By Danny Chan
Given the amount of time, effort and sacrifice it takes to build up a dental practice, it is not far fetched to compare the process to that of nurturing a child from birth to maturity. That is why when the time comes, dentists selling off their maiden practice can get pretty emotional – not unlike parents watching their firstborn walk down the aisle or move out of the family home.
Yet the transitional phase of a practice sale need not be wrought with emotions or be overwhelming for the seller, says Dr Anthony Coulepis, Executive Chairman of Ekera Dental Pty Ltd., provided the right partnership is established from the get go.
Dentists who view their practice as de facto retirement funds often consider their only responsibility in a selling scenario to secure the highest bid. After all, isn’t it only fair to maximise returns for all the blood, sweat and tears poured into their business? Nevertheless, they shouldn’t skim over the fact that most sellers stay on as Practice Principals long after the sale and the haunting prospect of unscrutinised contract clauses coming back to bite from the wallet.
Underlining these reasons, Dr Coulepis shares what he considers the top three imperatives for would-be sellers:
- Understand any constraints that you, and your team, will be working under: “Most corporate buyers alter the Practice’s operating model from the time of acquisition, imposing their own KPI driven, profit focused culture, which will most likely be a contradiction to the Practice’s existing culture. You should be asking whether you and/or your dental practitioners would like to be tied to daily revenue targets and accountable for the achievement of tough monthly KPI’s’. Would you be able to choose your own labs and consumables or would you be required to implement certain pricing structures such as “No Gaps”? Will there be a name change for the Practice and what productivity regimes will you have to work under?”
- Be aware of penalties that may apply: “Are there any “clawbacks” from the selling price you achieved via commission reductions, etc.?” In other words, is the agreed selling price truly achieved?
- Understand the philosophy of the organisation you are partnering with: “Who are the people and what are their drivers? How does the buyer help you, and what do they offer in terms of support services? In this regard, it’s best to talk to other Principals who are already part of that organisation.”
Taking up his last advice, I spoke to several dentists who sold their practices to Ekera Dental, under which corporate umbrella they now serve as Practice Principals. The common threads running through their respective post-sale experiences appear positive: (1) Relief from administrative duties; (2) Ekera’s unobtrusive management style; (3) Flexibility; and (4) Good transition into retirement.
“My own experience with Ekera, the corporate I partnered with, has been positive,” said Dr Tim Stolz, the Principal at Geelong Implant Dental Centre”.
“They have intelligent and well-credentialed people at the helm. The organisation has now grown to more than 20 practices, with a number of others still in the pipeline.”
“There was no threat of clawbacks or commission reductions and the Ekera Management was promptly responsive to any problems about my practice that I raised with them.”
“Even now, which is beyond my initial contract period, I am still with Ekera and I have not lost my clinical independence. I have not lost control of my practice. The contract period, which I served was as I wished, free of interference, financially secure and unencumbered by weighty management issues,” said Dr Stolz.
Dr Rod Edwards, the Principal at Toorak Village Dental Care, said “Under the Ekera model, the practice’s autonomy is protected. We’re allowed to run the practice exactly as we’ve always run it. That includes staffing, day-to-day operations, materials, methodology and so on; and there’s no effect at all on patients and Ekera also assists in other added-value areas such as marketing and back-office services”
Dr Edwards appreciates the fact that the Ekera people haven’t become a presence in the practice unless asked. He also says practice life has changed for the better, as has work-life balance, due to less back-office stress. “The sale has probably improved my longevity because, as a dentist on commission, I now don’t have to worry about the Practice compactions, just my dentistry and my patients,” said Dr Edwards.
Being able to “spend more time working as a clinician and less time in book-keeping and practice management” were main motivations for Dr Tania Nixon to sell her practice in 2014. Besides the freedom to focus on what she’s good at, the former owner of Gentle Dental Geelong said nothing much has changed otherwise: “I still maintain my position as Principal Dentist and I’m still able to make decisions on the main day-to-day running of the practice.”
Dr George Koudos of Raglan Dental, who joined Ekera Dental in February, concurred: “Ekera plays a much needed support role that allows me to focus on my clinical duties with minimal distractions.”
Dr Mark Scriven of Belmont Dental Group, who sold his practice in 2016, had this to say: “We have fantastic support staff who relieve us of so many chores, regulation compliance, payrolls etc, leaving us free to do what we do best, that is, look after our patients.”
“Ekera does not interfere much at all in the process, but offers support in all areas should we require it. There is, of course, some reporting, budget discussions, KPI’s etc. that serve to highlight inefficiencies in certain areas or confirm that the right procedures are in place for the best patient care, but Ekera assists us with these activities”.
Dr Scriven also shared what he found most appealing about Ekera’s acquisition model:
“We received the majority of the purchase price at the time of sale, with the balance paid in yearly instalments over the earn out we chose, with no clawbacks on the completion payment.”
“We also opted to acquire shares in the company, which allows us to benefit from future growth as Ekera acquires more practices. They encourage professional development and reimburse us for the costs of attending seminars and courses. They also provide professional indemnity insurance free of charge to the practitioners in the practice”.
Dr Coulepis says the absence of “clawbacks or penalty commission reductions” in contracts is consistent with the company’s insistence on being a “Non-Corporate Corporate” and “a company that offers a flexible model focused around the Practice Principal, the Staff, the Practice and its patients, rather than the tight constraints of some of the some other Corporates”.
The company’s practice-centred philosophy means that the Ekera Support Team functions incognito, or as Dr Coulepis puts it: “We leave good things that are working alone, and only assist from the background, if asked and if necessary.”
“Patients are loyal to the dentists, to the Practice and to the Staff,” he adds, “ Ekera has no branding as far as the patients can see and we encourage successful Practices to keep doing what they have been doing to be successful and we assist Practices that ask for, or need help.”
Such unobtrusive support even extends beyond the clinic. Just ask Dr Koudos. His passion project involving dental mission work in Vanuatu, received not only Ekera Dental’s blessings, but also funds. Ekera sponsored the flight and accommodation of two dental assistants for one of the dental aid trips.
To Dr Coulepis, that is simply the logical outworking of their modus operandi:
“Ekera supports charity and philanthropic work that is part of the “fabric” of the particular Practice. Whatever used to be important to Practices that have now become part of the Ekera Group, we will continue to embrace. Same logic applies: If it is successful and working, why change it?”
“While Ekera does not support independent charity work, we support our Practices and what they support.”
It is little wonder that dentists who joined the Ekera family feel supported both professionally and personally. The pain of relinquishing ownership of one’s practice has been mitigated by a lump sum payout with zero clawbacks or commission reductions, employment in a familiar environment with same autonomy (but less administrative work) and the opportunity to work for a group of like-minded individuals who share common goals.
For Dr Scriven, it’s also a bit more than just a viable exit strategy: “I like it that interaction among the practices is encouraged in the group, allowing cross referrals, sharing of staff when required and the benefits of professional interaction.”
“I might also add, the Ekera Christmas party is legendary!”