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I Will Buy Your Business for 25x Your EBITDA...

Posted by Ryan Mingus on Sep 22, 2022 8:17:16 AM

I Will Buy Your Business for 25x Your EBITDA...

Offers from DSOs come in all shapes and sizes.  They contain a litany of terms, variables, vocabulary and numbers.  Yes, there is a “headline number” or “Enterprise Value” near the top of the page, but the reality is that many will never realize that headline number due to the structure of the deal.  Structure drives the long-term value of a transaction.  As I have said many times, “I will happily buy your business for 25x, IF you let me structure the deal.”  If you took me up on this offer, on a $1M EBTIDA business ($25M Enterprise Value on 25x EBITDA), I would set aside $1M of cash at close then structure the remaining $24M in unattainable earn outs, but you could tell all of your friends that you got paid 25x for your deal.  See where I am going?

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Tags: Dental Practice Brokerage, Dental Practice Selling, Selling your dental practice DSO, how much is my dental practice worth?

I Am Not Your Friend…

Posted by Josh Swearingen on Aug 10, 2022 3:28:00 PM

I Am Not Your Friend…

For a long while, I operated on the buyside of both a smaller regional DSO, and an elite national DSO. In that time, if I could have honestly started off every single meeting I had, it would have started with the phrase “I am not your friend!”. Obviously, that would be incredibly counter-productive to my cause, so I generally just settled with “Dr. Jones, it’s wonderful to meet you! You’ve built an incredible business and my job is to make sure a partnership is a good fit for all parties involved and get you the value you’re looking to receive!” Phew, that feels better for everyone sitting at the table. Amazing how semantics can alter the focus of a conversation greatly.

But I digress, as a buyside representative, my job was to find opportunities that were a good fit for my organization, and then pay as little as possible for those opportunities, thus maximizing the arbitrage that my organization would experience at their next capital event. Rinse. Repeat. This was done through a myriad of strategies, a couple of which I’ll touch on here.

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Tags: Dental Practice Brokerage, Dental Practice Selling, Selling your dental practice DSO, how much is my dental practice worth?

Costly Mistakes That You Can Make In A Sale (Part 2)

Posted by Kevin Cumbus on Aug 4, 2022 8:18:11 AM

If you missed part one of this article, you may access it HERE.

3. Taking Too Much or Too Little Cash at Close

I love that dental deals these days come with so many options when it comes to the allocation of the purchase price. I also love that every DSOs equity packages are vastly different and come with different risk factors.

Some DSOs offer equity that is trapped at the DSO level, provide no distributions, and can only be monetized when their PEG sells their position. Other DSOs offer equity at the practice level that distributes profits quarterly based off EBITDA and comes with put features that enable you to put the equity back to the DSO when you choose at a pre-determined valuation. 

Almost every deal we close comes with the opportunity to roll some of your proceeds from the sale into equity at some level. And each tranche of equity comes with very specific rights, obligations, privileges, and responsibilities. We work closely with our clients to make sure that they understand the risks and the expected rewards that accompany each equity offering.

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Tags: Dental Practice Brokerage, Dental Practice Selling, Selling your dental practice DSO, how much is my dental practice worth?

Costly Mistakes That You Can Make In A Sale (Part 1)...

Posted by Kevin Cumbus on Jul 20, 2022 1:25:26 PM

Too Much Focus on Exit Multiple / Price

I know that this may sound counter-intuitive, but price (or exit multiple) is only one component to a transaction and is not the most important. I am fond of saying, “I will pay you 25x your EBITDA, if you let me structure the deal.” 

I would argue that the deal structure is the most important feature of any transaction as the deal structure dictates how cash, equity, and cash flow from JV equity is delivered to you and your estate. In addition, today’s deals are far more complex that historical deals, with a lot of the enterprise value held in the various equity offerings of each individual seller.

deal-structure

Understanding what the triggers are for these equity offerings, and what exiting said offerings consist of is a critical component in realizing the full value of your deal.

Because of our extensive background in investment banking, our process mirrors that of many of the largest investment banks in the world. Each time we take a deal through a Marketed Sales Process, we receive a wide range of offers with a plethora of differing deal points and structure, including but not limited to:

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Tags: Dental Practice Brokerage, Dental Practice Selling, Selling your dental practice DSO, how much is my dental practice worth?

Specialty DSOs Are Tired Of “Overpaying” For Deals...

Posted by Kevin Cumbus on Apr 28, 2022 7:32:19 AM

Specialty Dental M&A Market Update

5 years ago, Specialty Practices and Groups were all but ignored by the DSO buyers in the dental market.  But in recent years there has been a new wave of Specialty Specific DSOs that have hit the market.  These groups have partnered with some of the smartest private equity groups and best names in the industry to form their businesses. As these companies have enjoyed financial success, grown in scale, and recapitalized (thus providing excellent returns to investors), more traditionally GP DSOs have stepped up their interest in Specialty practices and groups as well.  As a result, there are more buyers for Specialty practices than ever before!

Higher Demand for Specialty Practice and Groups = Higher Prices

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Tags: Dental Practice Brokerage, Dental Practice Selling, Selling your dental practice DSO, how much is my dental practice worth?

Batting Cleanup...

Posted by Josh Swearingen on Mar 29, 2022 7:51:06 AM

A baseball reference… which is funny, considering I’m not even remotely interested in the sport. The term… 3 solid hitters starting off the batting order, and then a fourth, batting cleanup has the opportunity for the grand slam, or to knock a runner in… Often the best hitter in the lineup, they certainly have the best opportunity for run production.

So, how in the world does this apply to dentistry? 

You’ve built a successful business. You’re heading down the home stretch and are trying to figure out if it’s time to sell… how to sell… what type of preparation needs to be done heading into a sales process? How do you undertake such a process, without upsetting the performance of the practice(s), while maintaining your team and ensuring you receive a maximum valuation on the back end? How do you hit a grand slam when selling your business? 

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Tags: Company News, Dental Practice Brokerage, Dental Practice Selling, Selling your dental practice DSO, how much is my dental practice worth?

Now Is The Time...

Posted by Josh Swearingen on Mar 3, 2022 9:40:18 AM

Now Is The Time…

M&A is a largely cyclical business… Deals get brought to the table, and a vast percentage of them end up closing either in Q4, or even the week between Christmas and New Year’s celebrations. Everyone is incentivized to get things done before the change of the calendar! However, what further incentivization may exist as we look at spots that don’t traditionally fall in line with the natural cycle of the market?

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Tags: Dental Practice Selling, Selling your dental practice DSO, how much is my dental practice worth?

TUSK Partners Advises Coastal Max Oral Surgery & Dental Implant Center On Its Sale To Five Point Dental Specialists...

Posted by Kevin Cumbus on Mar 1, 2022 7:42:42 AM

FOR IMMEDIATE RELEASE (March 1st, 2022)

 

Kevin Cumbus

TUSK Partners

704-302-1043

Kevin@Tusk-Partners.com

 

TUSK Partners Advises Coastal Max Oral Surgery & Dental Implant Center on its Sale to Five Point Dental Specialists, a portfolio company of Casla Partners.

 

TUSK Partners (“TUSK”), the premier dental-focused M&A Advisor, advised Coastal Max Oral Surgery & Dental Implant Center in their sale to Five Point Dental Specialists, a portfolio company of Casla Partners. The transaction was led by Ryan Mingus, Managing Director of M&A at TUSK Partners. Alex Cherniavsky and George May spearheaded the diligence and analytics efforts for TUSK.

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Tags: Company News, Dental Practice Brokerage, Dental Practice Selling, Selling your dental practice DSO, how much is my dental practice worth?

2021 Dental M&A Markets – Lessons Learned and What’s Ahead.

Posted by Kevin Cumbus on Feb 2, 2022 6:44:36 AM

After a wonky, bar belled M&A market in 2021 with most transactions all coming in the first and last quarter of the year (#thanksCOVID), in 2022 we witnessed the most active dental M&A market in history.  The market was driven by four major forces:

  • Pent up demand on the buy-side
  • Fears around tax increases from the Biden Administration
  • COVID fatigue related to business ownership
  • High demand for specialty practices
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Tags: Dental Practice Brokerage, Dental Practice Selling, Selling your dental practice DSO, how much is my dental practice worth?

TUSK Partners Advises Gendus Dental Partners in their sale to Guardian Dentistry Partners...

Posted by Kevin Cumbus on Dec 22, 2021 7:20:45 AM

FOR IMMEDIATE RELEASE (December 22nd, 2021)

 

Kevin Cumbus

TUSK Partners

704-302-1043

Kevin@Tusk-Partners.com

 

TUSK Partners Advises Gendus Dental Management in their Sale to Guardian Dentistry Partners...

 

TUSK Partners (“TUSK”), the premier dental-focused M&A Advisor, advised Gendus Dental Partners in their sale to Guardian Dentistry Partners, a large and growing family-fund backed Dental Partnership Network (“DPN”).  The transaction was led by Kevin Cumbus, President of TUSK Partners.  Alex Cherniavsky and George May spearheaded the diligence and analytics efforts for TUSK.

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Tags: Company News, Dental Practice Brokerage, Dental Practice Selling, Selling your dental practice DSO, how much is my dental practice worth?

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TUSK provides Industry-Leading Resources to Group Dental Practices and DSOs, such as:

  • Full Day Deep Dive - Built to Sell
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