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Get ready for a deep dive on DSOs. Kiera is joined by Brannon Moncrief, principal and CEO of McLerran + Associates, an industry leader in dental practice sales and sell-side advisory for DSOs. Basically, if you want insight about selling to a DSO, this episode is for you. Kiera and Brannon discuss: Pros and cons to selling to a DSO What common mistakes are and how you can avoid them Different deal structure examples The DSO landscape over the next 20 to 50 years And so much more! Episode resources: Learn about McLerran + Associates Connect with Brannon: brannon@dentaltransitions.com or 512-660-8505 Reach out to Kiera Practice Momentum Virtual Consulting Subscribe to The Dental A-Team podcast Become Dental A-Team Platinum! Review the podcast TRANSCRIPT: Kiera Dent (00:00.878) Hello, Dental A Team listeners. This is Kiera and I am so jazzed. I have been dying for this man to get on our podcast. I think DSOs are hot right now and it's what do I do? Is the DSO world good? Is the DSO world bad? Should I sell to a DSO? Should I not sell to a DSO? What are the mistakes? I think there's so much confusion and lack of clarity around it. And I have actually found someone referred to me from a client that I think toes the line really well of private practice and DSO to really be educational. Brandon. I don't even know how to say your last name, Brandon. I'm not going to lie to you. So tell me how I say your last name. I was going to say Moncrief. Is that right? Brandon Moncrief. Coming in today, he has over 20 years of experience as a banker, broker, and sales side advisor, and has facilitated the sale of over a thousand dental practices. That's impressive. Kudos. His firm, McLaren and Associates, provides sales side advisory to large practice owners who are interested in pursuing a DSO affiliation or private equity partner. Brannon Moncrief (00:36.297) Moncreme. You got it. Yeah. Kiera Dent (00:57.614) He lives in Austin, Texas with his wife and two daughters and spends his free time traveling, cooking, and being outdoors. So we're definitely going to geek on travel. Austin, keep it weird. Brandon McCreary. I think I got it. Welcome to the show. How are you? Brannon Moncrief (01:09.545) I'm doing good, good to see you. Thanks for having me. Kiera Dent (01:11.79) Yeah, Brandon and I are actually like swimming in the same pool. We're going to be at the same events together. He's going to be speaking with our private Dr. Mastermind pretty soon. But one of our mutual, I have a client that I've consulted for years, sent me your thoughts about his practice. And that's how I actually got introduced to you. And I just am super jazzed. Let's talk. I obviously gave your intro, but kind of tell a little bit about who you guys are. how you even got into the DSO space. I mean, bank or broker, you already have red flags on you from most people's perspectives. So kind of like win us over. I think you're great. So they already will like you, but kind of give us some feedback. Brannon Moncrief (01:47.273) Awesome, thanks. I have spent my adult life in dentistry. The first nine years of my career was focused on lending money to dentists all across the country to buy, start, expand practices. So in that role, I worked. Kiera Dent (02:00.43) How did you even get there? Like, were you just like, cool, I'm on Dennis? Or did it kind of fall into your lap? Brannon Moncrief (02:04.841) It was very random. I mean, finance degree straight out of college. I was recruited by a finance company that focused on lending money to dentists out of the Houston area. Thought it was cool that I could actually use my degree. You know, new dentistry was a good industry to be in. And yeah, took a took a leap, started off as a loan underwriter and then worked my way up to the director of business development. By the time I left that company to buy McLaren. But as my role as a banker, I worked with all the brokers in the country and a lot of the CPAs, attorneys that we do business with today that are still in the industry. And I recognize very quickly like broker is a four letter word in a lot of markets. The bar, what's that? Kiera Dent (02:44.782) It is. I was like, Banker broker, you really want me to say that? I'm like, you really have that in your bio. Okay, I'll say it. Brannon Moncrief (02:53.545) Yeah, it's kind of a four letter word and I understand why. And being a banker, I was constantly frustrated with the work product and the lack of professionalism that I saw among the brokerage community. And I was like, hey, I can do this better. So that's why I decided to step out of the role as a banker and step into the role as a broker. And I bought McLaren and Associates, which was a small mom and pop practice brokerage shop, like you see a lot of them out there today. I purchased the company 13 years ago at the time. The legacy business really focused on doing doctor to doctor, traditional practice sales in Texas, where the company was based and built the company up substantially in the doctor to doctor world, doing traditional practice sales. Got to the point where we were doing about 50 to 60 doctor to doctor practice sales a year. And then we saw DSOs and private equity come into our backyard in Texas. We were kind of on the forefront of a lot of the consolidation. and start to acquire a lot of the elite practices that we thought we were eventually going to sell to private buyers. And we quickly realized that doctors really didn't understand EBITDA, they didn't understand private equity, they didn't really understand the different levers involved in these deal structures, and they were getting taken advantage of. And for a while, we pounded the table and it was like, we're never gonna sell a practice to a DSO, it's bad for dentistry, it's bad for patients. Hopefully this is all just gonna go away. But after a while, Kiera Dent (04:15.086) Thank you. Brannon Moncrief (04:20.265) you know, we started to realize once private equity comes into a vertical and starts to consolidate it, they double down and they're not going away. So once we realize, hey, DSOs are here to stay, it's our job to educate doctors, to protect dentists. That's what we do on a daily basis. We need to build out a team. We need to build out a process to walk doctors that want to go down that path, you know, through that, that the navigation of a DSO transaction. So we did. Kiera Dent (04:29.262) Mm -hmm. Brannon Moncrief (04:49.449) We built out another division of our company. That's the team that I lead. We've got a former investment banker on the team. We've got a couple of guys that actually worked for DSOs on the buy side that have now joined our team. We do sell side advisory. They used to work for DSOs on the buy side. Who better to have on your side if you're selling your practice than somebody who's sat on the other side of the table. So we now have a team of 13 all over the country. HQ is in Austin, but we have an office in San Diego, an office in Atlanta. We've closed over 200 DSO transactions. We work regularly with about 50 to 60 DSOs. There's over 500 of them out there, but I certainly wouldn't sell my practice to all of them. So we're very, very careful about vetting DSOs, making sure that we only put the best options in front of our clients, and then making sure that our clients are fully educated. They understand that they do have options, right? Kiera Dent (05:33.262) Right. Kiera Dent (05:45.614) Thank you. Brannon Moncrief (05:46.025) One option is to do nothing. You're right, stay the course. Maybe they just need to work with a great consultant like you to help solve some of their pain points rather than affiliate with a DSO. We have other clients that are already knee deep in the process, already have LOIs on the table from DSOs, and they need proper representation. They need somebody to kind of reset the playing field and negotiate on their behalf. And then we have other clients we talk to where it just makes sense to hang on to the business and eventually sell it. in a more traditional sense to a private buyer. So we try to take a really objective approach to educating dentists regarding all the options available to them. And then at that point, it's a pick your own adventure situation, right? And whatever you want to do, we can help you execute at a very high level or help bring in the resources that you need to take your practice down the path you want to go down. Kiera Dent (06:39.982) Sure. And Brandon, I really love that about you guys, which is why I wanted you on the podcast, because I feel like Dennis tell me all the time that they're getting usually like at least 20 emails a month from DSOs trying to buy their practices. And so I remember, gosh, it's been at least is pre -COVID. So either 2018 or 2019. I remember I was out at a dental college in Nebraska and it was UNMC. And I remember talking to some students there and they said like, Oh, do you think DSOs are coming? And I remember saying, I was like, I don't actually think private practice is going to be traditional for a lot longer. And I think DSOs are going to come in pretty strong. And I don't mean to like rain on your parade. And I might be very unpopular in my opinion, but I saw the exact same thing you did of DSOs are here and private equity is here. And so. Instead of fighting against it, instead of saying, I'm like, shoot, if I had a practice right now, I mean, I've owned plenty of practices. Like there is temptation around it to get higher multiples. There's also DSOs going bankrupt where people are losing their entire investments. There's, um, so I think that there's a lot of like unknown around it. And that's why I wanted you on the podcast is to start to educate to where people know, because I think fear only comes from not being educated. Fear comes from not feeling like you understand your options and then you feel like your pigeon holes into a zone. that you maybe didn't necessarily wanna go into. So I really do agree with you. And also DSOs love consultants because we usually grow the practices. We help you get it to the level you want it to be. So you're getting those higher multiples. If you choose to sell to a DSO, if you choose to have it on your own, if you choose to keep the practice and sell it to another associate, it never hurts to grow your practice to X number and get it as high as you can before you sell, just like you wanna get your house to look the nicest it can. before you sell it to get your highest multiple. It is an investment at the end of the day as well. So Brandon, I'm excited to kind of just chat through like, let's talk about what kind of like, let's start educating about DSOs. Like what questions should I be looking at? What are the pros of selling to a DSO? What are the cons of selling to a DSO? Like I really would love you to kind of like educate on DSOs. Cause I think people understand like do nothing. I get that one. And maybe like you said, look at the pain points of what you really have. I get that it feels, Kiera Dent (08:52.846) tempting to sell to a DSO and just like wipe my hands clean. I don't think that usually happens. I'm excited for you to hear. But then the other side is they're also pretty familiar with selling to an associate or a doctor partner buy -in that way and then transitioning out. But I think some of those decisions can also impact if they ever want to sell to a DSO because I've heard a lot of DSOs prefer don't have true partners in if you're going to sell to a DSO. Don't partner in your associates potentially because it makes it messier when you sell to a DSO. So I think it's more like, What mistakes do we make when we're trying to sell to a DSO and what do we need to do to make sure we're educated on that? Brannon Moncrief (09:30.569) Yeah, so we always start our process with a discovery call with all of our potential clients. And the first question I ask is talk to me about your why, right? What are your goals? What are you looking to achieve? Is it that this is strictly an economic decision? You're five years away from exiting your business. You're evaluating. What would it look like if I hang on to the business for a few years and sell to a private buyer versus sell to a DSO today, maybe hit a recapitulation event and then exit the business. Let's quantify what is your business worth in the private buyer world versus the DSO world and map out. What does a no sale, traditional practice sale look like down the road versus a DSO sale today and you hanging on to some equity for a while and then monetizing that equity in a recap. So is it purely economic or do you have some pain points that you're trying to solve for? Are you fed up with managing the business? If so, what components of the management? Would you like to give up? And how does that play into autonomy? Are you concerned about maintaining clinical autonomy? What about operational autonomy? You're looking for better work -life balance. Are you looking to take a step back and work less both on the business and in the business? Or are you entrepreneurial and you're looking to actually lean in, continue to scale the business, maybe add additional locations, but you don't want to do it on your own. You want to use somebody else's capital and infrastructure to do so. So we always start with defining the why. You know, what are your goals? And then let's talk about how your practice is engineered financially, quantify the economics, and then talk through options. And we do a lot of financial modeling and forecasting to figure out, you know, how each option is going to play out. You know, now annually and cumulatively over a five year, seven year, 10 year window. And that's exactly what we did for your client. we were mapping out what would it look like if you sold to a DSO today versus sold pieces of the practice internally to associates and then eventually sold your remaining equity to a private party 10 years from now. How do these options compare? What are the different deal structures look like? What are the different avenues to get to your eventual exit from the business? And he loves what we did for him because it provided him Brannon Moncrief (11:57.001) a lot of clarity regarding what his options were and what the potential economic implications of those options were going to look like. But even if you're five years away from selling, I think it's critically important to understand what your options are so that you can groom your business in a way that's going to make it more marketable and more valuable if and when. you decide to pull the trigger. And I think you said it well, if you're going to sell your home, you're going to make improvements to your home to ensure that it's the sexiest house in the neighborhood when it's time to sell so that it sells quickly and for top dollar. Sometimes when you make improvements on your home, like you make improvements on your practice by working with a consultant, you decide to live in it because you've now created the environment. Kiera Dent (12:47.566) Mm -hmm. Brannon Moncrief (12:51.337) that you want to have long term. So I think evaluating your business early and investing in changes that can make your practice more marketable, more valuable when it's time to liquidate it is going to make your life more enjoyable along the way and then make the windfall bigger and better when it's time to sell. So we always like to start these conversations early, start this education early rather than cal…
Full show notes at the publisherWhen it comes to a prospective patient's first phone call to your practice, there is magic that should be happening to convert the call into a visit. Tiff and Dana talk through that process, including the right energy to give, what to say, the information to request, and more.
Episode resources:
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This episode is all about celebrating your team and practice. Kiera gives ideas for adding more fun to the work day while still keeping things professional. Remember, applying flavor is a culture builder, marketing tool, energy booster, and more.
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Wish Tiff and Kiera a happy birthday!
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Kiera touches on the best-of from this year's Dental A-Team Summit, including: your relationship between your work life and personal life; increasing production or improving efficiency; facing the pain of change; building long-term wealth; and more.
Episode resources:
Practice Momentum Virtual Consulting
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Kiera is joined by Pedro Becker of Axle to talk about how to effectively use a centralized dental platform that utilizes artificial intelligence while staying human. Points of conversation include learning curves with automation, how this software is transforming dentistry, what's easy for the patient and the practice, and more.
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Join Kiera as she uncovers the power of SOPs and Operations Manuals for dental practices. Learn how these tools can save time, ensure consistency, and streamline your operations. Discover practical tips for creating your own manual, from dividing tasks among team members to keeping protocols user-friendly and accessible. Tune in for expert advice on storage and maintenance, and revolutionize the efficiency of your practice.
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Kiera goes through different positions in the practice and gives advice on how to streamline. Examples include how office assistants can maximize their time; when doctors and office managers should schedule their week; the power of clustering and cadence; and more.
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Kiera and Britt are discussing the April book club selection, Buy Back Your Time: Get Unstuck, Reclaim Your Freedom, and Build Your Empire by Dan Martell. They share their top takeaways about treating time valuably, how to best go about starting to delegate, where an assistant can fit in, and more.
Find the full book club rundown here!
Episode resources:
Practice Momentum Group Consulting
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As an employer, it can definitely feel like all you do is give, and working with those team members who always want more can be a major hurdle. Kiera talks about the right way to approach giving, what to consider from the team member's perspective, budget confines, and more.
Episode resources:
Practice Momentum Group Consulting
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If you're looking to up your review game, it's important that you're in the right arena(s). In this episode, Kiera talks about why practices should showcase their best selves on social media. Specifically, she touches on the ideal number of reviews your practice should have, and why considering your social media presentation is so critical. Bonus: Ideas for social media content and a prime review resource!
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Practice Momentum Group Consulting
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