Ask most practice owners about their KPIs and they can walk you through every number. Ask what they’ll need to retire comfortably, or what they’ll do the Monday after they sell, and the conversation usually slows down.
That gap is what Kevin Cumbus, President and Founder of TUSK Practice Sales, and Brett Miller of Corient set out to close in this webinar, which revisits the workshop they led for practice owners in Denver. Brett cites Exit Planning Institute research showing that 48% of business owners have done no exit planning at all. For dentists, that’s a big blind spot, since the practice usually makes up 70 to 90% of their net worth. TUSK Practice Sales has completed $1.3B in transactions, and Kevin has watched the difference in being well-prepared versus not play out. Owners who know their numbers before going to market get to pick the partner who fits, rather than defaulting to the biggest check.
Key Takeaways
- Start exit planning now, even if a sale is 20 years away. The same work that prepares you for a transaction also grows the value of your practice and protects you if something unexpected happens, like a disability.
- Selling changes how you get paid. For years you’ve controlled your own cash flow. After a sale, that money has to be turned into income, and one retiring dentist admitted to Brett that he had no idea how that would work.
- Be wary of any buyer who rushes you. Kevin’s advice is that if someone is pressuring you to sign an unsolicited offer before a deadline, you don’t need to work with them. Selling under that kind of pressure is how owners end up with regret.
- Know your number before you expand. If you’re already close to financial independence, buying two more locations and signing more personally guaranteed loans may be risk you don’t need.
Core Exit-Planning Concepts
Getting Out of Autopilot
Kevin read Bill Perkins’ Die With Zero in January 2023. A few weeks later, Brett called to tell him he had to read it because it had changed his life. For Kevin, the big realization was that he’d been treating wealth as the goal when what he really wanted to maximize was fulfillment. Brett took away Perkins’ idea of stepping out of autopilot. Business owners, he says, put most of their energy into what they should be doing, the best practices and the KPIs, and very little into who they are and how the business should serve them.
Closing the Wealth Gap
Early in 2023, a dentist Brett had known for years called to say this was the year he would sell. When Brett asked what prompted it, the answer was simple. He had $5 million saved, and that had always been his number. Brett asked whether it was enough, and the dentist didn’t know.
That question is where Brett starts every financial readiness conversation. What do you have today, what will you actually need, and how does the sale close the difference? Answering it means mapping out the trips and experiences you want at different ages, while you’re healthy enough to enjoy them, and being honest about what you spend. Brett’s rule of thumb is to write down what you think you spend, then double it.
Planning for Life After the Wire
Brett called an orthodontist client six months to the day after he sold. Retirement was amazing, the client said, with one exception. He had pictured slow mornings on the back porch with his wife of 40 years. That plan lasted a single day. She had her own routine, and she wasn’t changing it just because he had sold his practice.
Brett tells it for laughs, but he pairs it with a sobering number. The Exit Planning Institute found that 75% of business owners regret selling within a year of closing, mostly because they never planned what came next. Brett uses an elements of life assessment to help owners think through family, health, giving, friendships, travel, and personal growth long before the wire hits. For a deeper look at planning your life after a sale, watch What to Do When the Wire Hits, another TUSK Practice Sales webinar with Brett Miller of Corient.
Getting the Practice Ready, and Yourself
Kevin pushes back on the idea of dressing a practice up for sale. For him, preparation means knowing where any problems are, having an explanation ready for any dip in the income statement, and telling the practice’s story clearly. Brett’s side is personal readiness. Sellers who already know where they stand financially go through a deal with more confidence, and they’re far less likely to back out at the last minute. Read more about how to prepare your dental practice for sale here.
Find Out What Your Practice Is Worth Today
TUSK Practice Sales offers a complimentary TUSKVal analysis for practice owners who want an honest picture of where their business stands and what the path forward looks like, with no obligation.
To schedule a conversation with our team, reach out at [email protected] or visit www.TuskPracticeSales.com.
Kevin Cumbus
Hey, good evening. I’m Kevin Cumbus, President and Founder of TUSK Partners. Thank you for making time in your busy schedules this evening to join us. You know, here at TUSK, we spend so much time focused on how to maximize value when we work with clients and take them through a marketed sale process to ensure that they exit at the top. We spend so much time down in the weeds: What’s the adjusted EBITDA? What’s the multiple? What’s driving the multiples? What’s really going on in the micro and macroeconomic environment that’s driving valuations? We get into structure, and on and on and on. And look, if you want to watch more of that, by all means, we have a treasure trove of it on our website, and I encourage you to do so.
But we’re just coming off of a really interesting conversation. We were down at Dykema’s DSO Conference in Denver, Colorado. It’s their 10th year of doing this. There were over 2,000 people there, and like the last three years, we were invited to put on a workshop in advance of the conference. Unfortunately, it was limited to 100 practice owners and entrepreneurs. And it was a heck of a day. It was just remarkable. The knowledge transfer that occurred down there was like nothing I’d ever seen. It was by far the best conference we’ve ever done. After the conference, it was clear that the audience really, really appreciated two big concepts, and we wanted to go back and revisit those today. So I’ve invited my friend Brett Miller to join me. Brett is a partner and the dental practice area leader at Corient. Brett, it is so good to see you again. How have you been doing?
Brett Miller
Great, Kevin. And thank you so much for allowing us to participate and join this evening. It seems like we blinked twice and we were just at DMA last week, even though I realize it’s now been a few weeks. But certainly this conversation is top of mind, and I’m excited to reconnect and revisit it. Thanks for having us.
Kevin Cumbus
A hundred percent. I’d like to tell the audience a little bit about you. I’ve had the pleasure of knowing you for, golly, 15-plus years. Just full disclosure, I’m a client of Brett’s, but our relationship goes much further back than that. I think it’s important that I share a little bit with you all about Brett. I asked him for a bio, like we always do when we have guests on, and he sent me something special that I think is important to share. First, this is Brett’s purpose: to inspire a world of community and people at their best, which is fantastic. And the background: “I’m Brett, from Gastonia, North Carolina. Middle child, proud graduate of The Citadel down in South Carolina, husband and father to amazing kiddos. Loves the outdoors, being on the water, running, hiking, and golf.” Brett, always a pleasure. Tell us what’s been going on in your life, and tell us a little bit about Corient. The last time we were on stage together in Denver, you were affiliated with a different brand and a different logo.
Brett Miller
You know, I might have had a secret up there that I was bursting at the lips to tell, but I was sworn to secrecy and wasn’t quite able to share it yet. So I am excited that officially, as of August 1st, just a few days ago, the 30-plus legacy brands that have come together over the last three years have a new name. Previously, we were CI Private Wealth, a new initiative to bring together the top wealth management firms around the US to form an integrated, cohesive group. It’s a lot of the same synergies and conversations you’re hearing discussed in the dental world. Over the last year and a half to two years, the conversation was floated around: How are we going to come together under a unified brand? We actually came together and did a values analysis and said, “All right, if we are to understand who we want to be in the marketplace, how would we define ourselves?” I’ll put a small asterisk on this: it’s also very fun to try to rebrand in the current marketplace, where someone owns the domain name for just about every word in the universe.
That is a challenging exercise in and of itself. Thankfully, it was the name of one of our legacy firms, and as a partnership, we came together and voted on Corient. You can see it’s a construction of two very impactful words: client and oriented. In essence, we believe in being client-oriented, in placing our clients first, so much so that we made it our name. So we’re excited that as of August 1st, we’ve rebranded all of our legacy brands to Corient.
Kevin Cumbus
Congrats. I know that’s a heavy lift. Congrats to you, the partners, and everybody involved in the business. That’s awesome.
Brett Miller
Thank you.
Kevin Cumbus
So, before we get to the meat of the matter: as I said at the top of the presentation, we get pretty myopically focused on valuation, and I think it’s important to take a step back, Brett. I think it’s important to really understand what your business really is. What is the purpose of the business? We’re all capitalists. We all want to make money. Yes, it creates cash flow, but that’s just one piece of the puzzle.
This became very evident to me back in January of this year, when I was reading a book called Die With Zero by Bill Perkins. I was reading this book, and it stopped me dead in my tracks. There were two key principles in this book that, although relatively obvious, just hit me over the head like an anvil. One is that we are all swapping our time for dollars. When we go to the office, we expect to get paid, and we expect to get a return on that, because when we’re not at the office, we have the opportunity to spend time with our family, go play golf, or, hey, go to a conference in Denver. That was a relatively simple concept for me to grasp and glom onto.
But the big aha moment was: What are we really trying to maximize with respect to our life and our time on this planet? I think all too often entrepreneurs get caught up in trying to maximize wealth for wealth’s sake, and it comes at the cost of our time and, many times, our health. What Bill does such a masterful job of articulating is that maybe you don’t want to maximize just wealth, or time, or even your health. What you want to do is find some balance. The conclusion he comes to is: How do we really maximize net fulfillment in our lives and look at our work and our businesses as a conduit, or a tool, to get us there?
I’d read this book, and within a matter of weeks, I got a call from you saying, “Hey, you’ve got to read this book. It’s changed my life.” And I said, “Is it Die With Zero?” And you said, “Absolutely. It’s Die With Zero.” So this kinship over this book has connected us and reshaped a lot of the way I think, and I think the way you think, about how businesses should serve folks over their lives and in their exit as well.
Brett Miller
Well, let me ask you a question, and it’s a bit of a leading question, because I’d like to turn around and answer it from my perspective. What was your key takeaway from reading Die With Zero? You and I have had this conversation. We’ve actually opened our laptops and shared the spreadsheets we created with each other, because yes, we’re those kind of geeks after reading the book. But what was the key impact this book had on your life personally? How did it reshape or reframe the way you view your business as an entrepreneur and a business owner?
Kevin Cumbus
So, first things first. I’m giving a peek behind the curtain here, but thankfully, I’d already worked with you guys, and I understood what financial independence meant: how many dollars I need to have socked away to continue living the lifestyle I’m living, from an expense standpoint, and never spend down all that capital. I’d been through that exercise, and I knew what the gap was between where I was and where I needed to be. From there, it enabled me to think a lot more constructively about how I wanted to spend my time. For example, I started to make lists of things I wanted to do over my lifetime and in any given year, and how I wanted to spend my time with my family and my team. What was remarkable is that since I wrote all of that down back in January, I’ve accomplished a lot of it. So I would say it’s made me much more purposeful with every minute of every day, and that’s really rewarding.
Brett Miller
I’m glad you said the word purposeful, because I would also include the word intentional. That was actually my big takeaway from reading Die With Zero, which, ironically, you and I both joked that we reread on the plane to DMA. And I wouldn’t be lying if I said I reread another section of it on the beach just this last week when I had some downtime, because I wanted to process more of Perkins’ comments about stepping out of autopilot. I think that’s a concept that resonated with you and me, as well as the audience at DMA. As business owners, it’s very easy for us to become entrenched in a form of autopilot: What is the industry doing? What are the best practices? It’s all the what, the what, the what. This is what you should do, this is what you should do, this is what you should do. But it misses a very big conversation about the who. I think we’ve got it backward. Instead of the who serving the what, shouldn’t it be: How does the business serve you as the business owner? I’m really excited to continue the conversation about how we start to insert a wedge, put some pressure behind it, and really open up and shift the conversation about what your mindset needs to be and who you are as a business owner evaluating a transaction.
Kevin Cumbus
I love that concept of autopilot. I think so many entrepreneurs get on the hamster wheel, and you get better at running the wheel, and better, and more efficient, and the next thing you know, you think the wheel is the entire purpose. We forget that we actually had a life before we got on the wheel. And it’s remarkable to me how many entrepreneurs and business owners come to us and say, “I just need to get another $200,000 of EBITDA, or another $400,000 of EBITDA, before I exit.” And I’m like, it’s risky running these businesses. I always pose the question: Are you sure? Do you know how much you need? Are you certain?
So I wanted to reflect on those questions, and I’m going to hand it over to you in a second. Brett is a wealth of knowledge, and he’s going to share his insights with you. In talking with him before this evening’s webinar, he said, “Look, I’m going to share with folks that exit planning is not a past tense thing. It’s not a future tense thing. It’s something you need to be doing in the present, all the time, and you need a plan.” And in order to get a plan started, you have to know where you stand today. By the end of this presentation, we believe you’ll be inspired and have the confidence to leverage the value of the business you’ve built, the business you’re sweating and toiling in every day, for your benefit in all sorts of ways. So, Brett, I’m excited to see what you brought us this evening.
Brett Miller
Absolutely. Thank you, Kevin. I’m certainly looking forward to the conversation. You’re right that so much of this is about who you are, how you’re approaching your business, and the mindset that creates. One of the things I want to challenge everyone to think through is: What’s that automatic setting? What’s that default? I always love to see body language, which I realize is difficult in a webcast environment. But if you’re listening to this webcast, I’m curious how many of you are going to start shifting in your seats right now when I describe that default mindset. For many of you tonight, it’s probably, “I’ve got my head down. I’m focused on growing and operating my business. I’m really familiar with the rhythm: the income, the distributions, the cash flow, the spending. I’m dialed in, and I’m in the zone of operating and growing my business.” Which is great, right? You need that focus. For many folks listening, that dedication, that singular focus, that drive, is probably what’s allowed you to create such a wonderful entrepreneurial business and build value. However, there’s always a “but,” or a “however.”
This is the one that I think starts to trip people up. Yes, you’re really dialed into your current business. But would you believe, Kevin, that 48% of business owners, and by the way, these statistics are from the Exit Planning Institute’s State of Owner Readiness survey, so this is not dental-specific, it’s industry-agnostic, though I would surmise it’s probably spot on for the current state of the dental industry, and Kevin, I’ll let you speak to that, 48% of business owners have done no exit planning?
Kevin Cumbus
Yeah. That sounds right.
Brett Miller
So hold on a minute. Traditionally speaking, the value of a dental business is somewhere between 70 and 90% of a business owner’s net worth. It’s your single largest asset. You’ve obsessed over it. You’ve done granular analysis on KPIs to try to squeeze an extra nickel out of cash flow. But we haven’t done any analysis of the business itself.
Kevin Cumbus
Yeah. When we talk with owners, the way we describe it, Brett, is that it’s likely your largest income-producing asset and your most valuable asset. And when you think about it as a portion of your total portfolio, like you say, it’s 80 or 90% of the total value of your invested assets.
Brett Miller
And so try this on for size, because so many folks say, “I’ll deal with that later. The transaction, the exit? Kevin, I’m 35 years old. I’m not planning to exit my business for the next however many years.” Well, that may be true, but if exit planning is present tense, then it should be agnostic to your timeline, whether that’s two quarters, two years, or two decades from now. Because if you focus on exit planning, number one, one of its big aspects is increasing the value of the business. Well, why not do that today? Why not capture the additional return on investment from both a valuation and a cash flow perspective? Wouldn’t that be prudent to do in the interim?
Two, exit planning decreases your risk. It lowers systemic risk from things like death, disability, and outside business factors. All of a sudden, you’re building in succession planning. But then, and I think this is where we really want to start pushing the audience and encouraging people to think a little differently, exit planning is what allows you to take a step back and detach. One of my favorite examples of that is Jocko Willink, the great former Navy SEAL who has written several books, including Extreme Ownership and The Dichotomy of Leadership. He describes this concept of detachment. One of the hardest things we often have to do as entrepreneurs and business owners, and the reason a lot of companies in the corporate world actually force people to take vacations, is to step away, step out of the business, broaden your perspective, and look around.
Because one of the things you start to realize when you step back from your business is that there’s a fundamental truth that pops up, and that is: What actually happens when you sell your business? I think the textbook investment banking answer would be that it’s an acceleration of future earnings and planned savings. Clearly, you’re willing to accept a sum of money today for the future profits and growth of the business moving forward. But for a business owner, it actually goes much deeper than that. Now we start talking about, one, a change in liquidity. As we just discussed, 70 to 90% of your net worth that was in a single illiquid, not readily transactable asset is now highly liquid.
Kevin Cumbus
Can I go to liquidity for one quick minute here, Brett?
Brett Miller
Yeah.
Kevin Cumbus
Because it’s really interesting. Ten years ago, I would have agreed with you almost completely that dental practices are rather illiquid. When I was brokering practices 15 years ago and someone would come in and say, “Hey, I want to sell my business. How long is it going to take?” our standard line was 18 to 24 months. Because the buy side was so limited, right? We only had one type of buyer, and you had to have three magic initials behind your name to buy the practice, because DSOs were in their infancy. Today, if you own a dental practice or a group, it can be liquid within six months. The whole world has changed since then. So I would say it is more liquid than it has ever been. And we can give you a clear indication of price, with 99.9% certainty of where the deal is going to trade, and give you the bottom of the range. So you know the answer to that question.
Brett Miller
Right. And with that comes a different way to think about it, because it’s no longer, “This is long-term. I’ll sell when I’m ready, and I know it’s going to be a long process.” Now, and Kevin, I think you and I are experiencing this more and more, folks are saying, “This wasn’t really something I was thinking about, but with the current state of the marketplace and where valuations are, am I being a prudent business owner?” Well, if I’m being a prudent CEO, I need to analyze and determine what a liquidity event would mean for my business as well as my family.
Kevin Cumbus
Let’s double-click on this for a minute, because it’s really important. Over the last couple of years, there has been this sense of urgency. “I’ve got to sell now, because my buddy sold.” Or even worse: “I got an unsolicited offer, and they’re putting pressure on me with a ticking clock to sign this letter of intent, or the offer goes away.” Let me tell you: if anybody is putting a gun to your head to sell your largest income-producing asset, which is likely your most valuable asset, you don’t need to work with that person. That’s what Brett and I are getting at here. This should be a thoughtful process, with planning involved, to ensure that you’re doing it on your terms with 100% confidence. Selling because your buddy sold, or because you got an unsolicited offer, is an almost surefire way to exit with regret.
Brett Miller
Especially, Kevin, if you don’t anticipate and plan for the change in cash flow, which I believe trips up a lot of people.
Kevin Cumbus
A hundred percent.
Brett Miller
Funny enough, one of my favorite questions came from a soon-to-be-retired dental business owner. He said, “Brett, you’ve shown me these financial analyses, and everything looks great. I’m a little embarrassed, but I have a very simple question.” He kind of leaned across the table, and I said, “Sure. What’s your question?” And he said, “How am I going to get paid?” He was almost embarrassed, like he should have known the answer to this question. But think about it. For years, you’ve run payroll. Sometimes it’s Friday night, sometimes it’s Sunday morning, but you’ve had your proverbial finger on the pulse. You’ve known the cash flow of the business. If you went on a trip or took a vacation, you shifted money around or paid yourself a dividend or distribution. There’s comfort and stability in controlling your own cash flow.
But once again, you can’t sell the cow and keep the milk. If you sell the business and get that liquidity event, it doesn’t necessarily mean you can turn around and buy the beach house or go on a shopping spree. We hope to incorporate some of those things into your plan, but really, it’s about how you reposition the liquidity from the business across a diversified portfolio of investments, including reinvestments in joint ventures, rollover equity, and so on. How are you being a steward, and being prudent with that liquidity event, to design cash flow post-sale? So I’m going to be intentional here and say: liquidity and cash flow. But then comes the fun aspect: What is your purpose going to be when you’re no longer a business owner?
Kevin Cumbus
We ask folks, “What’s your elevator pitch for version 2.0 of yourself?” That’s what we like to ask.
Brett Miller
And how many folks, Kevin, struggle to answer that question? It would be wonderful if you could overlay a little Michael Jackson here, “Man in the Mirror.” But the reality is that change is hard, and we’re going to talk about this a little more. The what side you can solve. You can do an analysis, and we can get everybody comfortable on the what side. But the who side is a journey. It’s a process, and it has to be continuously revisited. Yes, it’s challenging and tough, but when it’s done well, it’s what creates, and I think this is fair to say, the outcome we want. We don’t want folks simply to transition their business at the end of the day. We want them to transition well. How does this end up being a highlight? How does it become that key moment where they’re happy, they’re joyous, and they’re able to celebrate and move positively into the next chapter?
Kevin Cumbus
Brett, it’s funny. We’ve worked with three doctors under the age of 40 recently who sold their businesses for well over $12 million each. And I asked them, “What are you going to do with your life?” And they actually had a plan. They knew what they were going to do, and they were excited about it. I get texts from them now. They’re at national parks, enjoying their lives. Two of them are in RVs. They had a plan, and when the wire hit, they said, “Great, let’s go execute the plan.” They knew where they were going and what they were going to do. It wasn’t that they were going to toil away on the golf course for the next 60 years. They were going to get busy living. It was so fun to see them know their plan and execute it when the wire hit. And frankly, it allowed them to negotiate from more of a position of strength. It was so interesting to see that dynamic play out over the course of those three transactions.
Brett Miller
Is that the majority or the minority?
Kevin Cumbus
It’s a question we ask. I would say there are a couple of different types of doctors we work with. There are those who are absolutely done with their careers and are willing to work post-sale for three to five years, and they’re looking to maximize value. That group knows they’re on the glide path to retirement. Then there’s the younger group, let’s call it 50 and younger, who still have a lot of opportunity ahead of them. Of those, I don’t know, maybe 60% really know what they want to do, and 40% are still trying to figure it out, but they feel like they want to capitalize on this unique market we’re seeing and take some chips off the table. They still have a job post-sale, so they still have employment and purpose, but they haven’t quite figured out what they’re going to do if and when they ever leave the practice. And then there’s the great middle, and that’s where it really gets interesting, because they have all the wisdom and they’re kind of sitting in the catbird seat. They can choose to exit if they’ve done their retirement planning correctly, or they can leverage that wisdom through growth and scale by partnering with the right group. So, to be candid with you, it’s a grab bag.
Brett Miller
Absolutely. And I think that fits with what we see, once again going back to the Exit Planning Institute’s State of Owner Readiness research. I’m going to explain this statistic further, but would you believe that 12 months post-close, 75% of business owners regret selling their business?
Kevin Cumbus
That’s not our clients’ experience. Why is that so?
Brett Miller
I believe it’s indicative of what we’re about to cover. Go back to the previous point: the majority of business owners have no post-transaction game plan. They’re so focused on the business that they say, “Oh yeah, I’ll retire. I’ll play golf. I’ll travel.” They’re speaking in hyperbole. I think the reality is that they get to the other side of a transaction, and once that adrenaline wears off, they’re a bit stuck and lost. So, to the example you were just describing, more and more folks are approaching this in a positive way, and I’m glad we’re seeing positive traction in this conversation. I’m glad to see books like Die With Zero and From Strength to Strength. In a great way, there are plenty of emerging resources that are helping people think beyond the sale and ask not necessarily, “What am I moving from?” but “What am I moving to?”
And Kevin, I also tip my hat to you and your team for saying, “This is a key part of the conversation. We need to discuss both the who and the what, so we can make sure that as you approach this transaction, it’s right for you.” Because we want to expand and grow that 25%. We want successful, happy business owners and successful, happy post-business owners.
Kevin Cumbus
What we talk about here is that we only want clients to exit when they are ready, and that can mean a lot of the things we’re discussing today. But look, we’re also playing a long game here at TUSK. We’re not going anywhere. When our clients are ready, we’re ready to serve them, because ultimately, we just want to create referrals for life, like you do. I’m happy to say that everyone we’ve worked with is in that camp, and that’s what gives me the most pride about being involved in this business.
Brett Miller
As you should be, Kevin, because from my perspective, you and the team at TUSK are in the minority. I’m hoping this permeates and spreads to more folks in the industry, because it’s the right thing to do, and it’s creating the right conversation.
Kevin Cumbus
I’m afraid you’re right. But all right, let’s move on.
Brett Miller
So let’s drill down here for a minute. How does this concept actually start to manifest itself, and where can we help, especially for the viewers here this evening, as they really start to dive into their own businesses? You have to split off into parallel paths, because what we have to create is a dual inflection point. One is: Is the business attractive and ready? Kevin, that’s a lot of what you, your team, and several of our other industry partners are really focused on: getting the business ready. Putting on some lipstick, getting the KPIs and the financial statements in order.
Kevin Cumbus
Well, it’s really just preparing the right story. It’s making sure we understand whether there are any skeletons in the closet, so we can identify them, know what they are, and have a solution for them. If there are any blips in the income statement, we’re prepared to speak to them. I wouldn’t call it lipstick so much as understanding and preparation.
Brett Miller
Fair point. Very good. The second is: What is the story you’re telling yourself? Are you personally and financially ready? Are you going to be the seller who, as you mentioned a minute ago, is able to go in knowing where they stand financially, knowing their key non-negotiables, and knowing where they want to be, so they can move through the transaction with confidence? Rather than having to get up to speed in the middle of the transaction and potentially having that 11th-hour moment of, “I can’t do this, because I don’t know where I stand.”
Kevin Cumbus
We’ve had the privilege of working with some clients who have worked with you for many, many years, and I’ll just tell you, it’s a different experience when folks know whether the proceeds from the sale of their business are the linchpin or the victory lap for their retirement savings. When they know that, and they know what they need to make it work, we go out to market, bring all these buyers in, pit them against one another, and tune up their offers to peak valuation. Then they get the privilege of choosing the right partner, not just the top dollar. The ones who don’t know what their future looks like haven’t done the work on the front end to understand what they need to achieve financial independence for the long run.
Brett Miller
I have a great little story on that exact subject, Kevin. Earlier this year, I took a phone call from a gentleman I’d known for many years. Sadly, the previous time I had spoken with him was about five years ago. At that time, he was working with his father, who was also a dentist but was in the late stages of dementia and Alzheimer’s. We were working on some family planning, and unfortunately, his dad passed away. So a few years later, I get a call from this gentleman. His name is Billy. And Billy said, “Hey, Brett, this year’s the year.” This was January of 2023. “This year’s the year. I’m ready to sell my business.” I said, “Great, Billy. Good to hear from you. If memory serves me correctly, you’ve got a thriving practice. How’s the family?” “Everybody’s good. The kids are about to go off to college.” “That’s wonderful.” So we were just catching up, and I said, “Hey, Billy, help me understand. Share with me a little bit about your decision process. You mentioned now’s the time. Talk to me about that.” In my mind, I was thinking he’d say, “I’ve got a buyer,” or, “I’m being cognizant of family medical history.”
No, it wasn’t either of those. It was, “I have $5 million in the account. That was always the number in my head. I’m ready to sell my business.” I said, “Awesome. That’s quite an accomplishment.” Then I said, “Hold on a minute. Is that enough?” You know how, in the middle of a conversation, you can tell when you’ve asked a question someone wasn’t expecting? You catch them off guard, their natural defense mechanism kicks in, and they start backing up a little. He said, “Well, you know…” And I said, “Hey, Billy, no pressure, by the way, and no judgment. Selling your business is probably the single largest, most financially important transaction you’ll ever do. You don’t get to do it over, and there’s a lot at stake here. Tell you what: Can we do an analysis? Five million may be the right number, but what would it mean for you, Billy, if we could prove it was enough? Or better yet, if it wasn’t, what you still had to accomplish?” And you could hear that audible exhale through the phone, like, “Yes, that was the reason I called you. I didn’t know how to ask that question.”
That’s really the first step here. As we’re contemplating the idea that exit planning is present tense, and unlocking our financial freedom, well, you can’t unlock your financial freedom if you don’t know where you stand. So step number one in financial readiness is very simple. What do you have today? What does your net worth statement look like, compared to what you’ll actually need tomorrow? What are your future needs? How much in savings, diversified investments, rollover equity, and continued employment post-transaction? Then you can start to ask the question: How will the transaction provide what you need to close that gap?
Interestingly enough, we do a fun exercise, and I want to encourage everyone on the webcast tonight to think about this. It’s a simple scale of one to six, one being “I have no idea,” and six being “As I’m sitting here watching this webcast tonight, I have my most recent financial report in my hands, and I can definitively answer these questions.” You’ll notice there’s a reason it’s a scale of one to six: there’s no middle and no average. You have to be either above average or below average, a three or a four.
Kevin Cumbus
Brett, when I went through this with you, we’d done step one and step two. I’m not sitting on long-term exit plans. I’m a young man enjoying what I’m doing. But it’s interesting. When we completed steps one and two, it gave me so much knowledge. I thought, “Okay, I know where I am today.” And it actually enabled and empowered me to make decisions about my business from a different perspective. I think that was one of the biggest surprises and aha moments for me. Now that I’m armed with this knowledge, I look at my business differently. I’m curious: Am I unique in thinking that way, or is that something you see regularly? Unpack that a little bit for me.
Brett Miller
I’d love to know how many of the folks on the webcast tonight, across those three questions, come up with a score of 15 or greater, which means you averaged a five or a six in your responses, especially on the first two. If we take a step back, I think we did a show of hands at DMA, and it was a minority. Actually, I don’t have to guess. Go back to those statistics: 48% of business owners have done no planning, and 95% of business owners have done no personal planning for what they need in the next chapter. I think it’s the majority. And by the way, I don’t share that to be judgmental. I share it out of love and empathy, because this is an easy win. It’s a simple conversation to have. As you look forward in your life, do you want to wake up in 20 years and say, “Crap, I spent the last 20 years on autopilot”? Or is this the time?
I’m an aviation buff, and this is where you flip off the autopilot, take the yoke in one hand and the throttle in the other, and start going. All right, Kevin, to your point: now that I know where I stand, how do I start making decisions, both in the business and in my personal life, with that knowledge and understanding? Because it changes you. It absolutely changes the perspective with which you approach that conversation.
What that starts to look like, and we use the term “solving the wealth gap,” is this. If you were struggling to answer those questions, let’s dial this down for a minute. One, we need to be thinking ahead to where we’re headed and anticipating those future cash flows. This is where I think the Die With Zero exercise of bucketing out your life comes in. Not a bucket list, but bucketing out: What are the trips? What are the experiences? What are the memories you can achieve, by age and by health? Because as you head off into the horizon, there are a lot of unknowns. But what if we could plan for that 50th anniversary trip, taking the entire family on an African safari? Or providing a wedding fund, or college expenses for children and grandchildren? Or seeding the start of a business for your entrepreneurially minded high schooler? We have to think ahead.
In addition to thinking ahead, and this is the scary one for most people, we have to know what we’re actually spending. A quick lie detector test: write down on a piece of paper what you think you’re spending, cross it out, and multiply it by two. That’s probably a more accurate description of what you’re actually spending. That may mean pulling out your Amex statement and truly going through it with a pen and a highlighter. But the idea is to know what we’re actually spending, and what we’d love to achieve with our time and our wealth, so we can start to dial in.
And once again, this is for the business owner who’s saying, “Hey, I’m young. I’m entrepreneurial. I still want to grow.” Great. Where can you optimize savings and cash flow to get there? One of the concepts we all struggle with, and I personally struggle with this, is: What is enough? Enough is a feeling. It is not a number. But what a gift it is if you can actually figure out what enough is. Then you can start to ask, “How am I optimizing the business to create these memories and experiences?” And, for those closer to a transaction, “How do I use the closing cash, the rollover equity, and all of those aspects to fuel that third piece?” That is: How do we use the financial side to align our values and resources so we can actively focus on our purpose?
Proactively focus on creating memories. It gets a little cliché when people say, “Live your best life,” and by the way, I’m not talking about YOLO, “you only live once.” That’s not what I’m getting at here. But everybody has more agency in their life than they realize, whether they believe it or not. Most people just haven’t figured out how to take ownership of that agency and create the business, the personal life, and the values that align with their purpose. That’s actually why we’ve created an assessment, and I know we’ll talk a little more about this later, Kevin, to help people start to think through that. Because it’s hard to arrive at on your own. A lot of times, you need a guided conversation, not necessarily with someone telling you the answer, but with someone helping to ask the right questions. So we’ve created a bank of assessments covering business readiness, personal readiness, and, as we’ll talk about in just a minute, personal readiness as it relates to the next chapter.
One aspect of this is clearly dialing in the business and the financials and getting financially ready. But then comes the next part, and this picture is a bit ironic, because I think this is the customary vision of retirement: you sell your practice, you get this incredible wire transfer, and you drive off into the future. How long does that last? It depends on how many miles it is to your driveway. You pull into your garage, turn off your car, take a deep breath, and say, “Okay, what’s next?”
Here’s a fun little anecdote. A couple of years ago, I had a great client, an orthodontist here on the East Coast, who sold his practice. We were very intentional. I talked to him the day they sold the business. Everybody was high-fiving. It was a highlight day. He had taken our advice. He had planned, and he was ready. So I called him six months to the day later. We had communicated via email and chatted a couple of times, but this was the first key conversation six months later. The gentleman’s name is Frank. I said, “Hey, Frank, how’s retirement?” It was about 9:30 in the morning. And he said, “Brett, it’s amazing. It’s everything.” Then you could hear him stop himself, and he said, “Well, there is this one thing.” I said, “Really?” He said, “Brett, you’re married, aren’t you?” “Absolutely, Frank.” At that time, I’d been married about 10 years, so I said, “Yep, I’ve been married for 10 years.” He said, “Brett, I’ve been married for 40 years. And for those 40 years, I was also an orthodontist. Every morning, I had a routine. I got up, went out the door, went to the gym, got to the practice first thing, had a cup of coffee, and reviewed the financials and patient records to get ready for the day.” And he said, “Brett, I had this vision. I viewed retirement as waking up and having coffee with my amazing wife of 40 years on the back porch, and we would talk and read the paper.” About that time, he started laughing, and he said, “Brett, that lasted one day. I walked out with a cup of coffee in hand, ready to go, and my wife said, ‘Frank, you’ve had your routine for 40 years, and I’ve had mine. Just because you sold your business doesn’t mean I’m changing mine. You can’t talk to me until 10:00 a.m.'”
Yes, that’s a little bit of satire, but it’s true, because we all go through this process of expectation versus reality. You’ve dealt with this before. For those of you who are married, think back. Or those of you who have children, think back to the moment you found out you were expecting, and then the reality. Or the moment you got into dental school, or the moment you decided to become a business owner. There’s a very human element to this, the raw emotion, and we have to go through an evolution. It starts with anticipation, and that’s where most of us are 90% of our lives: “Oh man, retirement is going to be great. I’m going to do this. Once I buy that lake house, I’m going to do that.” We love it. Anticipation is wonderful. We get to plan, and there’s a lot of positive excitement. But then comes the reality of the ending. This is the J curve, for those of you who like to think in business models. There’s the ending, and Kevin, I think this is where a lot of business owners get stuck, because they haven’t done the planning. They haven’t taken the critical step of deciding who and what they want to be in retirement. They get stuck in the passage. They get in a rut. It’s a difficult time, navigating life without a rudder, and it takes time to get to that new normal. I think it takes more time than most people expect to get there.
So what we’ve encouraged folks to do is take a step back. This is another assessment, and by the way, we’ll be happy to share these assessments with anyone who’s on the webcast tonight. Think about it: this isn’t necessarily an all-inclusive list, but it’s a representative list of some areas of life where we dedicate time, energy, and resources. For most folks, they’ve clearly been in that top left quadrant. For the last however many years, you’ve been focused on your work, and your primary purpose has been to generate money: to support your family and to build toward your retirement dreams, what have you. But what happens when that work is no longer your primary objective, or you’ve retired outright? Your purpose evolves. And as you reach a place of sufficiency, ideally sufficiency with your money, how can you once again step back? That’s the context of the elements of life assessment. It asks, “All right, where am I today?” And as I look forward, are there things such as giving and philanthropy, of either time or money? Social: reconnecting with friends and creating new community connections? Leisure and travel? Personal growth: Is there a hobby or a skill? One of my favorite stories here is a surgeon client of mine who loves photography and plans to take courses and trips to pursue a hobby she just hasn’t been able to pursue up to this point. Then there’s family, health, and so on. I think, admittedly, all of us would say that one of the things we’ll do in retirement is probably get in better shape. “When I have a little more time, I need to get in the gym or go out and walk a little more.” These things do not happen if you’re on autopilot, though.
Kevin Cumbus
It’s really interesting to me to see you walk through this. Growing up, my dad was a stockbroker, and it was all about making sure we had enough nuts squirreled away for the winter. Dad recently retired. Like many folks in the healthcare world, he took COVID as an opportunity and said, “I’m 74 years old. I’m only working one day a month. What in the world am I doing?” So he jumped out of it, and he’s got purpose. When I call him these days, the first question I ask is, “Where are you?” Because I never know where he is. He’s in Iceland, he’s in London, he’s visiting friends and family all over the country. This is critical stuff, and most of the time you don’t get it unless you do what you said: pause, reflect, and think critically about it.
So I think for our viewers this evening, this is very likely a new message and a new, thoughtful way to begin thinking about what an exit looks like. When you go through this exercise, yes, obviously it’s about the money. Yes, obviously it’s about exiting at the top. But on the other side of that, we always talk about life after the trade from an operational perspective: What did the DSO say you’re going to do? Are you really only working 100 days? Are you really only working three days a week, or whatever it may be? But this is really the bigger purpose. You sell the business, the wire hits, you work three to five years, and then what’s next? It’s so critical to begin thinking about this in your thirties and your forties. It’s a present tense action item that everybody, in every industry, should be thinking about, at least revisiting annually and recalculating the math.
Brett Miller
Kevin, you and I have discussed this on a personal level. I do this quarterly. For those of you who use Traction and EOS, this actually informs my quarterly rocks. I’m 38 years old, and I would encourage it. It’s a missing piece of, at least, my industry. I think the financial advisory and wealth management industry is evolving so that, in five to 10 years, it will continue to be less and less about the technical and more and more about the role of the advisor. I’ll use the term: we are an industry of emerging life coaches, because we need to help.
I think this is probably a good way to segue, and I want to be respectful of everybody’s evening. Where does this all come together? It comes down to: What’s the prudent thing to do as a business owner who’s thinking about how to unlock financial freedom, regardless, once again, of what stage you’re in within the business ownership cycle? One, you have to know where you stand. You have to know where you stand to make prudent decisions. Two, start preparing yourself. As the old adage goes, the best day to start preparing was yesterday, and the second-best day is today. So prepare yourself financially. Understand the aspects of the wealth gap. Understand where you have deficiencies in your elements of life assessment so you can start to craft a plan. Build the team, and build the plan. Because our goal is that we don’t want folks simply saying, “Yeah, I transitioned.” Gosh, that just sounds awful. We want them to say, “No, I transitioned well. I optimized value, I did it on my terms, and I had the confidence and clarity to be all in on my next chapter.” That opportunity exists for everyone.
Kevin Cumbus
Let me bring this to a real-world example that we see all the time. Every doctor-founded, debt-funded group practice out there faces big, critical decisions when it has the opportunity to buy a new practice or build out centralized services. When you buy a new practice, you’re taking on additional personally guaranteed debt, and hopefully creating incremental EBITDA, which should translate into incremental enterprise value. And for those of you in scaling mode who are building out a leadership team and a headquarters or centralized service office, with a call center and revenue cycle management, what you’re actually doing is chewing into your existing EBITDA, thinking that it will give you the opportunity to grow more quickly.
But before you make a big business decision, and I can’t stress this enough, you have to know where you stand. Because it’s possible, and actually very likely, that you’re in a much better personal financial situation than you may realize. The value of your business today could be at a point where, if you went through a liquidity event or partnership event, you could be financially independent. Then you roll some equity, so you share in the upside of the future vision of the business, but you don’t own 100% of the risk. If I’ve learned one thing since starting my dental practice almost 10 years ago, it’s that owning dental practices in particular is risky. There’s a lot of human capital. Your most valuable assets walk out the door every single night at 5:00 p.m., and you sit there and pray they come back the next day. I think COVID taught us how hard it is. The Great Resignation taught us how hard it is. The risk is very, very real.
As I talk to entrepreneurs these days, I ask, “Why do you want to continue to take on incremental risk if you don’t have to?” If you know you’re there and you want to own it for one more year, great. But what you don’t have to do over that 12-month period is buy two more locations, sign two new leases, and sign two new personally guaranteed loans. You don’t have to do that, because you’re already there. Enjoy the cash flow for 12 more months, and then let’s take it to market. That’s really the crux of all of this: take on only as much risk as you have to in order to achieve the goals you’ve set for yourself, your family, and your estate.
Brett Miller
Absolutely. Well, Kevin, maybe to simplify that into a small statement: get out of autopilot. It’s time to move into intentional living and intentional planning, because that’s what will allow you to enjoy the journey. At the end of the day, that’s the goal. Enjoy the journey of this life, enjoy the journey of business ownership, and enjoy the journey of the transaction, if, when, and however it occurs, knowing that you’re doing it with confidence and clarity. So thank you so much for having me on this evening, and for allowing me to tell my side of the story.
Kevin Cumbus
I really appreciate your perspective. It’s a breath of fresh air, and I really wanted to make sure that folks who weren’t able to attend, who weren’t among the lucky 100 in the room, were able to hear the message, because I think it’s important. It’s been life-changing for me, and I suspect it’s been life-changing for those who’ve listened today.
As Brett and I have been working through these concepts, we asked ourselves, “What can we do? How can we help the broader dental community, the entrepreneurial community inside the business of dentistry, gain the insight and knowledge to figure out where they are today, and do the planning we should have done yesterday but can absolutely start tonight?” What we came up with is a pretty nifty tool. What we’re offering to the market today is something we’re calling a Transaction Readiness Assessment. With this tool, we’re going to take a deep look not just at the value of your business, like we’ve done for thousands of dentists nationwide, but also at your personal balance sheet and the assets you own. We’ll give you a view of what your entire balance sheet looks like, where financial independence gets achieved, and where you are in that journey, so you can actually enjoy the journey from where you are to that ultimate exit and ultimate financial independence.
We’re offering this complimentary to anyone on the webinar this evening. You can scan that QR code. We’re more than happy to spend the time with you. We’ll request a little bit of information from you, and in turn, we’ll offer a two-hour consultation where we’ll share the insights we’ve discovered and help you begin to think proactively today about what your future looks like.
Brett Miller
Kevin, thank you. I really appreciate the opportunity, and the chance to help create this knowledge and insight. Our goal is to create empowerment and better decision-making, and there’s no better way to do that than to help boost everybody’s confidence scores on those questions by going through this assessment. So we’d love the opportunity to dive in and help you take a step back and get a realistic view of where you are.
Kevin Cumbus
Well, it’s a pleasure to get to do these with you. I love it when there’s great collaboration between two teams with deep knowledge: your side on the personal balance sheet, and ours on the practice valuation. Marrying those two pieces of the puzzle together enables people to make great long-term strategic decisions. Brett, it’s been great to see you. I can’t believe we had to get to Denver to see each other. When we all settle in after the summer, I’ll look forward to seeing you for a cup of coffee real soon. To those of you who joined us tonight, thank you, thank you, thank you. It’s always a privilege. If you insert questions in the chat, we’ll get back to you within 24 hours. As always, enjoy the rest of your summer, and we’ll look forward to seeing you in the fall. Everybody have a great night. Thanks again.
Frequently Asked Questions
When should I start exit planning for my practice?
Now, even if you don’t plan to sell for years. The planning itself grows your practice’s value and protects you along the way. A complimentary TUSKVal from TUSK Practice Sales, is an easy place to start.
Should I keep growing my practice before I sell?
It depends on where you stand personally. Each new location usually means another lease and another personally guaranteed loan. If you’re already near financial independence, partnering with a buyer and rolling equity lets you keep some of the upside without carrying all of the risk. TUSK Practice Sales can help you weigh that decision with a valuation in hand.
How long does it take to sell a dental practice?
It depends on the practice and the path you choose. The size of the practice, the quality of its financials, the type of buyer, and how much diligence the buyer does all affect the timing. Owners who have their numbers and personal plans in order before going to market tend to move through the process with fewer surprises. TUSK’s team brings 125+ years of combined advisory experience to guiding owners through each stage.