am going to take a 15 minute, what I call a success strategy call for both buyers and sellers to introduce you to the software, answer your questions and also just validate who you are. I can look up your dental license and website and do a little due diligence on you as well. So great point there, Matt. Appreciate that. Okay, Drew, anything else you want to comment on? The technology itself as a tool to make this just a much better experience.

Yeah, I think that part of Practice Orbit's goal is, we said this in the beginning, is to create education and transparency on how different deals are. You know, how one deal is valued over another and be able to compare and contrast things on an apples to apples basis is very important. And as we have more practices that utilize this technology to facilitate their sale and purchase, the data is going to become more rich if artificial intelligence big news right now, right? Well, artificial intelligence taps into all of the Internet data out there and able to formulate their own opinions and they're able to do that given the breadth of the data that exists. And the same is going to be true for Practice Orbit. The more sales that we have, the better our data will be, the better the transaction comparables will be. And ultimately, as we mentioned, we really foresee this being the MLS of private practice sales. And that requires extensive amount of data and market understanding for people to put together.

Amen to that one. A couple things is if you have multiple practices, you can create a separate listing or a separate profile for each practice. You could have 10, 15, you could have them all in there. If you're a DPO 20 practices and you want to sell them all or individually, it has that really robust ability. If you're a buyer, you can save practices that you like, just like you can save houses on Redfin, you star them. And then in your My profile page it has those practices that you are considering and has a number of other sort of small tools like that that just make it really, really helpful. And then lastly, price. Okay, we're this is not a listing fee. So if a seller lists or presents their practice through Practice Orbit out in the marketplace through their practice profile. And let me emphasize too, creating a practice profile can be done on your own. That's we have what I what I say. We've TurboTax this. TurboTax has taken a complicated process and made it easy for individuals to do as a consumer. We have turbotaxed the prospectus which is your all the details about your practice, the financial information, your staff information, your technology information, your insurance detail. We've made it so that you can probably most likely do this on your own. Now we do have transaction assistance, we have support if you need support. We can help you through some of this. But this is something that you can you can do on your own. And the profile looks beautiful. It has pictures. If you're comfortable putting pictures, you can identify which pictures are anonymous, meaning that they will be presented before the NDA. Which pictures are private, which are only released after NDA. Some very, very nuanced tools to make the presentation of your practice helpful. Now, because we're not a broker, there's no exclusivity here. If you present your practice to the marketplace through Practice Orbit, all you're doing is essentially using the technology. You can go list it with another broker, you can take it off. You're not obligated to do anything. There's no signup fee. The only thing you pay is 1% of the sale price if and only if you sell to a buyer that was introduced to you through the practice. So we wanted to make this so you literally have nothing to lose. If Practice Orbit doesn't provide you a solution to selling your practice, you got nothing to lose, you're not committed, and there's no cost. The only time you pay what is a very, very small fee relative to what the industry is seeing today and getting all these great benefits that we've been talking about is the 1% of the sale price. So if the sale price is 500,000 upon closing, there would be a $5,000 fee that would be paid to Practice Orbit as a licensing fee to use the technology platform.

And to be clear, that would only be if the buyer is produced through our platform. So if you list your practice on the platform and your neighbor comes over and says, you know what, I'm just going to buy the practice, we're not trying to collect any fee for that. That's completely outside of the orbit.

Exactly. I love it outside the orbit.

I don't want to reiterate one more thing as well, which is the only people that you really need on your team other than this technology solution is a cpa, an attorney, and maybe a practice management consultant if you're on the buy side. But the tool has really been created to consummate the deal outside of the due diligence. For the most part.

I will say sometimes it's helpful to have a supplier in there to sort of look at the equipment and tell you what's going happen to go out and that kind of thing.

Possibly an insurance consultant if there's, if there's something unique in the insurance space.

Sometimes buyers will like to engage a professional valuation expert to do an official valuation. I generally find what the banks are willing to lend approximates pretty similar to Maybe what that practice is valued at, assuming that the buyers have a decent credit score and whatnot.

Yeah. And. And if you're a user of the system and would like that full valuation or an appraisal with a professional appraiser, we do have those relationships and can plug them into the system. So it would be a part of it, but you'd be working directly with them.

Yep. Okay, I will just now. One of the things I always love to do is look out way into the future and say what what could be. You know, that's I live a lot of my life in the what could be that maybe it's unhealthy a little bit, but I tend to do that a little bit. And there's a lot of what could be with practice orbit. When you create a community of dentists that come together and you introduce great technology. There are other aspects I think about hiring is such a challenge in dental these days. Finding hygienists, finding front office and assistants, finding temporary people or finding associates. I think a community could be served well by providing some tech based solutions there as well. There's a lot of others which I won't go over to now. Let me just say we are really excited about this technology. It's honestly it's been two years in the making, it's been a lot of time and it's been a lot of financial resources and commitment in order to get this to a place where it is now launched and ready to go. So create a free account, you have nothing to lose and we will go to great lengths to give you an understanding of the tool as needed. I just want to also emphasize, and I think I'll end off on this guys, is what are some of the topics now going back to content and education and stories? What are some of the episode contents that likely we'll be discussing? I'm just going to name a few. You guys can jump in and name a few others. Valuations and maximizing the value of your dental practice Associate agreements. If you're working back as an associate Matt, that would be a great one for you to run. Staging your practice for a sale. Roles of the team. What does the accountant do? What do they not do? What does the attorney do? What do they not do? Taxes. How are taxes calculated? What are those taxes going to be? What is an asset sale? And how can you in allocating the price to the assets that you're selling, which happens in every practice. I think I've seen one stock sale my entire life. They're all Asset sales. How you allocate across those assets has a big effect on your taxes. We'll talk about that. We'll talk about deal points like retreats and prepaids, AR and covenants, how and when to wind down your corporation, what are the legal documents communicating to your staff. And then of course, just a lot of great stories from other sellers you guys want to add to that list.

I think you kind of hit the nail on the head and I think within each of those there's going to be a lot of tangents that kind of COVID every single aspect of buying or selling a practice.

One topic that I'm very passionate about, probably could tell from this particular podcast is I want to more education around DSO and DPO offerings and ultimately what differentiates those offers, both the pros and the cons, so that everybody is operating whether they're buying or selling, regardless of the transaction type. They're operating with extreme confidence of both the short, intermediate and long term pros and cons there.

I think we'll have a series which is sort of like a group or bundle of podcasts talking about institutional dentistry and DSOs, DPOs, tons of demand. What is EBITDA? How is it calculated? What are a lot of the provisions? What am I not thinking about? What are the advantages? What are the disadvantages? I think we'll have a whole series on that. That might end up being 10, 15 podcasts, to be honest. I think we'll have a series on deal points and I listed off a few, like, how do you handle ar? How do you handle the covenant not to compete? What are industry trends? What do you want if you're a seller? Prepaids, if you're an orthodontist, maybe contract receivables if you're doing orthodontia work? There's a lot of deal points. There's really about 20. Matt, you could probably be more detailed on this than I can, but there's probably somewhere around 20 kind of key deal points that every contract needs to address, how they're going to be handled. I think we'll have a series that talks about those different items as well. So so much good content that we can talk about in this, this episode, in this podcast, the Dental Sale podcast. I already have a list of that, which is right now about 40 different episode subjects. And honestly, I did that in like 10 minutes. There's so much to discuss in this, in this space. It's such a big aspect in the life of a dentist. It's kind of like the consummating event in some ways that if it can be done right, they will just feel so much more satisfied with how their career ended, if they're selling or how it transitioned, if they're not sort of stopping dentistry. So excited about you guys joining as well.

Yeah. And if anybody has any topics they'd like to hear us discuss kind of on this space, definitely send them to us and we'll attack them.

Yep. Wesracticeorbit.com, mattracticeorbit.com and drew@practiceorbit.com all right, guys, any final touch up comments on our opening podcast episode?

Went. Went great. And I'm excited.

Same.

I'm looking forward to upcoming episodes.

Yeah, we're gonna have a lot of fun.

Yeah. All right, guys, thanks for joining with that. Signing out.