Attorney Matthew W. Odgers is the owner and founder of Odgers Law Group, a dental specific law firm based in San Diego, California. The practice services dentists throughout California with an emphasis on practice purchase and sales, associate employment agreements, dental office leases, partnerships, and estate planning for dentists.
After graduating from Purdue University in three years with a Bachelor of Arts in Political Science, Matthew Odgers spent a year in Seoul, Korea teaching English. From there he moved back to San Diego where he started law school and developed a passion for healthcare law.
VIDEO - DUwHF #1244 - Matthew Odgers
AUDIO - DUwHF #1244 - Matthew Odgers
In 2013 Attorney Odgers decided to branch out and start up his own firm to better serve the legal business needs dentists. Odgers Law Group works regularly with young associates and new dentists by making sure they are legally protected as they pursue the career of their dreams. He regularly lectures on dental related topics at dental schools and through online CLE courses and Webinars.
In 2016 Odgers Law Group was named one of Entrepreneur Magazines top 365 best Businesses in the Nation and Attorney Matthew Odgers is recognized as a Rising Star by Superlawyers.
Howard: it's just a huge honor for me today to be podcast interviewing attorney Matthew Odgers and he'll tell you it's odd years like Dodgers but it's really odd years like the Arizona Diamondbacks so just remember that Mathew W odd years Arizona Diamondback Esquire he's the owner and founder of augers Law Group a dental specific law firm based in San Diego California the practice services dentist throughout California with an emphasis on practice purchase and sales associate employment agreements dental office leases partnerships and estate planning for Dennis after graduating from Purdue University in three years with a Bachelor arts and political science Matthew author spent a year in Seoul Korea teaching English from there he moved back to San Diego where he started law school and developed a passion for health care law in 2013 attorney Odgers decided to branch out and start up his own firm to better serve the legal business needs of dentists Oscar's law group works regularly with young associates and new dentists by making sure they are legally protected as they pursue the career of their dreams he regularly lectures on dental related topics at dental schools and through online CEO courses and webinars which I hope you pull one up on dental town we got 400 courses they've been viewed almost a million times Millennials love hour-long courses in 2016 archers law group was named one of Entrepreneur Magazine's top 365 best businesses nation and is recognized as a rising star by super layers it's really an honor to get you on the show and before you start I just want to remind my homies I know you just graduated from dental kindergarten school this is August 21st you've probably been a real-life dentist for two months now but remember when you graduated when you walk down that aisle they said congratulations you're a Doctor of Dental Surgery and you don't know anything about anything else in 32 years as a dentist they tell me their nightmare story the last one in Phoenix was on was running a thousand square foot in the roof started leaking turns out he's responsible for the leak and he had to repair the roof for 10,000 square foot of retail to get the water to quit and I'm like well man I'd go back to your attorney who signed off on this and chew him out no I didn't have an attorney oh I'm sorry I thought you told me you were a dentist but you're really an attorney so what is it about dentists and physicians who always think they can do their own law
Matthew Odgers: yeah well the biggest thing that we come across is not so much that they think that they can do their own law they just have a lot on their plate and taking the time out of their day when they're going to set up their practice or purchase to practice and actually meet with someone to explain all the finer points they think that there's a lot of trust that goes into working with the other party and working with some of the landlords when there really shouldn't be that trust all together and there's a certain level of trust that you can get to after a certain point but the decisions that dentists are making at that stage are gonna impact really the next 10 15 20 years of their life and so they're incredibly important decisions you're just got a lot on their plate and all that kind of thing III think that for some reason when you're a doctor you always think you're I tell my boys they said what is the dds mean I know
Howard: I didn't get a DDS I got a do e it means doctor of everything so I know absolutely everything everything in the universe was taught in dental school and my gosh how many nuances do you find each year all you do is dental law how many weird nuances do you see each year that you've never seen before oh action
Matthew Odgers: I pick up something new that that comes up and added to my list of things to be aware of and really you know getting through dental school is no small feat and Dennis are incredibly bright but there's something with just getting through a lot of these transactions that that really is what makes the attorney incredibly important they can foresee things that aren't necessarily intuitive even if you read through the agreement and understand everything about it
Howard: so when I go to McDonald's and I go there every day because I'm a health food fanatic you know basically I'm gonna order a hamburger a fry and a coke what is your hamburger fry Nikko when when a dentist calls you what are the top three or four reasons they're calling you weighted by volume
Matthew Odgers: yeah absolutely so if it's a new associate somebody who's a recent grad usually they're calling because they're gonna go work for somebody else and they asked if I can review their associate agreement and in doing that I dive in and I just make sure that the terms are fair and most importantly that the dentist understands what they're signing up for and then try and negotiate some of those terms
Howard: okay well I gotta stop you right there because this is why we started dental town so when I saw the internet came out I said the Internet can make it so that no dentists ever has to practice solo again and they are telling my young kids who graduated about four hours ago well we you know we have 500 offices across the nation and these are standard contracts and we don't negotiate and it is what it is so sign right there or we'll see you so they sign it and I'm like are you kidding me the fastest-growing business and Dentistry right now is dental recruiting agencies because these big dsos some of these DSOs on any given days ten percent of all their dental offices don't even have a dentist working so which one is it are they really desperate to get a dentist associate or or is it ironclad agreement if you go work for the big ones Heartland Aspen Pacific it just is what it is
Matthew Odgers: yeah so there is that certain element of it is what it is with some of the bigger DSO companies that are out there and really the role that I facilitate is explaining all the terms to the dentist and letting them know kind of what else is out there if they were to pursue a different company or you know to make sure that when they do sign that agreement that they're comfortable with everything that they're signing up for sometimes the big companies have quite a bit of leverage and you can get a little bit more compensation from time to time
Howard: so I mean drop names on that which big ones are not is there any that are just non negotiable I mean is Heartland ask for them Pacific non-negotiable
Matthew Odgers: no it depends it depends on should you try and negotiate some of the some of the terms such as compensation and who's gonna cover my practice insurance from time to time those can be negotiated but when the associate goes ahead and signs kind of a commitment letter or a letter of intent that the state's kind of what those main terms are those are usually the negotiable terms and then when they actually get the agreement the agreements less negotiable but with that said it's always good to have an attorney look at it and we have had success once in a blue moon negotiating depending on the need of the of the practice and of the bigger DSO if it's in an area where they're just having a hard time getting any associates we can identify that we can be a little bit more strict with be a little bit more hard-nosed with what we go in there and what we ask for so the main reason dentists are calling you is look at their associates agreement no that's just one of you that's one of the reasons the second is after they've become an associate and have a little bit of experience and they want to step into practice ownership they call to kind of discuss how that's going to look and see where how an attorney can help them throughout the practice purchase process okay and
Howard: you know you tell them you know the number one cause of divorce is getting married and we just don't get married and you know when you get married you got all these great things love and kids and family and it fails half the time now you're gonna marry a dentist without any of those glues you know you don't sleep together you don't have babies so I say did you get a prenuptial agreement on your marriage no well did you get a prenuptial agreement with your dentist associate contract that shows me a clear exit strategy in time of divorce and it's usually this general stuff like you can't if you leave you can't take my patience okay well he left and he took your patience now what and you're standing there in front of the judge and judge says well it just says you can't do it doesn't say what happens if you do it I mean if you told me that he was fined $1,000 per chart I didn't force it but you just you didn't you didn't tell me anything you just said don't do it so what are the nuances when you're trying to buy a get married to a dentist
Matthew Odgers: yeah well and that's a great point and that's we're working with an attorney is helpful because you want to kind of keep the goodwill going between either the buyer and the seller you don't want the dentist to go in there and have to fight tooth and nail for each one of these nuances and by bringing in a dental attorney who understands those they can lean on me or the dental attorney to kind of be the bad guy and look out for their best interest and dive in to get all those specifics but some of the specifics like you just mentioned are what to do with the time of split who's going to take the patients and whose property they are the patient charts and then what kind of recourse there is in the event that the associate who leaves tries to solicit some of those patients
Howard: okay I've lectured a thousand times so I before every break I said okay before we take a break anybody have any questions no one has a question then you do break and then get storm by 20 people who think they have this unique question that's never unique so there's already I already know my homies there's already people listen to me saying I don't wanna listen this podcast because I have I have a unique situation if one of my homies wants to contact Matthew W augurs do you take clients out of California or is this an only California play
Matthew Odgers: so it's mostly California there's a few states that I have relationships with other attorneys that I work with local counsel and that's Texas Nevada Arizona or again and Washington right now okay
Howard: so it's a it's California Texas Arizona what was the other one you said out of Nevada Oregon Oregon then Oregon and what Washington so the whole west coast really so your your West so if someone's in Cali Texas Arizona Nevada Oregon or Washington and they have a unique question how should they just stop and contact you now what what's the best way and what are the terms on that if they if they call you is it a one 900 number that charges $1 a minute or how does this work
Matthew Odgers: no not at all they called call my office and my secretary schedules a 15-minute free consult and a lot of times I'm able to answer those one-off questions and kind of point them in the right direction at no charge and what's that number you want to give it on there yeah it's eight five eight eight six nine one one one four
Howard: okay so if you have any question and by the way this isn't a commercial he didn't pay to get on he probably didn't you know who the hell I am I I begged him to come on the show not vice-versa you can call him at eight five eight eight six nine one one four but I encourage you just to listen to this show because you everyone calling has the same four questions so I want to go back on to that marriage deal so now she's an associate at a dental office and already some of these dentists are saying well if you're gonna work for me you know I want to buy in and I want to you to sign an associate contract now and she's like well you know I dated my husband for a year before we got to that that point and some of these dental some of these dental offices they they want commitment to buy in relationship at the start how do you do that how do you how do you get married on the first date I'm not a expert on tindr maybe you can fill me in
Matthew Odgers: absolutely the best bet is if you're on the associate side is to give yourself some outs if you do agree to do that usually we recommend working with somebody for at least a year if not two years to determine kind of what the internal practice culture is like see how the relationship is see if they kind of build up that deep trust between the owner during the associate and see if it's somebody that you do want to enter into that partnership or the marriage with or buy them out and be responsible for all the patients so usually we try and talk the talk our clients into giving it time and if they are getting pressured into signing an early associate agreement or an early Buy in agreement we want to figure out some potential outs so they can walk away if they choose to without sacrificing too much and
Howard: what are some possible outs yeah I get the Dodgers beat the Cardinals then you can just tear up the contract yeah so
Matthew Odgers: I am a Padres fan being from San Diego but but are you a Chargers fan that's what I want to know yeah that one's rough the second team yet but I'm still shopping around but yeah the some of those outs are having a short term to where it's either exercised with a Buy in within say two years or the associate has the right to walk away or a gradual pay increase that that tears it up that means that at some point the associates going to be making more money than other associates if the owner doctor doesn't let them buy in so those are two of a kind of the regular ones that we use and also just kind of keeping the lines of communication open between the owner doctor and the associate and seeing where the owner doctor is in their life and sometimes selling doctor they can say right now that I want to be out in two or three years and then before you know it that you were three years are up and they're not ready to give up the reins
Howard: ding ding ding ding ding did you just said that's what I've been saying for 32 years when a doctor says he's gonna retire at 65 and he's 62 he gets to 65 he thinks damn I got a hundred thousand miles on my car my spouse wants to redecorate the house I want to go on a vacation one of my children needs money they never ever you a heart it is to just wake up one morning and say I need no more new money for the rest of my life I mean that's and when people say only 3% of dentists can retire 65 well they could all retire a 65 but they couldn't retire a 65 saying I need no more new money because their lifestyle is vastly exceeds gravity so in fact I say it's the opposite problem I say you go get an associate chef the old man says he's gonna sell to you in two years two years go by and he doesn't want to sell it to you wants to be a partner so I'm so do what would percent of these partnerships if they date for a year or two they buy the practice what per centum in your experience or in your sphere still end up in divorce is it a small problem a large problem
Matthew Odgers: no it's a I'd say it's a it's a medium problem and going into it you kind of have an idea as to which one's may end up in divorce and which ones are committed based on kind of the personality types of both dentists but don't stop there tell us what these personalities what are the red flags yeah so some of the red flags are I mean it's really just the level of control in which the either party wants and the level of passiveness of the other party so sometimes you'll have somebody who's just incredibly domineering who's the owner doctor and the associate comes in and being new maybe a little bit more passive and in that scenario the associate doesn't identify exactly what they want and their expectations are high but the owner doctor doesn't necessarily know that and it just leads to a big blow up at some point so let me baby
Howard: let me give you a skill what I do so you go in there and these controlling domineering people there's one a small talk hey how's the wife the kid the dog yeah how's Taylor Murray doing and it's all good and great but then I come and say okay let's go to work and successful people are the one to have the highest number of uncomfortable conversations so I so cut out the small talk clap get their attention say okay let's go to work I we have a question supplies you say this should be 40% I mean that's a hundred percent variance so clap your hands get them out of small talk let's go to work call it work clap your hands let's go to work and talk about something uncomfortable so that we can be more successful down the road so the first red flag you said it was the level of control domineering versus passive what are other red flags would have what about if the selling dentist what would have no one in the office what did the dentist is work there 30 years and no one in the office has been there more than five years that high employee turnover does that mean most the employees left because son there was the owner was dysfunctional is that a red flag or not what are the other red flags that you're seeing I don't want to lead the way
Matthew Odgers: yeah absolutely so the potentially high turnover could be a personality thing or it could be a spending habit thing where the owner dentist just doesn't give raises or doesn't keep up with kind of the industry standard when it comes to payment so that's the other big red flag that I see is kind of spending habits of the two different parties and sometimes you'll have a owner who's very conservative or will go out and spend you know the full amount on everything and it's constantly working in a deficit so you want to make sure that fiscally both partners kind of have the same mindset when it comes to growth and spending and finances otherwise there's going to be issues with the kind of philosophy of the practice
Howard: and that that's the same as divorce true they say the most perfect marriages are when two savers get married you know when two spenders get married they're always going in wanting more raises and they're trying to buy some stock that's going to double because the issue is spending and so yeah so I would see as a huge flag year your dentist is a spender goes to the seminar always gets excited walks out of a seminar once about a cad/cam or a laser or some you drop a hunter grin because it'll make him feel good in a short-term and the other one says gosh look how many m OD composites I would have to do to pay for that damn thing I don't want to buy it so spending habits would be huge what are some other red flags
Matthew Odgers: and just personality types when you have that awkward conversation that you were talking about where you sit down and you say everybody let's talk about let's make each other uncomfortable and talk about the things we don't want to there's people who just can't do that it's not an air skillset and they're just unable and if that's the case that should be identified a little bit early on and maybe they should kind of go a different route than a partner than an associate buy an and potentially purchase a practice altogether so I think that that's kind of my key takeaway is getting to know the client and determining whether it's gonna be a good fit with their personality to do a buy-in after meeting the other the owner doctor or if it's not going to be a good fit then start looking for a practice that can have a quick transition period where they can step in and be the owner you know within three to six months and take everything over and not have to risk that divorce and so it's I identifying those personality types and kind of helping them go down the correct path
Howard: I'm going to ask you another question um a lot of them a lot of people tell me that they they don't want to deal with the business they just want to get a job and live happily ever after and I said okay well if that if that matches with dentists good then why don't we go find all the graduates from your dental school four years ago and they should all be working as an associate living happily ever after and every time I find someone five years out of school they've had five different associate jobs it doesn't matter if it's private or public doesn't matter if it's big Heartland or a little small office in Parsons do you see associate dentist and what percent of associates dentists say this is great I just come in and do dentistry no big deal and I just leave it all here at five o'clock versus how many em are like you know what the only way I'm gonna be happy is if I own this thing and do it my way where do you think the breakdown is
Matthew Odgers: yeah so the breakdown on a whole I couldn't speak to because the people that I see usually want to be practice owners and whether they're in their first stage of being an associate usually they're serious enough to where they'll reach out and talk to an attorney because they're going down the ownership route and they want to cultivate that relationship early on ok how many years out of school is this person usually
Howard: one to two one to two years out and are they more likely be boys or girls short fat tall skinny any other demographic or is it more girl the boy boy than girl it's about equal okay see that's another thing they keep saying oh these girls they just want to stay home and have a family it's like dude I graduate 32 years ago and those 20 girls in my class they all averaged a bigger more successful office than their male counterparts there almost all of them had a million-dollar practice so you're saying men and women are equal amount so you don't you don't buy and do the girls want to be associates DSOs
Matthew Odgers: no and I don't know statistically how that looks but I know that if you want your the most amount of flexibility to do what anything you want outside owning your own practice and kind of creating it in the way that works for you is the only way to do that you're not going to you may be able to find a boss that's going to allow that but if you have a bit or something like that it's going to be hard to get that boss to pivot with you
Howard: absolutely and in fact I think one of the business models that has improved yet is I'm just gonna own a bunch of dental office and have a bunch of dentists do all the dentistry I just want to know where all these dentists are because when I look at the associate chefs in private and paren brand public it looks like the average associates only lasting a year or two absolutely and I get that
Howard: I get that call maybe once a week from past clients we're looking for a good associate that doesn't want to own or that doesn't want to buy in and they're just very few and far between yeah it's a rare breed I've actually had more luck finding uh okay
Howard: so I'm in Arizona which is the only state which will accept your dental license from the other 49 states and it's always the same thing the my best luck my ten year doctor's that made me Bank it was always like you know what I did my practice I put my kids through college I'm done and I live in this frozen tundra called New Jersey Wisconsin North Dakota and my wife you know every time we go to Scottsdale she's we just want to retire in the Sun and just get a job and just and oh my gosh they got all the experience they know how to talk to people and by the way the one thing I want to take issue what you said is when you said they don't have that confrontational style so their their past and they just don't want to confront well dude you have to fix that because you're the same person you can't look in the patient's eyes and say I'm sorry dude you have eleven cavities and we need to do 11 fillings I so when you can't confront people then you can't sell dentistry and if you can't sell dentistry I don't want to die and have my five grandkids go to you and each one em has a cavity and you can't convince any of them to pull out their debit card and get it done and you need to learn how to confront people because people want to hear that they're beautiful they don't want to hear that they have ten cavities and gum disease and you need to learn how to be a real doctor which is to get a good diagnosis and treatment plan so with the patient you have ten cavities with the associate you're working for the beef I hear the most from associates that they finally say I'm forget I'm done is they know they're driving into work they got this big day they got you know some difficult cases and they get there and they get a tenth dental assistant they've never said they're like well where's my girl trustee well here's a temp yeah her name's Ella and say oh my god it's it's crazy so they are calling you a year or two out of school the ones that aren't calling you I know what they're thinking because they post on dental doubt anything and well I can't buy it practice I got two hundred and eighty seven thousand dollars of student loans no one's gonna loan me a dime so she's listening to you right now and she hates her associate job but she doesn't think she can buy an expensive practice in California what is the average practice going for in San Diego and how much student loan debt does she have before they say no dice
Matthew Odgers: yeah so Dentist banks love lending to dentists and it's been that way at least the last six or seven years and it's not like any other type of lending you know I think a lot of people dentists in particular view their ability to buy a practice as if it were their ability to go out and purchase a home but the banks look for different criteria when it comes to that so to answer your question the practice the average practice price that we work with is around seven hundred thousand they range from on the small in to two hundred thousand to the high-end I would say four million because that is the biggest practice we've done and the student loans that that this dentist has coming into it range anywhere from two hundred thousand to six hundred thousand and I've seen people get approved and get through it what the banks are looking closely at is the dentist's ability to replicate the cash flow of the practice after they purchase it so if the if the practice is doing seven hundred thousand dollars a year and the dentist has four hundred thousand and student loans the banks are going to look at do we think that this dentist is capable of keeping that seven hundred thousand dollar cash flow and with that is the dentist's going to be able to service all of their student loan debts any other financial debt that they have and still have enough of a profit to live on so it always surprises me any other industry somebody who's a year or two out of dental school wouldn't be able to get the loans that dentists are able to get so it's worth having that initial conversation with the banker and having them submit kind of the general information to see what you can be approved for
Howard: well when should she call you yeah so
Matthew Odgers: as early as possible I have a I have a client out here who called me a year before she graduated a doctor lisa donn and came into the office and sat down and just introduced herself and she's a year she graduated and has been practicing for a year and just opened up her own practice a huge success story but part of that was in order for a lot of dentists to be successful they kind of need a team of professionals who understand dentistry and the sooner they can build out that team of people who they can go to for advice the quicker they're going to be able to make moves and not all the professionals including myself I can't speak for others but are gonna charge the brand-new dentist give them a give them an hour's worth at their time to answer questions and put them on the right track a lot of the professionals are more interested in kind of the long game and saying I get it you're getting ready to graduate and when you do you're gonna be a perfect candidate to work with me but for right now let me just start educating you on the process and letting you know what types of things to look for and what types of things to avoid and when to actually call me which is for my services which is when you found a practice or when you're fed up of being an associate or when you need that associate agreement reviewed
Howard: you said something earlier but she might not understand why you said that you said that I'm banks loved dentists and so if you look at the SBA failure and charge off rates for the health care industry the lowest is veterinary services I mean veterinary sir number two Louis Nexus dentists then it goes a little higher with automatize than podiatrists then physical occupation speech therapist then physicians except for mental health and a really high one is mental health specialists and then the highest is chiropractic where you know they and even with chiropractors it's only three and a half percent failure rate and dentists or less than a one percent failure rate so explain to her why dentists have an industry charge offer free under 1% and which is why they can be more selective about where they loan their money why do you did us have a less than 1% charge off Rita banks yeah
Matthew Odgers: so after the transition there's general provided that it's done right there's generally a very small drop off and patience when you purchase a practice you're buying the goodwill of the practice and when done right the seller is gonna step in and help with that transition and the amount of patient drop-off should be you know as low as 2 to 3 percent and on the high end maybe 10 to 11 percent and so with that said when the dentist is when the bank's looking at should we land they feel pretty good that the amount of cash that the business is going to continue to generate is going to keep going and being it be able to service that loan and then they have the history to support it those numbers you just brought up show that historically dentists don't default when they go and purchase a business the business is able to fully support them provided they do it correctly
Howard: so the you're saying the average dental practice is song about
Matthew Odgers: 750 750 thousand yeah that we're working with and that's a yeah absolutely yeah and so once you get once you
Howard: build your practice to where it's 2 3 4 million you basically have an illiquid asset don't you you just have to it's a little bit more difficult to find the right buyer but there are buyers out there for that and with those be DSOs or who's the buyers who provides liquidity to a 2 3 4 million dollar practice
Matthew Odgers: so there's dentists you've got a market a little bit wider than just in your local town when you have a practice of that size the last practice we did in the in that range in Southern California dentists from New Jersey came out and purchased it and it was on the market for a little bit longer than the other practices but he stepped in and he's doing the exact same number so he's doing excellent but with that said the DSO was there there's no real cookie cutter approach with what they're looking for and the two three million dollar practice they may be open to that provided that they could implement their systems if the practice has gotten up to that level because the dentist is just a rock star and when you remove that dentist from the equation the production is going to drop off you know that's something that that may hurt the purchase price or may require the selling dentist to stay on for but there is that kind of sweet spot and there's different banks who land on who kind of have their different sweet spots as far as price goes you go to some banks and they only want to lend on a hundred under five hundred thousand and then others only want to talk to you if the practice is over a million so if you go to a bank and get turned down that doesn't mean that everything's gonna turn you down it just odds do with that banks internal portfolio and what their risk tolerance is at that moment
Howard: who do you think is I'm doing the most lending in dentistry now
Matthew Odgers: so that's a good question nationally I'm not sure we work a lot with Wells Fargo with Bank of America with Lynde ever they've been doing some good deals lately and then there's banks that kind of come and go so every time a transaction comes up I reach out to kind of my net network of dental professionals dental CPAs and things like that and I'll just throw the question out there and say who's kind of given the best rate right now or who's being the most aggressive and then I recommend that my clients go out and talk to an interview two or three of the banks and have them kind of compete against each other to see what the rate is and what the terms are and
Howard: what kind of interest rates and links of loans are you seeing what's the bread-and-butter
Matthew Odgers: so the interest rates just dropped I guess what two weeks ago now and I talked to a banker that I've worked with it Wells Fargo and it was sub-4 it was like 3.95 or something which is it hasn't been that low and I mean they've been low for the last couple years but that's incredibly low so I would say four to five percent interest rate on a practice purchase in California is kind of what you can expect now and most of the loans are a 10-year term and you need a lease that's going to at least cover you during that ten years and they some of the banks will require that you do your merchant services through them each individual bank is going to have their own list checklist of requirements on the deal so it's good to get that checklist as early as possible so if any of those are a deal-breaker for you can break off and not work with them all right
Howard: this is just amazing information so um so purchasing a practice you're talking about the associate wanting to purchase the practice and then getting financed and all that stuff what would you say to the other side of the table the old the old lady selling the practice what should she be thinking about when she saw your practice when should she call you
Matthew Odgers: so the perfect scenario is three years prior to selling is when they want to start thinking about it because the valuation generally the valuations done on the prior three years financials and they can start kind of making a conscious effort to make sure that those things don't drop and that there's no things there's nothing that comes up during that time that's gonna either make the practice less marketable or decrease the price so kind of three years out and that's not always doable we have we get calls from people who have a health issue or something and they need the practice sold yesterday and we can accommodate that as well the earlier the better though because we've got a little bit more flexibility and maneuvering with how to do it and then how to find the right buyer
Howard: so right now it's August 2019 is it a buyers market or a seller's market mean is there more people trying to sell a practice and there are buying it or there more people trying to buy than I mean so who owns this market yeah
Matthew Odgers: so right now I'm seeing a lot more sellers there are a lot of buyers that are coming up but a lot of the baby boomers that that were trying to retire maybe in 2008 2010 when the economy crashed they finally kind of got their practices back up and running and got their numbers right and the purchase prices are high enough right now to where they're finally looking to actually take that retirement so they're starting to step away more and more and there's quite a bit of practices on the market for sale
Howard: and ISM I know they get sick of hearing this but is it I always hear that it's harder to sell a rural practice in an urban practice because the one thing millenials all have in common is they want to live in San Diego they want to see the lamp what is it the lamppost district yes gas lamp the gas lamp district they want to go to a Padres game is it is a dental office far more liquid if you can see the Padre Stadium than it is once you're an hour and a half outside of San Diego yeah
Matthew Odgers: that's a tough question for me because I'm usually involved after they're after a buyer is found to practice and I've done just as many transactions in the rural parts of California and San Diego has some of the more dense areas but and I think it's just kind of a different personality type I know in the rural areas its more common for there to be an associate by EM so an associate who works there and maybe lives in the area ends up buying out the selling doctor and that does impact the marketability and sellers ability to play hardball with some of the terms if you know there's one buyer one potential buyer so there is some benefit out there in that
Howard: you know as a dentist we all have our perfect patients the person just comes in and say you know you tell them they got five counties they say you're the dentist just do what you do if you were me you don't I mean who are you who are your favorite dental clients or what do the clients that do annoy you for instance they say they want to buy Jonny's practice but they already talked to him and they already wrote down a price and put things in writing I mean if somebody sees a dental office for sale should they call that dentist first or should they call you what's involved with a with an an LOI a letter of intent when what do they do that you just said there thank God I wish they would not have done that yeah so
Matthew Odgers: I'm usually okay with them reaching out the dentist or whoever the broker is the of the seller first and just kind of opening up that conversation just to see if it's a good fit for them you know get their foot in the door and see if they like the personality of the seller see if they like the location if the equipment looks okay if the interior is what they have in mind whether that be needs upgrading or has just been upgraded so I'm okay with them taking that step and gathering information I wouldn't recommend doing any of the negotiation even if they think that they're negotiating a killer price on the practice there are so many moving parts in a practice purchase or a practice sale that if you go in there and you beat the seller down on price and it comes way down but then the sellers not going to budge on anything else that can really hurt the negotiations and there's some deal points that are more important than the rock-bottom price for the success of the practice so to answer your question the perfect client is somebody who comes to me they may have a practice in mind that they want to purchase where they might have a couple and there have the personality type to look holistically and say this these terms right here aren't necessarily ideal but we're getting it we're killing it in these terms and we look at the whole picture I'm getting an overall really good deal and the harder clients are ones who get stuck on on a minor term that you know isn't necessarily material like who's going to pay for transition letter in the scope of a $700,000 practice the transition letter might be 500 or a thousand dollars to be mailed out and when they get stuck on that it can sour the goodwill and hurt the overall transaction for them so it's really looking at it holistically and saying you're right this isn't ideal the buyer and the seller should be splitting this this transition letter fee but with that said for whatever reason the seller is putting their foot down here and let's try and make up for it somewhere else so that you can be benefited that the seller is going to be ok with
Howard: another thing like I know I know my homies um the Kentucky Dental Association last week and young kids a lot of them think that they maybe before they talk to some once on their practice or talk to a lawyer like you transition brags that they need to figure out if they should get an SBA loan should they talk to their banker first when you're buying and selling a practice what percent of these are SBA loans
Matthew Odgers: yeah so it's I would say maybe 30 percent or SBA loans that's it only 30 yeah its more common for there to be a traditional loan and that might be the network that I'm plugged in with I'm not entirely sure with that but I know in other practice areas the SBA loans are a lot more common and in California the other part of it is that the lot of the dentists own the real estate associated with their office and they'll try and purchase the real estate coupled with coupled with practice so they'll purchase the standalone office with the practice and I think that from my understanding there's a complication with SBA on that there's
Howard: a complication with SBA buying the real estate with the practice let's just address that because humans are very territorial I mean you know every time I let my dog out in the front yard the first thing he does it goes and marks his territory all around the yard so many I'm gonna their own land and building but so what's the fortune 500 company says we're another real-estate business I don't want to own all these Pizza Hut's I mean I just want to rent do you think it's a wise financial decision to own all your real estate like Walmart does like Kroger does like somebody you know those people or you think man just put all your money into a great equipment and a CBC t don't own the land and building so where's your gut on owning real estate or not for a young dentist
Matthew Odgers: yeah so the real estate purchase is the right that's a tough question especially for an attorney because my gut is when it's feasible I'm all for it I like the idea of them owning the land and owning the building and then also down the road if they decide to sell their practice they can have kind of that recurring revenue from dentists that they sell it to so there's a benefit there and then also from a tax perspective depending on what kind of income they're generating from both it gives them a little bit more flexibility with how they allocate the rent to themselves how they're paying the rent to themselves how they're depreciating some of the assets and things like that so there is a little bit more flexibility but the huge caveat there is it has to be the right deal it's not kind of across the board and some of these dental condos can come with a lot of stipulations or office condos where you pay into an HOA or something along those lines the assessments can just be so detrimental and if you're a tenant you can negotiate around that potentially but when you're the owner that's the bottom line kind of Falls with you so it's a case-by-case in the rural areas I see it a lot more then and then a more dense densely populated areas
Howard: I know so many dentists who when they sold their pride went to go sell their practice well some of them are on California Bayou like in Downey where this okay well the practice burger guy says oh my pride is worth 750 there's some real developer says dude I'll give you a two million dollars for your building today and they sell it and then they call you crying I mean not crying but really sad because the first thing developer did is just bulldoze a dental office he didn't care about anything inside it they were they were ready to take a one-story unit to a four-story unit and bulldoze is so man in a fast-growing market I just can't tell you how many like I bought my land you know I I bought it in 87 if I told my kids what I bought that land for they wouldn't even believe me I mean so so I guess it depends if your real estates exploding it'd probably be good to get in I know I know Sam Walton explained it very carefully in his book and he just couldn't he just he wanted control he didn't want to have all these variables over his head on what the landlord was gonna do and one landlord almost caused him and Helen to go under and after that happened they swore they would never ever deal with the landlord again so I'm so so go ahead and
Matthew Odgers: going back to the landlord that is I would say that the deals that don't go through kind of after the letter of intent stage it's usually one of two reasons one is that the lending falls through the bank finds something and the lending doesn't happen and the other is that the landlord won't agree to the bank's terms on the loan and so you do lose an element of control when you're working with the landlord but the you give a perfect example of the downside if you if you do own the property and you sell it and that you lose kind of the asset of your practice nice um
Howard: so um let's see the questions you're next so I'm what so then before they're gonna buy a practice they need to know if that if I buy your practice I need the land and you're leasing I need the landlord to assign the lease to me yeah and what if what if I buy your practice for seven $50,000 and the lease comes up in a year and I can't get this landlord to commit to renewing the lease for another five or ten years I may be buying a practice that a year from now has to move yeah and where and where I've seen that play out again is when you go to these big strip so not not a strip center you know I'm talking about anchors you know something it's got a big grocery store in there and that the dentists at the very end they live happily ever after but if you're right next to the Beast if your dental office is right next to Kroger's fries or inky dinky and then all of a sudden that big monster fries decide you know what we wouldn't expand our or whatever department our vegetable Department and that means consuming your dental office well the landlord's gonna you lose so I'm so talk about the lease pitfalls and what kind of lease signage and all that stuff yeah
Matthew Odgers: so the first thing is that we would probably call the transaction off if they weren't able to secure at least a five-year term initially and ideally one to two five-year options to renew on the location and we figure that out we try and determine that as early as possible whether the landlords open to that and we do have a pretty high success rate of getting landlords to be open unless they have another idea for the building altogether like they're gonna like you said plow it down or something like that but we want to figure that out as early as possible in the process and if that's the case either adjust the purchase price or find another practice and then as far as putting your practice and in a kind of a strip mall or a retail shopping center with a Albertsons or something like that with a big anchor tenant those are notoriously difficult to negotiate because the brokers on the other end they just have such bargaining power because their anchor tenant pays so much of the entire center's cost that they're their leverage is just you know you're never going to compete with them as a as a small business so I would say anytime you're looking at a practice or a startup and a shopping center you really want to make sure that you understand what all the risks are associated with that and whether you're going to be the exclusive dentist in that area what the foot traffic is what the what their rights to relocate you are and that's something that's missed a lot but a lot of these landlords will put in a provision that says if our anchor tenant decides to expand their produce department and shut and move into your space we have the right to move you from your space to another comparable space but you want to make sure that they cover the cost of your entire build-out because the other space probably isn't built out to be a dental office so there's things like that that can they can absolutely break a practice and the value of the dental practice is so closely tied to the location and your ability to lease when you move locations if you move locations after you've had a long successful practice it can be done without a big patient drop-off but if you're the new dentist who just purchased something and now you're moving I would be I think that there's a huge risk that you're gonna have a big drop-off of patients because it's no longer convenient it's no longer the same old office it's a new dentist and a new location and that's the security that you're buying into the goodwill of that patient base and a consistent cash flow
Howard: do you also get into like what other I mean what glove dentist and so I mean you know I did a molar endo yesterday I've always thinking okay I bite your practice in here and you did lousy endo and every time something fails you know do I got a suck it up buttercup and redo it warrant here for free are you gonna pay for it is how many of those types of considerations are you diving into
Matthew Odgers: oh all of them and those all come in with the purchase agreement so Oh you'd be kind of a timeline the client reaches out to me if they're a buyer and we put together a letter of intent they submit that to the seller and the seller takes that letter of intent and if they agree to it great and we start the process or we negotiate some of those terms from there we'll set up entity so in California it's a professional corporation for the dentist other states it can be a professional LLC but something to limit the dentist's personal liability and so we've got the LOI done we've got their entity set up and then we start negotiating the lease and the purchase agreement believing we want to start negotiating both of those as early as possible so that there's no time crunch and during that time also working with the bank to see what you're qualified what the dentist is qualified for and what they're able to be approved for it
Howard: so are they score they mostly all qualified approved for about the same amount I mean Orser what is what is the big outlier as to why I got approved for more than you yeah
Matthew Odgers: so it does vary personal credit is a big deal student loans do have a little bit of weight there as well but the big one that we see is what do you purchase first your practice or your home and especially in California where if you get out of dental school when you're making good money as an associate and you go and buy a five or seven hundred thousand dollar home your ability to to pay a practice debt or a loan is going to be impacted by that so that's really the big variable that's gonna that's gonna change the bank's willingness to lend okay so
Howard: so what what what is the difference in good credit and bad credit are you saying I mean what happened
Matthew Odgers: so as far as oh it's just a dentist personal credit if they do take that into account so if a dentist has you know under I don't know exactly what the numbers are but I would say under a 650 you know they'd be that that would be a point against them with that they could be lent
Howard: okay what if they fell in love with somebody in their class and now you know two kids got married and they each had 284 and then one of them's best idea was to go onto ortho school for another three years and now they're married and together they have a million dollars in student loans are they just gonna be working at Aspen until they're 103 or when when could they get financing
Matthew Odgers: yeah not necessarily and there's enough banks out there with different programs they can treat that differently so you know you're right they do have that million dollars and debt but they also have double the earning potential and there may be a bank out there that looks at their earning potential and says we have two dentists here that if one of them goes out on disability the other one can step in and work which a single dentist family doesn't have so there's there's factors like that they come into play but I think the moral of the story is is that it's worth going through the legwork with the bank that you shouldn't count yourself out prior to talking to the bank and banks are usually pretty good at saying no this deal is not right for me but here's another bank that I think would be able to do the deal for you and then at some point you whenever I do that it mean
Howard s I don't like the patient or the dentist I'm referring them to it's like when I have a real P ITA I'm like I got a dentist's for you he's so much better than me oh my god go see my friend is that the way the bankers are or
Matthew Odgers: this is more a core competency thing it's more a core competency thing they each keep their own portfolios risk tolerance and so if if one bank just did ten deals that were each two million dollar practices they might not have any risk four practices over a million dollars for the rest of the year until those practices start paying off and so when they get a practice a month ago it would have been a perfect deal for them but today it's no longer a perfect deal because their portfolio has shifted so it's constantly changing and the bankers are aware of that and they're willing to kind of pass it around and they've kind of got those relationships built out but I've never seen a banker turn down business they make plenty of money on the loans so regardless of how difficult the decline is to work with
Howard: Oh interesting and I you know I've been talking all about the old guy selling the dental office to the young guy but when should these young kids think about estate planning you know you're big into estate planning - yeah when you go to school you're 25 I mean when do you what do you need to start thinking about that subject
Matthew Odgers: yeah so the two primary times are once you have children and then once you own real estate that's what I'd say it's absolutely important regardless of your of the amount of assets that you have and the reason being is that if you don't have a valid revocable trust in place then you're gonna have to go through probate and it's gonna be a nightmare and with dentists in particular if you own your own corporation you want to figure out what the strategy is for transferring the value of that to your spouse if they're a non dentist because it's not like it's not like having a hardware store or something like that where your spouse can just take over the store and start working it and continue to make money for the rest of their life with the business you built as a dentist if something happens to you if you become disabled or if you pass away your spouse can't take over that business unless they're licensed dentists so you want to come up with some sort of kind of succession plan or strategy to strategy to make sure your family is okay in the event that something happens to you
Howard: huh interesting oh my gosh I can't believe we already went for an hour um something out what was it like in Seoul Korea you're at it you graduated from Purdue out there in a Hoosier Ville Indiana halfway between Indianapolis and Chicago by the way they did find out what a Hoosier comes from did you hear that on NPR was it the people walking through the cornfield that's what I had heard no it was serious not even with that when they were building America's railroads they were laying down five miles of track a day so when I'm going through your town it doesn't make any sense to get to know ya we're on so you would just say you're one of somebody's men and sure enough the man named Hoosier laid a railroad all the way across Indiana and would have been totally customary if someone said who are you you just said I'm one of Hoosiers boys but in saying that yeah
Matthew Odgers: that's a much better story than then what I had heard I heard it was from people coming through the cornfields and person on the porch yelling
Howard: who's their daddy but but the but what would you what was it takeaway in in Seoul Korea there's so many major dental companies there yeah what was that like a year at apart do their
Matthew Odgers: their technology there is so far advanced with everything that you do and this was back in I guess 2006 and they were just kind of rolling out Wi-Fi for everybody and all of that but I loved Korea it was a total culture shock for me growing up in San Diego going out there which I absolutely loved and loved the people they were they were fun I love the people that I worked with there was just all around a cool experience and when the year was up I was contemplating staying for another year but decided it's probably time to come back and start real life yeah
Howard: I loved South Korea on that is amazing and when you're out there lecturing to dental students and you're doing your lectures your webinars what what are the main topics that you're that you're lecturing on
Matthew Odgers: yeah so we the the big one is what to do after you graduate and break that down into going out and working as an associate and what to ask for with it as an associate agreement and then also at what point are you ready to purchase your practice so that's one of the lectures that we do and then another one is the actual practice purchase process the timeline and pitfalls to avoid and things to request throughout that process s so we dive into the purchase agreement the lease and then and then another one is just the general estate planning for dentists those are kind of a big area
Howard: and the general estate planning I mean she's got so many things on her table she you say she can comfortably just wait until she's ready to have a baby and if you're still single you don't have a baby you got other other buyers to put out is the estate planning can go on the back burner
Matthew Odgers: so you can't ask an attorney that question because there's a million scenarios where that's the absolute how did Prince an Aretha Franklin both died without a will I mean what who is on their management team that thought Aretha yeah you need a will well and I think that's part of the problem is it's never really the right time to do it you know when do you want to sit down and talk about your death and so people just push it off and push it off and then before you know it their prints or Aretha and/or I think Marilyn Monroe was another big one barley
Howard: Bob Marley yes against the machine but the machine ate all of his wealth in legal fees and his kids got nothing I mean um it's just it's again it's a social animal wants to be nice wants to be friend they don't want to have uncomfortable situations and I almost think the more sociopathic you are the better you would be as like say a general and war because I mean you do d-day you knew d-day was gonna be a bloodbath so when you're drawing up the plan and that didn't bother you you're probably a good general but I wouldn't want to be on your team and I mean you know you just walk into work and everybody wants to ask you know how was your breakfast in Psych breakfast how was you know so again yeah let's go to world let's go to work let's talk about something uncomfortable and I I'm sorry that you heard it first on dentistry and sensor but everyone listening to this podcast eventually will die in fact I've already got five people that I've interviewed no longer here on the show I mean well I did Carl mesh Bob Gibson you know there I'm gonna read five people on this show that are no longer with us if you don't have a will if you don't then you're gonna turn it over to probate so just get used to talking about uncomfortable things because it will make you a better dentist because the best dentists in the world are the ones that can look in your eye and say I know you want to go to Disneyland I know you want a new car I know you want all this stuff but look the average American is gonna buy 13 new cars in their lifetime between 16 and 74 that average price of a new car is thirty three thousand five hundred and Buddy you know what your next car is it's gonna be your mouth because you need you have seven fillings eight crowns three implants a sinus lift you know blah blah blah blah blah and what you really need to do is just whatever the hell you're driving just drive it for an extra year or two because you need to get your mouth all fixed up and then I look out of these dentists and one out of every twenty dentist does a ten twenty thirty thousand dollar case every Friday their whole career and then the other five dentists on the same corner will never do one in their entire career and blame the whole thing on oh it's the economy it's the trade deficit Obama got blamed for everything I mean when Obama's president if you woke up constipate you say how did Obama do that I mean I mean they blame it on everything except Michael Jackson's favorite song the man in the mirror you know you know why you don't do you know why you practice 40 years and never sold an American who bought 13 new cars one time did you redo their mouth because you won't talk about anything uncomfortable and lawyers lawyers are about being uncomfortable because they're gonna tell you every single thing that can possibly go wrong and you're a dentist you're not attorney and expertise I'm not and when you feign expertise it's like my boys I told him don't ever lie to your dad becauseit's not about lying to your dad it's about lying to yourself you know just don't lie to yourself you have a problem and don't sugarcoat it and who else is gonna be your number one fan advisor to run this by so find an attorney get a relationship you're a dentist you're not an attorney and when you go meet that attorney don't ask him if he's got a dog or a cat or why the hell he chose to move back from Tikrit and go to San Diego Chargers what he knew the Oakland Raiders were not in San Diego I mean I don't even know what you were thinking but I vote by the way that you just become an Arizona Cardinals fan we got it there pretty high list we got a great team it's only a six-hour drive by the way everybody that lives in Phoenix their fantasy is the live where you live and every time I go to San Diego I'm just like why do I live and it's a hundred and fifteen today what is it in San Diego oh it's it's not bad they could be by 70s oh my god yeah me and in fact even the president of our company Lord's lousy she's always saying white why do we live in the desert of course this time of year of August you know you're you've had enough but hey I'm seriously thank you so much Matthew Matthew W augers I got it I gotta ask you this they see that esq Esquire are these kids don't even know what a Esquire is they CJD what is the difference in a JD and an Esquire I know they all know what an escort is but what's different in an escort in an Esquire
Matthew Odgers: well when you get a chance look up Esquire online because I think the real definition is as a pompous title that attorneys given themselves from the back of the day but the difference is the JD is the degree that you get a Juris Doctorate from law school so you can get a JD but not be a practicing attorney and from my understanding is that once you become an attorney and pass the bar then you can use the esq but again that kind of that's how I denote it so when you see when I see somebody who has their name and then JD I usually I guess I assume that they're not a practicing attorney but they have a background in law you know a JD is a is a doctor injury prudence so do you consider yourself a doctor I don't yeah and I
Howard: I don't like that about our culture because you always have these idiot journalists on TV and they'd be like interviewing the Federal Reserve and the Federal Reserve you know he had like a PhD in economics and his thesis was on the Great Depression and they're talking to them like it like everything he's saying is his opinion but the fact that television the only doctor they recognize as a physician well then that takes away from real news versus fake news like when you're talking to Alan Greenspan and he has a pH ease a doctor he's not making this up but when you're talking to somebody who was a successful pizzeria guy that that's your enterprise and I am you know a lawyer is a doctor of law and you're a doctor of dentist and I wrote a tall column last year called stay in your own lane and the smartest dentists are the ones that say I'm a doctor dentistry they stay in their Lane and then they develop a nice trustworthy team and what I like most about my attorney is um when I met ray Harris his social network was so intense that so many of my relationships the 30 the 20 years following meeting Ray Harris what he already knew the person I mean how connected are you in the San Diego community
Matthew Odgers: oh absolutely and that's why a few of the questions you talked about today you have your tight-knit network and ask a broad question when I go to answer it I think you know that could be completely different when you get outside even within San Diego when you get outside of my networks the way that we operate yeah and
Howard: you know what my homies doing it's so romantic but it's so wrong they they go pick their they go to their church they asked her pastor I need a lawyer and they're like oh Jonathan's a lawyer I'm sure he's a great guy but you're his first dentist case I don't want a great pastor to sit next to in church I want someone if I'm doing dental law I want someone that only does dental law just like if I have an eye problem I don't want to go to a chiropractor I want to go to someone who only does eyes and looking back homies what I look back and realize that the best connections I made in Phoenix to my social network for business and estate and everything started first with Ray Harris and then moved out from there and I have never called ray and say okay here's the problem my kids ankle bracelet fell off and now the cops are on the way what should I do now he always knows he always knows the person and then when you call him and then you're dealing with the element of trust and the trust saw that hey I sure hope you make it's an online CD course oh absolutely yeah it's I've reached out to the person who gave me and I'm working on one okay I'm if you were to ask me a question I'm Howard at dental town comm if it's online CEO the message boards it's the other Howard which is Howard goldstein so he's hoger at dental town calm or just drop a message in the comments and youtube or whatever but seriously dude matthew rogers thank you so much for coming on the show today and sharing a massive amount of dental attorney expertise i hope you have a rockin hot day yeah absolutely you have a good one too .