In the business of buying and selling practices, this week’s guest is the dental leader.
Back in 2000, Andy Acton co-acquired Frank Taylor & Associates (FTA), which he went on to grow into the UK’s leading name in dental practice acquisition, valuation, development and sales.
Andy takes us through the business’ early years, explains how COVID has effected the market and dispenses an encyclopedia’s-worth of wisdom on purchasing and growing practices.
“The craziest situation I’ve ever had…is somebody bought a practice and – I kid you not – he went and changed his name by deed poll to the name of the person he bought the practice from.” – Andy Acton
In This Episode
00.55 – Buying the business
08.32 – The competition
14.11 – Selling for free
17.10 – Deregulation
20.45 – Signs and scenarios
27.42 – Deferred income
33.06 – COVID and acquisitions
40.43 – Then, now, growth
48.31 – Darkest day in business
52.16 – Squats, small practices ambition
01.02.14 – Super associates
01.04.23 – Owning a practice
01.06.03 – Last day on earth
About Andy Acton
Entrepreneur Andy Acton is a director of the FTA group of companies providing business services for dentistry.
The group now incorporates FTA Finance, FTA Wealth and Management, FTA Law, FTA recruitment and FTA media.
Andy is also a popular public speaker on leadership, management and practice development.
Andy: I see so many people doing things that they don’t enjoy, and it’s heartbreaking. I would say, above all, enjoy yourself.
Intro Voice: This is Dental Leaders, the podcast where you get to go one on one with emerging leaders in dentistry. Your hosts, Payman Langroudi and Prav Solanki.
Payman: It’s my great pleasure to welcome Andy Acton on the podcast. I mean, we call it the Dental Leader’s podcast. That doesn’t mean everyone has to be a dentist. Andy’s actually dominating, if that’s the right word, the practise sales side as Head of Frank Taylor & Associates. Andy, thanks for coming on the show. Lovely to have you.
Andy: Thanks for having me.
Payman: It’s a pleasure. Tell us how you got into this, buddy. I mean, when you think of practise sales, you think of Frank Taylor completely. I mean, I envy your sort of brand position. Was Frank Taylor the first or how did this happen?
Andy: Yeah. He was the first, yeah. So what happened was back in the 1980s, there was a Frank Taylor and his business partner Sandra Rhodes. And they worked for Claudius Ash, who you’ll probably both be familiar with, the dental supply company. So they were going out and they were visiting practises. And as a result of visiting a number of different practises, a question started to come up, which is, “So what’s my practise like compared to the one down the road?” So Frank would say, “Well, it’s better than the one down the road, but it’s not as good as the one in the next town.” And then he goes to another practise, and the same question will come up time and time again. And sure he didn’t realise actually what people were asking was really, where did their practise rank in terms of value?
Andy: So Frank and Sandra went back into Claudius Ash and said, “Look, we’ve got an idea. We think there’s an opportunity to value dental practises.” So Claudius Ash being quite progressive said, “Well, that’s a good idea. Do you want to try that?” So they gave it the name, which in hindsight, probably wasn’t a great one. They called it Confidential Services, which has different connotations. But I kind of understand why, because what they were doing and what we do now is very confidential. So they trotted out and they started evaluating dental practises. And that was the very first time it had ever become an independent market in its own right. Because prior to that, dental practise has changed hands by basically people going down to the pub, or sitting in a cafe and talking to somebody and they sold to someone they know. But now suddenly, there was an independent market.
Andy: And then 1988 came along, and Claudius Ash did a strategic review, didn’t feel that Confidential Services fitted with the core strategic direction. So Frank and Sandra said, “Well, do you mind if we take this out on our own in this venture?” They said, “Well, go with our blessing. And good luck to you.” That was the start of Frank & Taylor Associates back in 1988. And they valued the sole dental practise, that’s what they did. They continued to do that through to 2000, and I bought the business back in 2000 with my still co-director and shareholder Christopher Evans, because we were working together in the city. And we’ve been working together for… Well, I’ll come back to how long we’ve worked together for in a second. But we’ve been working together in Bank of Ireland, developing solutions for the professionals such as lawyers, dentists, doctors and other health care professionals.
Andy: I joined this bank, the back end of 1999, just before we clicked over to the 2000s. So this was November, 1999. By March 2000, Chris and I decided to buy a business together, which, when I advise people now on entering partnerships, or buying a business together, the thought of knowing somebody, because I didn’t know Chris at all, before this period, to buy a business and get involved after four months seems crazy. It’s slightly distorted, because we worked intensely on a project. So we were working 16, 18 hours a day together. And through that process, what we found is we got on really well with a classic Venn diagram, I cut out some stuff, he cuts out the other. And we got on really well. So initially, we approached the bank to buy the business because we thought it would be a really good idea for the bank, because then they could provide the finance for the acquisition of dental practise. And the bank said, “We don’t want to do that because it’s too niche.” And we were like, that’s the point. The point of doing it is to capture a market. But they didn’t want to do it.
Andy: Quite incredibly, the bank gave us their blessing to buy the business ourselves, which was great. So we were two guys, we were working in the city, had good jobs in the city, we now owned a business on the side, which in our mind was going to pay us a great big dividend. And we were on cloud nine. Then in month three or four of business ownership, we realised that we had no money and we couldn’t pay salaries. Because what had happened is the people we bought the business from, Frank and Sandra, they weren’t involved anymore, so they didn’t care about the business. Sure they were doing a good job, but they weren’t responsible for running the business. And that was like a business Lesson One, is that when you own the business, you’re the person in charge, and the buck stops with you. So we had to change our attitude and mindset very, very quickly.
Payman: Andy, quick question there. Was the business on the market for sale at that point? Or did you approach them and say, “This is the ideal business we want to buy.”
Andy: It wasn’t on the market. We approached them and said, “Would there be an opportunity…” We knew they were of an age where selling was probably going to be on their horizon at some point. And then I think what starts happening is, even if it’s not on the market, when you start conversations, the art of the possible and the what ifs started gaining traction. So when that conversation started, both Frank and Sandra thought, “Well, we could sell and we could work on as consultants, and this could be a pathway to retirement.” And suddenly it started to snowball. But no, it wasn’t openly available as a business, which in many ways was good for us, because it meant that we could have lots of private conversations without there being a competitive situation.
Payman: How were the earlier years? Were you struggling?
Andy: It was hard. And the reason it was hard is that we didn’t commit. We kind of dabbled and we kind of had it on the side. So we bought the business in 2000, and we did this probably for a couple of years. It was 2001, 2000. So both Chris and I were full time in the business by 2003. Chris did an amazing thing, he actually moved over part time. He left the city, he worked the business part time, we both committed to make sure that it worked. But when we joined full time in 2003, that’s when it started to motor, that’s when we really were able to capitalise on the opportunities, but also build out the strategy. Because remember, this was a business that valued and sold dental practises like it does today. And that’s what it’s well known for, and what I believe is it does really well. But from a business point of view, there’s a massive risk, because if that sector of dentistry catches a cold, we’re out of business.
Andy: So early on, we worked out, that we need to start bolting things into this business to make ourselves safer in terms of our livelihoods. But also there were real added value services that dentists needed that weren’t being serviced out there, for example, arranging finance. Back in 2003, dentists just went to their local bank manager and hoped they got the result. So we introduced a brokerage and we helped them from that side of things. But it was difficult. And I guess one of the things that people tend not to see, they only see that whole social media and they see stuff on social media and everything looks so easy and straightforward. But in the early years, it’s hard.
Andy: When we first bought the business, I wasn’t actively involved in a day to day basis, so I worked in the city full time. So I’d start early, I’d get into the city by 7:00 in the morning, and I’d leave at 3:00 in the afternoon, I then head over. The office was then in Potters Bar, I’d get to the office by 4:00 o’clock in the afternoon, Chris and I would then work together till 9:00, 10:00 in the evening, and I’d repeat that. I did that for the first 18 months, two years of owning and running a business. New guys would have done the same and thousands of other people have done the same, but that never really gets talked about, because all people really want is, “What’s the quick fix? How do I go to from zero to a million in 24 hours?” And the reality is, it does exist, but it’s exceptionally unusual for it to happen. And actually, it’s the years of graft and hard work that gets you to a position when you’re in the market.
Payman: Absolutely. So then, at what point did these other competitors come along? Were there competitors in the early days?
Andy: In the early days, there weren’t really. There was an organisation called [Hemi Pirlo 00:08:46] Group. They started at a similar time and they were doing a thing like us. They were based in the south as well. So in reality, we had a clear run for an awful long while. And then a major change that happened, because back then the value of dental practises was relatively low. It was somewhere between 25 and 40 or 50% of turnover. It’s changed in terms of how value practises are valued. But that was kind of a rule of thumb. But then what happened was around about late 2005, 2006, when what was called the new NHS Contract came in, there was a massive shift, because effectively if you have an NHS Contract, your income is capped. Associates felt vulnerable, so we had hundreds of associates coming to us on a regular basis wanting to buy a practise. As a result of that, value shot up.
Andy: My business works on a commission basis, so we get paid on completion of the deal. We get paid by the person selling the business. So as values went up, when you earn a commission on your increased value, it became more lucrative and more attractive, and I think it was probably that [inaudible] brought other people into the market. As we are today, there’s probably about a dozen companies that do what we do across the UK to varying degrees of standards and success. Some of them fell out of recruitment businesses that said, “Well, we do recruitment.” So that’s matching people to jobs. So matching people to buy as a practises kind of things. Some specialise in it, absolutely. Others were just valuation companies that perhaps provide evaluation services to banks, and then branched out into doing the brokerage side. So there’s a mixture. I think the difference is that Frank Taylor & Associates set out to do this. This was kind of a plan of what they wanted to do, so it was a slightly different start point.
Payman: Andy, when you had no competition, and then fast forward in today, where there’s, let’s say, a dozen or so people in the market, maybe fighting for these people who want to sell their practises or people who want to buy. Do you feel back then maybe you were a little bit lazy and complacent, and then competition makes you kind of like up your game? If you look back then, looking at where you are now, are there any differences? Would you have done anything different?
Andy: I don’t think we did anything different. We were lucky back then, because we were a couple of guys who didn’t really know what we were doing. We were winging it. And because there wasn’t competition, it definitely did give us a breathing space to hone our skills, learn what we’re about, and gain our 10,000 hours. So we were able to do it at a time when competition wasn’t advanced. The reality of where we are now, I love competition, because without it, it absolutely does make you lazy, it makes you complacent. And there’s nothing worse than a situation where you have to use somebody, because there is no competition. And you know that is dire, you know it’s awful, but you just have to do it. You know how many monopolies are out there where you just think, “Well, I’ve no choice.”
Andy: If you want to get on a train, okay, I know some is privatised that kind of the rolling stock on the line today, there isn’t really much choice, you just have to accept mediocre service. So for me, competition means that we constantly have to stay on our game and make sure that we’re always improving and staying better because some of these champion our heels. And for me, it’s great because my view is legacy doesn’t mean a thing. It doesn’t mean… N really cares where you’ve been around for six months or 20 years. It’s what are you doing now? What are you doing today? And what are you going to be doing tomorrow? And that’s where, for me, it’s about consistency of what we do, always about we have to be consistently excellent. But also, if the marginal gains, I think competition makes you think about those 1% improvements, because you can’t [inaudible 00:12:33]. For me, I love competition. I love it.
Payman: If I was looking at selling my practise, is the massive unknown playing field out there haven’t got… Let’s assume I don’t know how a practise is valued, I just know I’ve got to that point in my life I want to sell my practise. There’s 12 people to choose from. How on earth do I go about making that choice of who to go to, to trust with my business to get me the maximum value? Or actually, irrespective of who I choose, is my business going to be valued on a multiple of my adjusted profits? And that multiple give or take a little bit, I’m going to end up with the same end result. And imagine, I know nothing about this, let’s say, so educate us.
Andy: The reality is that most people in your situation, most people will only go through this process once. And that’s dangerous. If you think about the first time you do anything, and you don’t know what you’re doing, you feel really vulnerable, you feel quite exposed. It’s where do you go for reliable information. For us, fortunately, because we’ve been doing this a long time, there’s a bunch of people out there that have worked with us and been through the process, and it’s gone well. So speaking to friends and other people within the profession, to get a guide on kind of who the good guys are, is a really good start point. But in terms of the approach we take, we are unique in how we go about our business, because one of the things that we do is I charge the seller for their service. So I’m going to engage with you as the practise owner, we’re going to have a letter of engagement, I’m going to act for you. But differently to the other people that operate in this market, I’m going to charge you for my service.
Andy: There’s a lot of talk in the market that you can sell your dental practise for free. As soon as you say the word free, people love it. So if you go to a train station, and there’s somebody handing out breakfast bars, there will be a queue of 50 people waiting for breakfast bar because it’s free. They might not even want the breakfast bar, but because they’re going to get something for free, they love the idea of it. So you then translate that into so your dental practise for free is highly attractive. The danger with selling dentist practise for free is you’re not the person that is paying for the service and there’s only other one person in that transaction and that’s the buyer, so the buyer is going to be paying the broker to sell the practise. So where the buyer is paying the broker who’s acting for you, it makes no sense. It’s illogical, because there’s a conflict of interest. And normally in my world, if I’m paying for service, I expect that service for me.
Andy: So as a seller of a dental practise, you really don’t want to move into an environment where you sell for free, because actually, it’s the buyer that’s paying for it. And I recently watched that programme, Social Dilemma, and in Social Dilemma you say, “If you’re not paying for the product, you are the product.”
Payman: Very true.
Andy: And if you’re selling your dental practise for free, then someone’s making money off you, and that’s not right. So going back to the value side of things. In essence, it’s a multiple of adjusted net profit. But also it needs to be considered in the context of so many things; the location, how the fees are generated, who generates the fees? Is it freehold or leasehold? What sort of dentists has been delivered? What are the core costs? I know that staff costs should be about 20% of turnover. Are they at 20%? Are they higher or are they lower? Who delivers a dentist within the practise? Typically, a principal would produce a gross of somewhere between 250 and 300,000 pounds, which is quite reasonable. If your principal is producing five or 600,000 pounds, then there might need to be adjustment, because that might not be something that could be achieved by the incoming principal. So you might have to add in some additional social costs.
Andy: So what you need to do, is you need to rebuild a practise based on what it would look like for somebody else buying that practise. But also, the multiple applied is important in the context of what’s that being applied to. So if you’re working to an EBITDA number of say 500,000 pounds without kind of getting too technical about it, and you had a multiple of five times, that would be two and a half million pounds. But if you had a smaller EBITDA with a higher multiple, you could end up with a higher number. So because you’ve got lots of different numbers and elements in this formula, it’s really important to work with a broker that is able to explain to you how they got to their value.
Andy: The other thing that’s important is if you’re a practise owner and you’re looking to sell, you got to be sure that the broker you’re working with can actually get that price, because there’s no point in giving you a flat in new value, if what you’re actually looking to do is so.
Payman: Andy, when you were growing your business, it was about the same time that the corporate started deregulating first. Do you remember the time when it was only like eight companies allowed in it. Suddenly, there was that deregulation, that massive influx of cash from the corporates. What does that mean to you day to day? I mean, what do they do? Do they work with the likes of you or do they have their own full on people trying to find practises for them? How does it work?
Andy: Some. They don’t like guys like me, because my job is to… We never fall out with them. I don’t think I’ve ever fallen out with anybody, but what they don’t like is my job is to get the best price I can for the seller. Their job as a buyer is to get the practise for as cheap as possible. We just stay opposite ends of the spectrum, and that’s just business and how it is. So what they tend to do, is they tend to approach people directly. They’ve got a good sales network, and they talk through their model and how they work. The bit from a seller’s point of view that you need to be careful with, is the corporate approaches you and invariably what the corporate will do is the corporate will value the business for you, and they want to proceed and buy that business.
Andy: The issue I have is, if you, say you’re sitting in your home, you own your home, somebody knocks on your door and says, “I’d like to buy your house. What I’m going to do, is I’m going to tell you what your house is worth, and then I’m going to buy your house. Is that a good idea?” It probably isn’t. And don’t get me wrong, I’m not saying don’t sell to a corporate. A corporate is a good exit route for somebody. What I’m saying though, is you should really get it valued by somebody else as well, to make sure that the value of the corporate you’re suggesting is a reasonable and fair value.
Payman: I guess it’s like going into court and saying, “I’ll just use the opposition’s lawyer for some advice.” Right?
Andy: Exactly. Not the best idea today.
Payman: They have sort of inflated prices or in the past anyway, so I guess that influx of cash has helped your business a lot, right?
Andy: It has, yeah. I mean, what’s happened over the years is there’s lots of small and large corporates. So we’ve got smaller corporates. And at the bottom end, if you’ve got eight or 10 practises, I’d say you a micro corporate. And we go all the way through to the end of my dentist and [inaudible 00:19:25]. And you guys are coming on in leaps and leaps and bounds at the moment. But what you’ve got is you’ve got the corporate market is very much designed around. They acquire lots of practises for a multiple, make it bigger and sell it for a bigger multiple. That kind of the logic that goes with it. That’s great if market conditions are such that when you decided to get out, there’s appetite to sell at that high multiple. If there isn’t, and at the moment, we’re seeing an awful lot of small and midsize corporates with practises that aren’t necessarily making money on an individual basis, because they were hoping and expecting to get at a mega multiple.
Andy: I always say that if you’re going to grow a group of practises, make sure that each of those practises on a standalone basis makes money in its own right. Because if they do, you can hold them away for the market conditions to improve. If they don’t, then you could be in a sticky position. I think that one of the things that corporates generally don’t do is reevaluate their portfolio often enough, they don’t they don’t churn it. It’s that classic. Look at the bottom 20% and see what’s not working. Because lots of practises just don’t work in a corporate model. They lend themselves to be owned and run by somebody in the practise on the ground there on a day to day basis, produces a gross, and motivating and inspiring their team.
Payman: Let’s go through that, then. Let’s say I own one practise, and I’m seeing all this activity, and I think I’m going to buy a second practise, which is going to be associate led. What are the key performance indicators that I’ve got to look for? What would you say is healthy, and what can I expect from a practise that turns over revenue to half a million pounds? What should I be looking for as far as what’s a healthy practise to buy and how much can I get out of that practise, from a percentage perspective?
Andy: If you already own a practise, the start point will be to work out whether you want to stay working in that one practise, and leave the other one completely associate run, or whether you’re going to split your time between the two.
Payman: Let’s say for the sake of the argument, does everything leave the other one completely associate run.
Andy: So it’s going to be a completely associate run. So it will then come down to the profit would probably show on the accounts, somewhere between 22 and 25%, which is quite typical for general dental practise on an adjusted basis, EBITDA or reconstituted net profit. It’ll probably go to something like 35, 40%. But because you’re not going to be working there, you are going to be solely reliant on associates working that practise. So the 22 to 25% fee isn’t going to work, because you’re going to need to increase your associate fees. So you’re going to probably come down to somewhere between 10 and 12%, as a net profit by not working that practise. The challenge that it brings is, and this is where the corporates tend to favour the three, four, five associate practises is that you really need to be a certain size, because you need somebody in that practise, so in managing money, you ideally need a practise manager.
Andy: And when I say practise manager, I mean a business manager. I mean, somebody who’s going to be a meanie you who is in there, actually kind of grinding the cogs and make sure that things happen. Because if you’re the owner of your practise, but you’ll never have this practise in your line of Associates, the reason that people are working in a business is because they’re happy having that life and being in that sort of environment. If they were business owners, they wouldn’t be working with you, then they’d left, and they’re gone set up their own thing. So on a day to day basis, they’re happy working, so things slip. So your materials. Your materials, perhaps should be at six or 7%. If you’re on the ground, managing and keeping an eye on it, they turn into 10 to 12%. And that trickles through the business, you get out of these inefficiencies.
Andy: So in a smaller practise, you either have to split your time between the two, or what you have to do is bring in a business manager. The problem that that brings is the business manager is probably somewhere between 40 and 50,000 pounds, because this isn’t a practise manager or glorified practise manager who’s just going to get in there, make sure that things happen. And that is the challenge, because quite often there isn’t the profit in the business to pay that person. And that’s when you go back to the earlier comment, which is where you get principal splitting cells between two practises, because the numbers don’t quite work.
Payman: Andy, on the flip side, I mean, I work with a lot of dentists who were at various different stages in their personal life or business journey. So you get the one who’s got towards the end of their career and they just want to throw the keys in and walk away. You get the ones who think, “I’ve got another eight to 10 years left in me. I’m happy to hang around for five of those tied in.” And you see all of these deals coming in whereby what you get this value where you’re tied in for so long, and you’re on this rate, et cetera, et cetera. Can you just sort of describe the different scenarios that people find themselves in. I guess the right deal is only the right deal if it’s the right deal for you in terms of your lifestyle and how long you want to hang around for versus handing the keys and then whatnot, and where did your experience come in advising people?
Andy: 100%. And that thing about the right deal is the right deal based on your situation. I got this thing that I think that practise ownership, I think people start to suffer fatigue around about the 10 to 12 year mark. The amount of people I see who were associates only run a business and to start with they love it. They go through a period of growth, things flatten out. They flatten out and then about five years later around the 10 to 12 year mark on down, and sadly, so many of them still really enjoy their clinical dentistry. It’s just the grief and the hassle that goes with [inaudible 00:25:11], the favour of the duty. And quiet for many people it never manifests into anything, but just that kind of the Sword of Damocles hanging over them. And the exit depends on what you want.
Andy: If you exit and you sell to an independent dentist, that will typically look like possibly a three-month handover period, but it is the classic case of [inaudible 00:25:35]. You collect all your money on completion and you don’t go back to the practise. A slide on that same scale might be you sell, particularly if it was a private practise, because you might want to do a handout to make sure that those patients were integrated to the new principle. You might have a hand over a period of three to six months, you’ll be retained on an associate basis, so you would still receive all of your money on completion for sale price that would come across your completion. When you start moving into the corporate model, what they tend to do is they tend to agree a price with you. And then they would typically pay 70% of that sale price upfront. Sometimes it’s 60%, but typically 70%. And the 30% deferred is paid to you over an agreed period of time. And typically, that’s somewhere between three and five years.
Andy: So you continue to work with the corporate as an associate being paid, and that pay rate would be down to negotiation, but it could be anywhere between 35 and 45% as an associate. You will then be paid your associate rate for delivering your dentistry for three to five year period. So long as certain KPIs, key performance indicators, will match year on year, you would then get your deferred element paid out over that three to five-year period. If those KPIs aren’t met, there is a risk that you don’t get the deferred element. So going back to that, what’s the right deal for somebody? If you want the sale and get out, send it to an independent dentistry, is the more attractive route because you get all your money and you get to go.
Andy: If what you’re saying is, “Well, I want to get my money out, I want to stay on, and I want to work in an environment where I still want something to add on, and I don’t mind leaving some money in the business and being paid out over a period of time,” then the corporate model works. So it’s really about understanding what people want to achieve, and then matching the buyer to suit the seller. In my experience, the majority of people want to sell, get their money, and go. And I think that’s because so many people start the process of thinking about selling probably about two to three years before they talk to me.
Payman: Andy, just going back to that deferred income argument. I’ve had numerous conversations with people, and the advice I’ve heard sort of thrown around is that if you’re happy with what’s being offered on day one, i.e, your 70%. Just consider that’s what you’re getting. And your 30% if you get it, is a bonus. And then, how can you expect your business to meet the KPIs that they’re setting for you that are based on when you own the business and you control the marketing budget, blah, blah, blah, all these different variables in your business, and all of a sudden they come along, change the pricing structure, change the marketing strategy, and the KPIs are on that. So there’s numerous conversations I’ve had. Do they ever intend on paying that 30%? Is there an engineering of, “Hey, we’re getting in this practise for 70%, and we’re never going to pay that because we can change the game”?
Payman: Just playing devil’s advocate there. And obviously, you’ve got more experience about seeing these deals come through. How often do you see the full deferred value being paid versus not being paid? I know for some of my friends, I’ve seen it not happen several times. But I’d like to hear what your thoughts are on this.
Andy: Yeah, I think if we go pre COVID, the payments were… different corporates work in different ways. Some corporates put in incredibly stringent and stretching targets. And then they do play around with the costs. They don’t make it impossible, but they make it incredibly difficult to hit those triggers. And bearing in mind, you could be looking at a two million pound practise. So 30% of two million quid, that sits on 1000 pounds. That’s quite a differed chunk. Therefore, from a commercial point of view, if that 600,000 pounds didn’t have to be paid across, you can see why that might be of interest. Having said that, to be fair to the corporates, I don’t think that they genuinely set out to not pay this amount of money. I think they do intend to pay that money. I think sometimes the deals aren’t structured in a way to help achieve that being delivered. From where we are now, unfortunately, there are lots of deferred payments aren’t being paid.
Andy: In reality, what you said is right. If the upfront payment is good enough, then that deal should work for you. If you get the deferred over a period of time, then that’s good news, and is a bonus. I think for many people, practise values have been high for quite a while now. So if we roll back to the mid 2000s, when values were shooting up quite high, lots of people were really surprised at the value of their dental practise because they were used to them being woefully undervalued. Whereas now, lots of people have a pretty good idea what it’s worth. So when you take 30% of that figure, for lots of people, the 70% isn’t quite enough. That deferred argument, they do need that deferred anyway, and they expect to see it come through. And the challenge for lots of people setting is the reason that lots of people who say, if they don’t want the grief, perhaps, so the management, the people issues, everything that goes with it.
Andy: But if you’ve got 30% of your value still retained in that business, you can’t really just completely walk around being associate, you’ve got to continue doing those things, because you want to get your 30% sale. So for many, the corporate world doesn’t quite meet all of their objectives, because they continue having to be actively involved in the business, because they’re protecting this 30% that’s deferred.
Payman: Part of your value add, do you help in the negotiation of what those terms are, about how those retention figures are met, or what the structure is, in terms of their guidelines, or is corporate is pretty strict that this is what it is, walk away? Is there some movement in that when you’re speaking to them?
Andy: Yeah, we do. We negotiate on their behalf. And I think the start point and where people negotiate with corporates directly, they’re incredibly good at just setting out an offer. And that’s their offer because for many of them, they’ve done this time and time before. The buyer side of sellers often assume that there isn’t any negotiation, but there’s always negotiation, there’s negotiation on everything. My wife finds it renders the embarrassing whenever we go anywhere, on negotiating all over the place. I love it for fun, but it you should be negotiating. You should be improving the percentage that you’re being paid as an associate, you should be shopping the differed terms, you should be trying to reduce the amount that’s deferred, but critically thought about those KPIs as well. Because at the moment, it’s challenging times. And if they put in some growth measures that are coming over the next two or three years, we don’t quite know what’s coming down the line. And it’s small things like if you miss your target in the first year, can that be rolled over into year two?
Andy: So let’s just, for ease of numbers, let’s say there’s 300,000 pound deferred, and it’s 100,000 pound in year one, same in year two, same in year three. So if year one’s mixed, does that mean you lose it, or could it be rolled into year two? For me, that’s the sort of thing that should be negotiated. Because if you fall short in year one, but you’re on target to have a cracking year two, that actually that should be paid in year two. But if that wasn’t part of the agreement, then potentially you missed out on that first portion. So yeah, but for my part, everything’s up for negotiation, or it should be.
Payman: Andy, what’s COVID done to practise acquisitions’ prices the way people are thinking, the psychology. Because from where I’m looking, a lot of associates now are getting a much tougher deal than they had before. And the ones who are able to are looking to buy practises. Is that right?
Andy: Yeah, absolutely. Normally, when big change happens, we see a flock of associates coming to us to get on to practise ownership. And I think what happened is through COVID, associates mostly earned over 50,000 pounds a year, there was no government support, but basically what it meant, you start dipping into your savings. Life being what it is, we all know that we should always have three months to clear savings to cover our outgoings as a slush fund. That kind of works for lots of people. Some people didn’t have that slush fund set aside. But when dental practise is shut three months, they burned through that quite quickly. Then when we got the end of COVID, and practise started to reopen, a few things happened. One, principles didn’t take associates back as quickly as they were hoping to because they were starting to deliver that dentistry in themselves. And when you factor that at the time, everything else it was difficult for them to work at the pace they were pre COVID.
Andy: Lots of practise also ran back to the associates and said, “Look, times are really hard. And I know I used to you used to be paid 45%, but I’m really sorry that now and these look more like 35%. 30%. 25%.” So their pay rates got reduced. And they also felt battered and beaten up because they were vulnerable. And so now you’re absolutely right, Payman. The amount of people that are coming to us associates that say, “I can never put myself and my family in this situation again. I need to buy a practise.” And don’t get me wrong. Owning a business as you guys know, hasn’t been easy through the pandemic. It wasn’t kind of a licence to print money. It wasn’t easy. But we had assets to go back to. We had an asset and a business to return to, so we can keep going, where’s an associate, you’re vulnerable.
Andy: So the amount of socialists that have come to us who are wanting to buy a practise has has really spiked. But what’s also happened is the values of dental practise have held up really well, because the true value’s point of view, what I need to do is I affected you need to remove the lockdown period, because you have to, because we all know the reason why they weren’t able to deliver dentistry. Since practise reopened, the ones they could have opened from the 8th of June, in reality, most were back on their feet sometime in July. But when you look at their August, September and October numbers, they brought it back to pre COVID levels, which, obviously from a professional point of view deserves a massive pat on the back, because they’ve had to factor in increased PPA, fallow time, some people work in between two surges.
Andy: So to get their numbers back to where they were pre COVID is nothing short of remarkable. But what it does mean is there’s values of held up really well. But importantly, that’s also been supported and backed up by the banks, because the banks independently have practises valued before they lend money. And the bank valuations are saying the same thing as we are. So it’s not just me as a broker kind of trying to talk the market up and say, “Oh, no, everything’s fine.” [crosstalk]
Payman: Andy, you must know. I mean, I certainly came across some distressed practises and some extraordinary deals for practises over that COVID period. Whether it was guys who just did not want to look at the whole PPE nightmare, or people who ran out of money, that happened, didn’t it? Some people got practises really cheap.
Andy: There were some practises that people picked up cheaply. I think it’s easy to look at COVID and say that was the reason. I think when you look at lots of those practises, they were in unknown distress pre COVID. This three-month period was the thing that tipped over the edge. These were practises that weren’t being well run. And it was the COVID thing-
Payman: Is that Warren Buffett thing about when the tide goes out, you see who’s swimming naked?
Andy: Who is swimming naked, is actually right. There are lots of people who didn’t have their causes on for sure.
Payman: All right, so tell us about, over the years that you’ve been doing this, you must have seen some wonderful stories, right? You must have seen some people who’ve really… we’ve had them on the show, people who started with 50 grand and opened 20 practises or whatever it is. And you must have seen the opposite side of it as well. In fact, within the same deal, I’m sure some practise [crosstalk 00:37:41]. Tell us about the horror stories. I mean, what should people more people know about practise sale and practise, purchase, and consider that they don’t?
Andy: I think on the purchase side of things, I think the thing where people seem to get it wrong time and time again, is the biggest change a business can go through is a change of ownership. So bearing in mind, a person that’s selling has probably owned that business for 10 or 12 years. So the team know them intimately. All the processes, the system, all those cogs. There is a well oiled machine, the patients know the consistency of visiting that location and what it looks like and feels like. So a change of ownership is massive. So anybody who buys a business who goes in and then start chucking their weight around by moving Rebecca off the front desk and bringing in Matthew, or repainting, or adding in another surgery or changing the branding, stop, stop it. Don’t do it. Do nothing for six months. Just move into the practise, and watch and listen. Just don’t do anything. Just be a dentist, and just get a feeling and understanding as to who does what and how it works.
Andy: Talk to your team, then start making changes, because you’re going to do it with your team on site. Patients are going to know you’re a good person, and you can meet them in a considered way. And I get why people do, [crosstalk]
Andy: It is. They spent a lot of money, it’s their practise, they want to make their mark, but honestly, it’s the worst thing you can do. There was a guy who bought a practises, sorry. And he went in and did exactly that. He changed everything. It was a small village. It was a really well established practise. The team didn’t like it, half of them left. The patients didn’t like. It was a private practise. There were other choices in town, the patient started to drift away, it was a disaster. If he’d have just done nothing for six months, I think the outcome would have been really different. Which it’s a shame, because he spent a lot of money on the practise.
Payman: So that’s a common thing. I hear that a lot of when people tell me they’re going to buy a practise. They come to us looking for photos and pictures for the new designs and all this. And I always tell them, “Look, evolution, not revolution.”
Payman: Exactly what you said. The staff and the patients… in fact, it would be ideal if they had no idea.
Andy: The craziest situation I’ve ever had, and you’ve got to be careful, you don’t take this to an extreme. If somebody bought a practise, and I kid you not he went and changed his name by depot to the name of the person he bought the practise from.
Payman: What a-
Andy: Honestly. The thing is they were from different ethnic backgrounds, that when he turned up, and he said, “No, I’m Dr. so and so.” They’re like, “Well, no. Are you?” He says, “No, I am.” And he thought by changing name, it would be good. It’s like, why was it ever going to be a good idea. There are some incredibly strange things that go on.
Prav: Loss. Absolutely loss. Andy, when you started your business back in the day, you used to talk about doing those 18-hour shifts, call it the art of graph getting you 10 pounds, 1000 hours in and whatnot. How has that changed now? So talk me through the contrast between then and now. And so what is your role? And also the people in the organisation now who we used sort of steering?
Payman: Take us through the separate divisions as well, because I know you’ve got law, marketing and several others.
Andy: Yeah. So we had FTA, Frank Taylor & Associates, and basically, that was our one legged stool. And in 2009, we said, “Look, it makes sense to formalise the finance side of things.” So David Brewer was the leading range of healthcare financing dentist in the UK who’s with RBS. And one of the great things that fell out in the banking crisis is David wanted to change, he wanted to do something different. So he came and joined us, and we started FTA Finance, and FTA Finance now arranges about 160 million quid a year for dentists to buy dental practises across the UK, works with 14 banks. David’s a great guy, he’s the Managing Director of that business, and on a day to day basis, I don’t really need to be much involved in that business, he has it covered, which is fabulous.
Andy: Then in 2015, we actually bought a recruitment business, so we rebranded FTA Recruitment. Because we realise though, when you’re buying a practise, there’s going to be some churn, things are going to change. And associates, some are going to stay, some are going to go. Hygienists, some are going to stay, some are going to go. But actually, if you don’t have hygiene as part of your programme, your practise, you should, therefore you may need hygienists. So we’ve now got a recruitment business, and that primarily focused on delivering hygienists and associates in the practises. All the things we do add value, and are unnecessary business service to dental practises. If it doesn’t tick that box, we don’t do it. That was where the improvement came from. Then in 2015, we started through a licence agreement, FTA mortgages, so that’s residential mortgages and weren’t involved in that business at all.
Andy: We work with a team that help people through that residential mortgages. It is an important part of the mix, because quite often, where people are looking to buy dental practise, what they can do is take out the equity from their residential property. And that then becomes the cash contribution to buy dental practise. That was quite nice as a fit. In 2016, I set up FTA Law, and that was with Chris, my business partner from Frank Taylor & Associates. Also Lis Hughes, who’s the Managing Director of Frank Taylor & Associates, and Thomas Coates. Thomas Coates is a lawyer, been a dental specialist lawyer for a good number of years. He wanted to do his own thing, we thought he was a great fit. So we set up FTA Law, full service law firm in North of England, does transactional work, property litigation and employment and HR services, and the employees and HR bit through the pandemic has just blown up. It’s incredible how many people just don’t know how to manage conflict and furlough and job retention, and job support, but actually really valuable service.
Andy: Then in 2017, we set up FTA wealth. When you’re arranging finance, you obviously need insurance and protection. So you need life cover, probably some local insurance, perhaps critical illness as well. So we arranged that for dentists. But what we also do on the other side of things is when people sell their dental practise, surprisingly, quite often lots don’t quite know what to do with the lump sum. So we provide them with advice and suggestions and guidance on how they can invest that money to get a return. So that’s FTA Wealth. Then in 2018, we set up FTA Media, which is a video marketing agency. Honestly, I’m getting towards the end, Payman. Hang in there. Hang in there.
Prav: Very impressive, mate. Very impressive.
Andy: What we did, in 2018, we set up FTA Media, and that sort of fell out of nowhere. What we realised was that, from a marketing point of view, we were words and pictures. And what we weren’t doing is we hadn’t moved ourselves into the video marketing game. And I read that by 2020, 80% of our social media feed was going to be video based. And I thought, well, if we’re not there, we’re not going to get a thing. So we started out as an internal project and we turned the camera on Chris and myself, and we did some short videos and response was really good. And going back to that point about people like to know the people behind the business, it gave it a personality who could find out a bit more about us and who we are, and what motivates us, and what drives us.
Andy: As a result of that, we were approached by a pair of dentists who said, “I’ve seen you doing video, I think that we need to do video, could you help us?” So out of that fell FTA media. We’ve now got a full videography team and editing suite where we go into dental practises and we provide video for marketing purposes for websites. It’s patient journey staff, it’s patient testimonials, that side of things. And then in the last year, we’ve been working on a new project, which is FTA Academy, which is effectively trying to pull together all the materials that we’ve produced over the years for how to value practises, things you should do if you’re buying, things you should do if you’re selling and just sharing our content and insights so that dentists can find all that material in one place. So yeah, we’ve had we’ve had lots going on.
Payman: I like your style, one a year for a lot of years there, huh?
Andy: Yeah. We-
Payman: Maybe you get bored easily or something. And is that you who is always looking for this sort of growth?
Andy: Yeah, I think I’m quite impatient. But also, I think the thing that I seem to have a knack for is coming up with ideas and starting new businesses and getting them to a certain point. And then other people can kind of run it. But going back to your previous point about kind of what is he doing on a daily basis now? I spend most of my time strategically making sure that the groups are aligned, are they all looking and feeling like FTA type businesses? Are we maximising the opportunities for our clients benefit by introducing different elements of the group so that people get the best advice and best service possible? I’m also constantly looking for new things we can be doing to improve the services that we deliver, those 1% improvements all the time, and new ideas. That consumes my time and honestly, because when you multiply that up across six or seven businesses, I’m not doing 18 hours a day anymore, but it still keeps you busy.
Payman: Very nice, man.
Prav: And what does Andy do outside of running all of these businesses and keeping them all ticking and whatnot? What’s life outside of work for you?
Andy: So I try to keep myself fit. I think it’s a really important element. My daily life could be quite sedentary, it could be sitting in front of a computer or sitting on a phone call. So I like to keep active. As a kid, I played a lot of badminton to a reasonably competitive level. So I still play badminton occasionally. I enjoy that. I swim quite a bit. I’ll try and swim a few miles each week in the pool, which I really enjoy. I’m married, I’ve got four kids, I recently had a granddaughter turn up on the scene. So I’ve got this new job within the family as the elder statesman.
Payman: You don’t look old enough. Are you telling me you’re a grandfather, buddy?
Andy: I prefer the term grand dude, to be honest. I think grandfather’s not… I don’t want to be a grandfather. That makes it sound like some weird old, I would say. But it is lovely. So just with the kids, that consumes quite a bit of time. I enjoy going to sporting events when we can, it’s been an interesting year for that. So I’m consuming much of that through the television at the moment.
Payman: Andy, what was your darkest day in business?
Andy: Darkest day. Probably right back in the early days when we couldn’t pay those salaries. I think it was when we thought we knew it, or we thought it was all so straightforward. And we hit the buffers. I think that was the point, and we’ve all gotten there at different times, when you realise the importance of cash. Actually, nothing else in business matters if things aren’t producing cash. You can have the best ideas in the world, you can be the brightest strategic thinker, you can go and you can develop things. But if the thing you’re doing don’t produce money, at some point, you’re going to grind to a halt. Fortunately, for me, that happened really early. Because I think if it had happened quite late, the danger is if you just keep doing something, you don’t know how to do it differently. But because it so happened so early for me, I’m like, “Oh, okay, right. So we need to change what we’re doing. And we just adapt it.”
Andy: Yeah, that was a horrible moment. Horrible.
Payman: And going forward. How do you see practises valuing? I mean, I know it’s not in your interest to talk about a bubble bursting, but grand dude to dude. Dude to dude, take us through best case scenario, worst case scenarios, what might happen. Because people have been talking about bubbles bursting for a few years now.
Andy: Yeah, I think it’s simply economics. It’s willing buyer, willing seller, supply and demand. And at the moment, and it’s been the case for a long while, demand has outstripped supply for lots of practises by 2030:1. So until we get to a position where demand and supply can’t catch up with demand, because there aren’t enough dental practise in the UK. So I’ve got just about 5400 people wanting to buy a dental practise. And there’s about somewhere between 1000 and 1500 dental practises change hands every year. So we’ve got a 5:1 immediately. So until that, that kind of scales of justice starts to balance itself, that bubble won’t burst in terms of values. And I don’t see that situation changing because with five and a half thousand people, if we apply the 80/20 rule, I’ve got 1100 people, and I’ve got 1100 practises. So there’s one of everybody who wants to buy a practise at the moment.
Andy: And it’s genuinely not kind of me being a broker trying to talk to market. It’s just a simple numbers, there’s so many people wanting to buy a practise, and there isn’t enough practise out there. What has been interesting this year that has changed is, if we roll back a year, if you had a dental practise that was in a major city that had a football club, which I know is bizarre, if you think of cities that have football clubs, they always very popular for people to buy. And also towns where there’s a dental school, if you kind of go 50 miles away from dental school and draw a circle, they’re always popular, because lots of people kind of hang out in the area where they qualified. Those areas were always the hotbed to where people wanted to buy dental practises. But what’s happened this year, and we’ve seen it in our own behaviours, people tend not to be going to the city centre as much this year as they used to, and people are staying locally.
Andy: And what that’s starting to do is that’s starting to change people’s behaviours in terms of where they want to buy dental practises. And we’ve seen a real upsurge of people wanting to buy regional dental practises, which is quite interesting. So wherever it used to be major towns, major cities, the metropolitans always doing really well. We’ve seen lots of practise that might have been on the market for nine or 12 months, having renewed interest, because people are saying, “Do I really want to commute? Do I really want to go into the big city? Or it’s another way of doing it?” So there’s good things that come out of this as well.
Payman: Andy, do you do anything for someone who wants to start a squat?
Andy: We do. We help people. We don’t [crosstalk 00:52:24]. Yeah, we don’t have a specific service for them. I mean, through the pandemic, I’ve done a number of webinars and taught lots of people. And it’s increasingly people are asking about setting up squats. My own view is, I think there’s more people talking about it, they’re going to do it. Because I think a lot of people like the idea of it. And when they sit down and they talk to their mates about it, they get from zero to a successful practise over two or three points. You guys will talk to a lot of people that it doesn’t quite work like that. One of the things that I do as a start point is when I have a conversation with somebody who wants to set up a squat, I talk them through the important things about finding location, what services do you want to deliver? Where you want to be in the country? What sort of size space you want? What do you see looking like at a perfect practise in a few years time?
Andy: Just to make sure that they’ve actually done some thinking in terms of where it’s at. But what I’ll always do is I will always send a blank cash flow forecast, and then into a business plan structure. And I say, “Look, this is what you need. You need to lay your ideas down. Don’t worry about whether it’s finished or not, but lay them down in a business plan structure, and put some loose numbers based on how you work at the moment as an associate onto a cash flow forecast and come back to in two weeks.” I’ve had that conversation probably 30 times this year. And at the moment, nobody’s come back to me.
Payman: Yeah, but I don’t know. I think for me, the squat thing is probably feeling more seductive for more people. Firstly, because the value of practises is so high, firstly. But secondly, because the experiential side of patient journey has become a thing for having an experience that you can really design the way you want. I think a lot of these young guys will be thinking that existing practises isn’t what they want as the experience, they want something other, whether it’s we’ve got Robbie in Liverpool, that beautiful sort of boutique situation, or there’s lots. There’s lots of interesting experiences out there. But also post COVID, I was I was talking to Prav about this, I live just up from Fulham Road. And on Fulham Road, there’s something like 25 empty shops now, because of the shops that didn’t make it through COVID, I guess. And so for a dental practise where you have to be in bricks and mortar, in a way that’s an opportunity, isn’t it?
Payman: And so we bring all those things together. But existing practises are expensive, experiences are becoming the thing, and there’s this retail space now that was probably under priced, and you can have that dream come true positioning. I don’t know anything about, but I reckon there’s going to be more squats coming. Maybe you want to add like a Frank Taylor Architectural. [inaudible]
Andy: It might be at least something else to do. But I think you’re right. I think the difficulty and the challenge is, and it goes back to dental school, dentists are trained as technicians, which from a patient point of view is what I want. I don’t really care whether my dentist can read a [inaudible] or not, I want him or her to be a good dentist. That doesn’t translate well into setting up a squat, because setting up a new business from ground up isn’t easy. And that’s why most people want to buy an existing practise. I think if you have the ability or the wherewithal or the support to create a new practise, it’s brilliant news. Because one, what it does is it creates new dental practises. Two, it becomes your own vision, you can create exactly what you want, you have control over it, and you don’t pay for the goodwill. And from a sales point of view, what it does is it restocks the pond in terms of creating new dental practises, which in the future can be sold on.
Andy: I’m really supportive of people that want to set up small practises. But I’m disappointed by the amount of people that never quite get there. Because guys like Robbie, I mean, what Robbie’s done is incredible. But he’s an outlier. That’s not normal dental behaviour.
Payman: I meet a lot of younger dentists who want to be him now. And others, don’t get me wrong, but that experiential thing. I guess it started with DSD, with life changing videos and all that. And Prav, you must come across this?
Prav: All the time, mate.
Payman: People are saying, “Look, rather than give that money for goodwill, I’ll give that money to you for marketing. Because we’re going to-
Prav: I think the thing is here, is that there’s a lot of naivety around that. Okay, you’re paying for goodwill, but you’re buying into cash flow from day one, you’re hitting the ground running, you pulled some finance, okay, you pay a little bit over the odds. But you know the gross figures that are going to be coming in every month are going to be a certain amount. If you do your numbers correctly, you actually know you’ve got room to grow the business and okay, you don’t map out the Gucci experience from day one. But you’ve got money coming in. And if we go back to Robbie’s story, what was he doing day one? He was working in this practise that-
Payman: Yeah, you’re right, he bought an existing practise.
Prav: He bought an existing practise, and he was working in this practise that was nowhere near what his vision is. But he used that to maybe accumulate cash or whatever it was, and then build the thing. I guess it’s what’s right for that person, what risks they want to take. Many associates, they get themselves into a job where they’re working well, they’re making decent amount of money. And then it’s a case of forfeiting. I speak to associates who want to carry on doing three days at their current practise to pay the mortgage, and then launch a squat in two days a week. And it ain’t going to happen. It is not going to happen. I mean, only last week, I had a conversation with someone. And the conversation was, “Well, I support you turn it over at the moment, and it’s like, 10 grand a month.” That conversation he was having with me, I think he was-
Prav: Groceries, 10 grand a month, right? And I think he was expecting me to be impressed. But his idea of that is so pigeonholed because he’s isolated as a business owner, he doesn’t know how to compare that to other practises in the market. And I said to him, “Listen, mate, the best advice I can give you now is if you believe in your business, give Euro the job bob, borrow some money and throw it into that business, because 10 grand a month…” And I said, “Where do you want to get it to in 12 months time?” “I’d love to be at 13 grand a month.” I said, “Not ambitious enough for me.” Sometimes that is what we’re dealing with, is there’s a lot of naivety in the market. I’m not a practise seller, I’m a practise owner, right? But I can see the mistakes that people are doing and the vision that they’ve got, because it’s probably what we were thinking back in the day, or what we’ve seen.
Prav: I’m just going to say someone like Andy, who’s bought and sold more practises than anyone else in the UK, you can spot these mistakes a mile away, can’t you? And squats are suitable for certain individuals, and then buying an existing business. I don’t know about you, Andy. But I guess you’ve been buying existing businesses over the last four or five years. And so that may be your default advice is to say, “Look, we’ve got something that’s ready. We’ve got customers, we’ve got cash flow. It kind of makes sense to buy an existing business and then throw our sort of brand on top of it and do something better.”
Andy: Yeah, exactly. And I think as well, I don’t want people to lose sight that it’s okay to be an associate. Being a dentist is a phenomenal job. And I think over the past few years, there’s a danger that being a business owner or an entrepreneur is kind of the new rock star. And so there’s lots of people wanting to jump on the bandwagon, and own a business because it’s the cool, trendy thing to do. But it’s a cool and trendy thing to do for people to post on Instagram about it. But that’s not the day to day reality. And if you’re not set up and equipped for the hard grind, that goes with, let alone not even a squat, just owning a business. I think it’s that thing where it’s still phenomenal to be a dentist. And the impact they make on people’s lives is ridiculous. It really is life changing stuff. And if people feel pressure to move on to being a business owner, because that’s kind of the next rock star thing to be, I think people should back off.
Andy: If it was what they want to do and they’ve got a really good reason and a driver for why they want to do it, and absolutely buy a business to have a squat, that kind of don’t just get swept along with it because being a dentist isn’t good enough. Being a dentist is awesome. It’s an incredible career, and I think people kind of get swept up with this business side of things. I think for lots of people, it is okay to be a dentist, you just don’t have to buy a practise because you majored on practises.
Payman: A very good point.
Prav: And you know what, I think there’s a middle ground here guys, is that I’m seeing now associates coming to me. And this is brand new, right? That ordinarily, a client will typically come to me and say, “Look, help to grow our practise.” I’m having associates approach me said, “I’m an Associate at this place, but I want to carve out my own business inside that premises. So I want my own marketing strategy. I bought my own. I’ve invested 27 grand in a 3D scanner. About the practise, I bought it myself. Totally unheard of right? And I’ll take that wherever I go. I’m going to create my own patients. But guess what, I’ve not paid for business, I’ve not paid for goodwill, I’ve not paid for the building. But I’m allowing myself to create that. And for a practise owner, how amazing is that? Oh, I’ve got a chair available one day a week. You come in use it and fill the book as well. Happy Days.”
Prav: I think this is a new breed of super associate entering the market right now.
Payman: Andy, how does that come across in practise sales? I mean, if I’m owning a practise with a couple of these social media super associates on my associates, I’d expect that’s a more vulnerable situation because they can move anytime they want and take their patients away. Does this come into the conversation?
Andy: We’re not there yet, because it’s still quite a new phenomenon. But [inaudible] practise is spot on, you end up with these super associates. And because they inevitably operate in the private market, there’s patient choice and they follow the clinician. So from a practise owner’s point of view, it really comes down to what agreement you’ve got with that associate in terms of who owns those patients. Because if you have a practise of delivering a growth of a million pounds, but actually plus my super associate, and he’s knocking out 700,000 pounds of that. Realistically, can that be valued into the equation? Because there isn’t some locking that says that you’re going to be sticking around post completion for a period of time. Then the risk is the person buys it, they’re not actually buying a million pounds worth of fees, what they actually buy is 300,000 pounds because 700,000 pounds is going to be off, because you’re going to move down the road and you’ll be welcomed anywhere else.
Andy: So it is kind of an evolving model that’s happening below the scenes. And I think for practise owners, I think just to deny it and say, “Well, no, they’re my fees, it doesn’t work like that,” is probably naive. I think you need to work out an arrangement with those super associates that says, “Oh, look, actually, perhaps they don’t own those fees, and the associate owns those fees.” But the pay rate and the deal you have with them an ongoing basis, is you rent them space to deliver their business within your environment. Because ultimately, with patient choice, and with social media these days, I can tell patients where I am at a moment’s notice, and there’s a risk to a practise owner, that they decide to go somewhere else. But I think they need to work on a model to engage with these people, as opposed to just deny it and say, “Well, that doesn’t work for me.”
Payman: Andy, you’ve got quite a lot, probably more experience of running a practise than a lot of people from seeing all these stories. You’ve obviously got access to practises for sale. Have you never considered practise ownership yourself?
Andy: No, I think it’d be dangerous to. I think it’s a little bit like… Well, I think there’s a conflict, but also I think it’s a bit like somebody that spends a lot of time in the pub doing committees so you can run a pub. I’m an outsider, I see an awful lot in the business side of what makes a dental practise work and not work. That’s one of my skills. One of my skills is to value businesses based on how they’re performing and make suggestions to make it improve. Sure, I like to think my work well, we’ve kind of leading my team of people, but I don’t understand the mechanics of the clinical side, of the systems and processes needed to own your own dental practises. There have been cases in the past where people similar to me have gone into practise ownership, and it’s not worked out well for them. So I’m a firm believer too. I know what my core skills and strengths are, and that’s in providing business services to the dental profession. So until I run out of ideas in that area, I’ll stick to my field.
Payman: This isn’t going to happen soon.
Andy: Hopefully not.
Payman: Well, it’s been a real enlightening conversation. You do listen to this podcast? I know you do, Andy.
Andy: I do. Yeah, and I enjoy it very much.
Payman: Prav has a final question here. So I’m sure you’re aware of. Prev, go on.
Prav: Andy, imagine it’s your last day on the planet. You’ve got your kids around you. And you need to leave them with three pieces of advice. What would those three pieces of advice be? And then after that, how would you like to be remembered?
Andy: I think the advice for them would be enjoy yourself. I see so many people doing things that they don’t enjoy, and it’s heartbreaking. And I always say, above all, enjoy yourself. I’d also say, be kind to people. I don’t think you ever really know what people’s backstory is or what’s going on in their world. And it costs absolutely nothing to be kind to people. And lastly, be loyal. I think loyalty is something that in the modern world seems to be falling away at a rate of knots. So I think if they could enjoy themselves, be kind and loyal. I think they’ll have a really good life.
Prav: And how would you like to be remembered, mate?
Andy: I think similar. I think I’d like to be remembered as somebody who’s loyal. I think if somebody does something for me, I value it in the highest order. And I will always show ultimate loyalty to people. I think it’s really important that if people are doing the right thing by you, you do the right thing by them. And I think if more people as a community were loyal to one another, we all move forward together.
Payman: Thank you-
Prav: Thank you, Andy.
Payman: … so much for your insight into your world, Andy.
Andy: You’re really welcome. It’s a really good job, talking to you guys, it’s been good fun.
Prav: Been great.
Andy: It has, hasn’t it?
Payman: Thank you so much, buddy. Hopefully see you soon, man.
Andy: Yeah, [inaudible]
Prav: Take care guys.
Payman: Take care.
Operator: This is Dental Leaders, the podcast where you get to go one on one with emerging leaders in dentistry. Your hosts, Payman Langroudi and Prav Solanki.
Prav: Thanks for listening, guys. If you got this far, you must have listened to the whole thing. And just a huge thank you both for me and Pay, for actually sticking through and listening to what we had to say and what our guests had to say because I’m assuming you got some value out of it.
Payman: If you did get some value out of it, think about subscribing. And if you would share this with a friend who you think might get some value out of it, too. Thank you so, so, so much for listening. Thanks.
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