Bentson Copple Blog – Page 9 – Just another WordPress site

NESO: A Revolutionary Learning Experience

We’re heading north to attend the Northeastern Society of Orthodontists’ (NESO’s) 93rd Annual Meeting, November 6-9. This year’s meeting theme is Connecticut Still Revolutionary Orthodontics Is Evolutionary. We are honored and excited to be a part of this annual event that represents over 1,250 members from Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, Vermont, and the Canadian Provinces of Québec, New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland.

At this year’s event Bentson Clark & Copple will not only be exhibiting (booth #515), but Chris Bentson is honored to be a part of the “Joining, Acquiring, or Selling an Orthodontic Practice: Ask the Experts” presentation. This is a joint lecture from three of the orthodontic industry’s transition planning leaders: Chris Bentson, Roger Hill and Dr. Eric Ploumis. This two-part, half-day educational lecture is scheduled for Friday, November 7 from 1:30pm – 5:00pm (with a 30-min scheduled break).

Chris’ portion of this lecture will review the current consumer market for orthodontics and how it affects your practice positioning. His presentation will include a description of the transition process, an illustration of the relationships between key financial and operational data needed to examine practice health and a general review of overhead targets. In addition, a few of the current trends seen in today’s growing practices will be discussed.

***Click here to subscribe to the Bentson Clark reSource***

As mentioned above, plan to stop by our booth while attending the event. We will be happy to speak with you if you are considering the possibility of a practice valuation, practice transition, partnership, relocation or the sale of your complete/partial practice. If you are undecided about your future, we would be more than happy to discuss your options and help guide you in the best direction for your practice and future endeavors.

True Overhead of an Orthodontic Practice

We find that a doctor’s Profit and Loss Statement (or P&L Statement) hardly ever reflects the true expenses required to produce the top line revenue stated. Why? Depending on how the practice is structured, there are a number of discretionary expenses that a doctor and his/her accountant may choose to run through the practice. Some common items hidden within a P&L Statement are the doctor’s payroll taxes, the doctor’s health/life (and sometimes disability) insurance, the doctor’s retirement contributions, automobile expenses, and certain travel and entertainment expenses, just to name a few.

To understand the true overhead of an orthodontic practice, it is often necessary to deduct these expenses from your P&L Statement, and then recalculate your overhead rate. After doing so, the question most doctors ask us is how they compare to industry norms. While there is no correct answer to what a practice’s overhead should be, we have produced a document that will help doctors compare his/her overhead to the average benchmarks seen in the orthodontic practices we value. Click here to access this sample P&L Statement document. Once you download this reference sheet, take out your P&L Statement from the last complete year and begin to make entries. Enter your actual expenses in the unadjusted column on the left (entering each into the best available category), and then remove discretionary business expenses in the adjustments column to determine the final adjusted figures, which will provide your true expenses to operate the practice. In an hour or less, you’ll have the best view of your practice.

Click here to download the sample P&L Statement.

Practice Valuation 101

You may be aware of the general concept of business valuation, but may question how an orthodontic practice valuation works. Obtaining a properly performed valuation is the key to maximizing a doctor’s return on their investment of time and effort in the practice. There comes a point in each orthodontist’s career when he/she must determine the value of their practice and the best way to do so it is through a properly performed valuation.

The most important part of any valuation is collecting the practice’s financial information. To determine the fair market value of a practice, a critical assessment of a practice’s current and past operational and financial information is required. We provide an information-gathering package that outlines the information necessary to properly establish the practice value. Various financial and operational data and reports are requested, including the following: the last three years’ profit & loss statements and the most current interim profit & loss statement; the practice’s tax returns for the past three years, including any other supporting statements; the most recent tax year-end and month-end balance sheets; a list of fixed assets; production and patient starts for the last several years; and a list of active patients that are paid-in-full. The information should be pulled from a number of sources including one’s practice management system, accounting system, and the practice’s accountant, among other sources.

The next important step in the valuation process is an on-site practice visit, which, ideally, should happen on a patient clinical day. During the on-site visit, we verify the fixed assets, examine the physical building and surroundings, ask questions to clarify certain data, observe patient flow and view the staff’s interaction with patients and staff (including the doctor). The visitation helps identify important items that cannot be documented in financial reports, such as the feel of the practice location, location relative to schools, competitors and referrals. It also lets us verify fixed assets in service, strength of staff and many other critical intangibles that could impact the overall value. The visit is also important as it allows us to review the data sent in prior to the visit, fill in any missing data pieces and to discuss the doctor’s transition preferences that will occur after the valuation is complete.

Once all of the information has been received and the practice has been visited, a valuation can be produced. The valuation report includes not only the value of the practice but summarizes the financial and operational data and provides an overall review of certain demographic information potential buyers will want to understand and consider.

2014 GORP Contest Winner Announced

2014 GORP Winner Bentson Clark & Copple is pleased to announce that Dr. Tyler Holt from the University of Oklahoma Health Sciences Center is the winner of our on-site Soccer Sunglasses GORP promotional contest.

All GORP attendees were invited to participate in our social media contest for a chance to win a Nike Fitbit and a lifetime subscription to the Bentson Clark reSource quarterly newsletter.

Company-branded, soccer-themed sunglasses were given away at the Bentson Clark & Copple booth during the University of Michigan-hosted event. Residents were asked to snap a photo of themselves wearing our branded sunglasses, then upload the image to Instagram or Twitter with the hashtags #BCCOrtho and #GORP2014.

A huge ‘thank you’ goes out to all of the residents who entered the contest. We received many great pictures and we regret only being able to select one winner. To view a sample of the entries, please click this link.

Reaching Your Goals at GORP 2014

GORP 2014 One of our favorite events each year is the Graduate Orthodontic Residents Program (GORP), which is right around the corner (July 31–August 3). Our bags are packed, our flight has been confirmed and we are ready to exhibit on the campus of the University of Michigan.

Want to win a Nike Fitbit at the event?! We will be holding a special soccer-themed contest at our booth. Stop by our table and learn how to enter.

In addition, Shannon Patterson, our Director of Practice Opportunities & Executive Recruiting, will be on hand to speak with you regarding purchasing an orthodontic practice, seeking an associateship position or entering into an employment situation. She can register you in our database of practice opportunities, which allows us to provide potential opportunity matches as they come to light, based on your specific geographic preferences and future ownership desires.

Each resident is also encouraged to contribute to Bentson Clark & Copple’s 2014 Annual Resident Survey. A QR code will be displayed at the booth, which allows easy online access to the survey. Paper copies of the survey will also be available at our exhibit booth, so be sure to stop by.

Save The Date: The First-Ever AAO Resident Twitter Chat

Plan to join us for the AAO‘s first-ever Resident Twitter Chat on Wednesday, August 13, 2014 (7:30 – 8:15pm CST). Chris Bentson will present the “Top 10 Questions to Ask to Be Successful After Residency.” He will address some frequently asked questions including, but not limited to the following:

Where should I practice?
Should I buy a practice or start one from scratch?
Will my student debt affect my ability to purchase a practice?

All AAO Student Members in attendance are welcome and encouraged to join in this open forum discussion! During this time, attendees will have the ability to chat with Mr. Bentson (and the AAO) directly from his/her Twitter account. No question about the business of orthodontics is off-limits during this 45-min chat. This event is FREE to attend and can be accessed anywhere with an Internet connection.

HOW TO JOIN/PARTICIPATE:

Log into your Twitter account during the designated date and time from your desktop, smartphone or tablet.
Search for #AAOchat to follow along.
Participate in the discussion using #AAOchat in your tweets.

Copyright Compliance in the Orthodontic Industry

Recently, a number of AAO members have received a letter from the Motion Picture Licensing Corporation (MPLC) regarding the alleged improper showing of movies in waiting rooms or other areas of the members’ orthodontic offices. The letter that has been received is strongly worded suggesting doctors should enter into a licensing agreement in order to avoid paying penalties in the future for violations.

The AAO offers a sampling of frequently asked questions regarding the MPLC and the display of movies in orthodontic offices. Also, the Bentson Clark reSource discussed copyright compliance a few months ago before this issue was brought to the orthodontic mainstream. Contact Bentson Clark & Copple to request a copy of an article regarding copyright laws and infringement written by Daniel Sroka, the attorney that drafts the majority of Bentson Clark & Copple’s legal documents.

How Long Will My Orthodontic Practice Transition Negotiations Take?

In the world of orthodontics, timelines are extremely important. From day one, patients ask, “How long will I have to wear my braces?” As a doctor you provide your best estimation, stating if all things go as planned AND you are compliant, things should stay on time.

In the world of practice valuation and transitions, the second question asked by many doctors (after the total cost of the transaction) is: “How long will my orthodontic practice transition negotiations take?” At Bentson Clark & Copple we tell orthodontists to allow about 6 months, 90 days for a valuation study and another 60 to 90 days for any negotiations and documents.

You’ve identified the candidate; they have reviewed the prepared practice valuation and physically visited the practice. You want to move forward. You have likely discussed the transaction on a high level, and you are now delivering the terms of the proposed transaction to your candidate. The terms are typically delivered in a document called a “term sheet” or “letter-of-intent.” This is usually a five-to-seven page document that outlines the asset allocation of the purchase price (for tax purposes), association periods and compensation for both doctors before and after closing, remedies for breach, non-competes or liquidated damages, how retreatment issues will be addressed, real estate matters, financing terms, and certain representations and warranties by both buyer and seller. This document will be the road map for the attorney to draft legal, definitive documents. Typically, a cash-flow pro-forma is presented in conjunction with the terms so that both parties have a financial illustration of how the transaction relates to their expected income over a period of years.

An open, back-and-forth dialogue between both parties is expected as terms are agreed upon. We suggest that both parties have knowledgeable representation during this stage of the transaction. There are companies that encourage the idea of representing both parties, but Bentson Clark & Copple suggests that both parties seek separate counsel, as there are definite financial conflicts on almost each deal point in a transaction.

However, be aware of pitfalls during this process. A “my way or the highway” attitude is likely not practical. The fairest spot or win-win most commonly occurs with both sides feeling a similar degree of discomfort. On the other hand, giving too many scenarios or too many different ideas of how to get to agreement often confuses one or both parties to the point of not being able to make a decision. Paralysis by analysis can happen on both sides of the transaction. Careful is good, but if you miss seeing the forest for the trees, the transaction can die, and an opportunity for both buyer and seller could be missed.

Bentson Copple Article Featured in Orthodontic Products Magazine

Nearly every younger orthodontist the Bentson Clark & Copple team speaks with wants to eventually own or co-own a practice. As such, we often get asked the question, Is it better to start my own practice from scratch or purchase an existing practice? Doug Copple of Bentson Clark & Copple advises in weighing the financial rewards of both practice situations.

In the latest issue of Orthodontic Products Magazine, Copple explains how to determine which is the best option based on one’s personal situation and examines some of the primary advantages and disadvantages of both starting a new practice and buying an existing one.

Advantages to starting a new practice:
Advantages include the ability for the doctor to create his/her own office and establish everything exactly the way the doctor wants (rather than inheriting the selling doctor’s facility, employees, and systems).

Disadvantages to starting a new practice:
One disadvantage discussed in this article is the fact that orthodontists generally still have to go into debt to purchase equipment and build out the office space. Additional loans are likely to be required to hire and pay employees and to cover operating expenses during the first several months or years until enough income is generated to cover these costs.

Advantages of buying into an existing practice:
One of the largest advantages the purchasing doctor has is an immediate cash flow. If the purchase price is fair, the financial rewards are greater than starting a new practice, even after repaying the purchase obligation. Additionally, the purchaser immediately has a facility and operating equipment (assuming it is in decent operating shape).

Disadvantages of buying into an existing practice:
Disadvantages are similar to the advantages for starting a new practice – ie, the buyer inherits the selling doctor’s facility, employees, and systems. If these assets are not satisfactory to the buying doctor, it can be difficult and time-consuming to make significant changes to the practice.

Financial Reward
The financial reward of acquiring an existing practice is usually much greater than starting a new practice from scratch, particularly in the first few years of ownership. But, undoubtedly, there are many other factors to consider that may make a start-up more attractive than purchasing an existing practice. Within the article, Copple provides example cash flows for both a start-up and the purchase of an existing practice. These examples compare the two opportunities to provide an illustration of the financial rewards of both investments during the initial years of an orthodontist’s career.

Click here to read the entire article.

Join us at the 2014 AAO Orthodontic Career Fair

Be sure to join Bentson Clark & Copple at the 1^st annual AAO Orthodontic Career Fair. We will be on-site to speak with each attendee about our company’s orthodontic recruiting and placement services. We will have a list of the most current orthodontic practices available for purchase, full-time associateships, part-time associateships and partnership transactions available.

This inaugural career fair is being held on Sunday, April 27, 2014 from 3 PM – 5 PM at the Ernest N. Morial Convention Center, in the Great Hall B, located on Level 1. The Career Fair will bring together those with position openings, or practices for sale, and those individuals who are seeking practice opportunities. This event is being held in conjunction with 2014 AAO Annual Session as part of the AAO’s “Career Day” events. This is one of three signature events designed to help newer and younger orthodontic members be more successful in their career transition.

There are countless advantages of starting your career search with Bentson Clark & Copple. We are committed to working with residents each step along their journey. As experts in the field of orthodontics, we have earned an excellent reputation as an organization that orthodontic professionals can truly rely on. Our experience and highly trained staff ensures unsurpassed service and dedication to each and every doctor.

Blog

Bentson Copple & Associates