Episode 159: Bank of America Interview with Tom Angeloni

https://www.youtube.com/watch?v=9y8GKSDy354 Questions to Ask Before Seeking Financing for Dental Startup or Acquisition Carrie: Welcome to the Jameson Files. I'm your host, Carrie Weber, and it's so great to have all of you back in the Jameson Files community today. We're excited. We have a very special guest who has come to the Jameson offices to be in person with us for this interview. This is Tom Angeloni, the National Sales Director of Bank of America. We were talking earlier, Tom, we've both been in the industry for about the same amount of time. It's been over 20 years for you.  Tom Angeloni: Like a quarter century. I have to date myself. The Future of Dentistry Carrie: Well, a lot has come and gone. I'm really excited and very grateful that you've come by to spend some time with us because, for those of you out there, whether you are a young dentist starting out, looking to get footing into your own practice ownership situation or whether you're a practicing dentist and have been practicing for some time and are looking for opportunities to expand, you may have a lot of questions about financing and what things you need to be considering. What is the environment like today and what things can you plan for? So, Tom, I'd really love to have a conversation about that. I’d love to start out with just giving your perspective on where things have come, after all of this time. From your perspective, where do you see things right now in the dental industry? In the dental environment?  Tom Angeloni: Honestly, it's driven demographically.  There have been a lot of states, different territories that were heavily driven by startups. Over the years, depending on where you're at, that has moved more towards acquisitions. Overall, we still find that the dental economy is still very strong. Dental spend is up year over year.  The last stat I saw from the ADA is that between 2021 and 22, there was an increase, not a huge increase, but about 1.2% increase in graduates. And then over a five year span, there's been about a 7% increase in graduates. So you still have a lot of graduates coming out. And the trick is to keep pace with who's retiring, right? That's always the trick. So the projections, again, ADA and some different consultants are really looking at it and say that over the next eight to 10 years, so 2031, they say that there's going to be a shortage of about 30,000 dental professionals. So you can look at that as, you know, very optimistic and an opportunity. There are still, as it stands right now, about level or a little bit more graduates compared to those that are retiring. Starting a Dental Practice from Scratch or Acquisition Carrie: Wow.  And I don't know why that feels surprising to me, but, you know, that gives a lot of opportunity to these young dental graduates. You do a lot with dental students and with those new dentists in trying to educate them on what their options are. And they think they know the direction, but I don't know that they've done a lot of due diligence in terms of how to make the best decisions for the start of their professional career. Some of you have, but some of you may still be really unclear about how you get from here to there. What are some of the questions that you get asked a lot from these dentists starting to explore purchasing or even starting up a practice from scratch? Tom Angeloni: I'll tell you the most common question in all the lecturing that we do at different dental schools across the country.  Almost 80% of the time we do this, the question comes up, should I start a practice from scratch, or should I do an acquisition?  And a lot of people have different opinions, right? Obviously, when you acquire a practice, you have a built-in patient base, you have a staff, you have equipment. It's almost like you flick the switch and get going. But what I've always seen is that it really has so much to do with what the transition plan is, right?  So if you're going to walk in and do what we call a walkaway acquisition where a dentist has been there for 30 years and he leaves on a Friday, and you come in on a Monday and take over that practice, with no transition plan in place, it's hard, right? You see a lot of attrition from that, because a lot of people have been driving past three or four dentists to go to that dentist, because that is what they have done their whole life and they leave. They say, well, there's no reason for me to pass up. I don't know the new person anymore.  So, a walkaway transition doesn’t work well.  I'm not saying there's not opportunities for that, but it is much more difficult. And sometimes, as you know, when you buy a dental practice, you pay a percentage of the revenues. So if you pay it and then all of a sudden you lose 10% from an attrition standpoint, you've just lost that, right? So in my experience the key is to have a very good transition plan where the existing dentist is going to stay. You don't want them there for a long time, but at least six months. So you get one rotation for everybody coming through for hygiene. Then you slowly transition. And when you do that, you don't have as much attrition, because every time a new patient comes in, they're introducing you as an associate. And all of a sudden, they don't even realize it, now you're the owner, right? When you do it that way, and you have a good transition strategy, there is much less attrition, and that might be a better situation than a scratch startup.  Now, the flip side of it is that when you do an acquisition, you're basically taking over a practice that already has character to it.  It's already been doing things a certain way. The staff has been doing things a certain way, and as we all know, people are just naturally adverse to change. So you come in, and again, you think that you have a staff, and then you start changing things and you realize that the staff doesn't like that and they leave. So in that scenario, it may be better to go ahead and do a scratch startup. You can do things the way you want with your equipment and build your staff how you'd like. So I'm really not for or against either one.  Carrie: You do a lot of both. Tom Angeloni: A lot of both, right. It's really just the transition and, and where you're at. And if the transition strategy is done right, then maybe an acquisition is best. Carrie: I think this is really great. I'm glad you brought it up, Tom, because as I think about doctors that we've talked to, practices that we've worked with, and conversations that we've had, this is so true, and it's interesting coming from your perspective to also be recommending that. This is something for anyone listening, if you're the doctor looking to acquire, think really clearly about it before the purchase is made. How are you going to enter into that practice and have that be as successful as possible? But also if you are looking to sell, if you want that practice to be successful long after you're gone, what are you willing to do? What intentional processes are you willing to partner with the buying doctor to help that be that successful transition? I think from both sides, that's a really important thing to consider for the success of the practice, and for the patients, and the team. So that’s a great point that you make there.  The Key to Making Wise Financial Decisions when Acquiring When you think about the financial investment that these doctors are going to make, whether purchasing or starting up from scratch, what would you say is important for them to consider, long before, in preparation for taking these leaps in this next step of their careers? Tom Angeloni: I think what you just said there, preparation, that's the key. I always say it's vital that you surround yourself with industry specific people that can advise you. We talked a little earlier about how so many say, I want to buy a million dollar practice. And you're like, well, maybe you do, but maybe you don't, because there's a big difference between a million dollar practice and a profitable practice. Right? Carrie: Wow. Say that again.  Tom Angeloni: There’s a huge difference between a million dollar practice, a million dollars being produced in the practice and a profitable practice. So many get it locked in their head that production is important. I want to buy a practice, or I want to start a practice and get it up to a million dollars or 1.5 or 2 million dollars. And if it's not a profitable practice, you don't want that. So yes, having a team of advisors that can come in and look at it and say, okay, well this practice is doing a million or 1,000,005, but overhead is up here. It's not the most profitable practice, so maybe you don't, and you can take that analogy across to all different aspects of starting a practice or growing a practice and say, look, you really have to have the right people around you to advise you. And that would be from the right dental specific lenders to CPAs, to financial analysts, to contractors, to equipment providers. You really have to take your time and prepare, as you said. And that's whether you're starting or whether you're growing.If you're doing a second or a third practice, you need people that can come in and advise you on whether this the right time to go from one to two or two to three, or is my infrastructure set up correctly to go from three to five?  We were making jokes earlier that you would think just like when you have children, right? You have one child, and two wasn't hard. So you figure, how much harder could three be? And then you have the third and you move from man-to-man defense to zone defense. It's very similar when you buy practices, right? Going from one to two isn't all that difficult. You can hire an associate, you spend some time there, I'll spend some time here, but then you go to three, then you go to four,...