Elijah Desmond is Co-founder of Dental Pitch Brokerage and the Founder of Smiles At Sea, where he leverages his expertise in the dental industry to assist in the sale and acquisition of dental practices. He is a seasoned dental entrepreneur, motivational speaker, and two-time best-selling author with seven successful company exits. Elijah has raised significant funding for dental startups through initiatives like Dental Tank. Besides his business accomplishments, Elijah is a digital creator, DJ, and a licensed auctioneer, having recently graduated from Auctioneer Academy.

Here’s a glimpse of what you’ll learn:

• [01:42] Elijah Desmond explains how relationship-building is crucial in the dental industry
• [02:27] Elijah’s unique and creative approach to selling dental practices
• [04:38] Connecting sellers with the right buyers through high-energy events
• [07:36] Matching sales strategies to each dentist’s unique goals
• [10:14] Why early planning is key to dental practice exits
• [14:44] Understanding EBITDA and its role in valuations
• [18:15] The pros and cons of selling to DSOs or private buyers
• [19:20] Why post-sale terms matter as much as the sale price
• [23:00] Top three priorities for a successful practice sale

In this episode…

Selling your dental practice can be one of the most significant financial and personal decisions of your career. But how do you ensure a smooth transition, maximize value, and maintain your legacy? Is there a way to bring creativity and energy to a process that often feels overwhelming?

According to Elijah Desmond, a seasoned dental entrepreneur and industry innovator, the key lies in planning your exit well in advance — ideally three to five years before you’re ready to retire. He highlights that understanding your practice’s EBITDA and tailoring your sale to align with your goals are essential steps to getting the best deal. With his unique approach of blending fun, strategy, and precision, Elijah introduces concepts for sellers and hosting confidential buyer-seller matchmaking events to energize the sales process. This methodology not only makes the transition engaging, but also ensures both parties feel aligned and valued in the deal.

In this episode of The Marketing 32 Show, host Brett Allen sits down with Elijah Desmond, Co-founder of Dental Pitch Brokerage, to discuss creative strategies for a profitable dental practice exit. Elijah reveals how to prepare your practice for sale, the importance of understanding EBITDA, and how innovative deal structures can maximize your financial return. He also shares how to evaluate potential buyers and ensure a smooth post-sale transition.

Resources mentioned in this episode:

• Brett Allen on LinkedIn
• Marketing 32
• Elijah Desmond on LinkedIn
• Dental Pitch Brokerage
• Serial Entrepreneur: From Startup To Success by Elijah Desmond
• Smiles at Sea
• The Dental Festival
• Dentistry’s Got Talent
• Delivering WOW Summit
• Dr. Anissa Broussard on LinkedIn

Quotable Moments

• “I’ve been in the business of relationships for a decade now, involved in every major dental conference around the world.”
• “The time to call is really three to five years before you’re ready to actually retire.”
• “You need to have the exit in mind, even if you’re going to exit in ten years.”
• “You go to work, you dentist, and then you go home. You have no employee issues, no payroll issues.”
• “There’s a people problem in our industry, no doubt about it — so the last thing you have to worry about is them going in and cleaning house.”

Action Steps

1. Plan your exit early: Optimize your practice’s value and ensure a smoother transition, addressing the common issue of dentists calling brokers too late and leaving money on the table.
2. Understand your practice’s value: Obtain a quality of earnings light assessment to understand your practice’s true financial worth, ensuring you are not solely relying on the buyer’s valuation.
3. Leverage expert resources: Utilize free resources like the EBITDA handbook to gain insights into maximizing your practice’s profitability in order to make informed decisions about operational improvements and financial management before selling.
4. Explore creative deal structures: Consider various deal structures, such as retaining equity or agreeing to an earn-out, to maximize your financial outcomes post-sale.
5. Research potential buyers: Conduct thorough due diligence by speaking with others who have sold to the same potential buyers you’re considering.

Sponsor for this episode…

This episode is brought to you by Marketing 32, the only dental marketing agency with the Practice Impact Formula™ for predictable growth without financial risk.

With a focus on new patient generation, addressing missed opportunities, and expert scheduling, Marketing 32 has helped over 170 practices in the US, Canada, and Australia. Grow in 30 days, or you don’t pay — it’s that simple.

To learn more, visit marketing32.com and schedule a 15-minute discovery call. If you’re a visionary practice ready for impact, Marketing 32 is ready to help you grow!

Episode Transcript:

Intro 00:13

You are listening to The Marketing 32 Show with your host Bret Allen.

Brett Allen 00:18

Welcome to The Marketing 32 Show. Brett Allen here, host of the podcast, where I connect with leading dentists, dental influencers and industry experts to uncover the latest strategies and insights and innovations in helping your dentists your dental practice to grow and thrive. Today, I’m super excited to have Elijah Desmond on the podcast today. Elijah is a good friend. He’s a seasoned dental entrepreneur, motivational speaker, two time best selling author with seven successful company exits. His experience spans from building and scaling businesses to optimizing practice value. Guiding dentists through the sale and acquisitions. Transitions. His book Serial Entrepreneur: From Startup to Success, is a comprehensive guide on launching and growing businesses with confidence, offering practical strategies from his own journey. Elijah, thank you for coming on the show and welcome.

Elijah Desmond 01:16

Thank you Brett. Very excited to be here.

Brett Allen 01:20

Yeah, it’s going to be fun. So let’s go. I mean, you’ve done so much. You’ve accomplished a lot to this point in your career and you’ve done a lot entrepreneurial. Let’s talk more on this. You know, this pitch brokerage brokerage. Let’s talk about that. How did you start that? Why did you start it? Let’s get into that.

Elijah Desmond 01:42

Yeah. Well, you know, first off, I’ve been in the business of relationships for a decade now. And while that might not seem long to many, I have been very involved in every major dental conference. All of the of the different influencer conferences I’ve spoke, I’ve emceed, I’ve Deejayed all over the world in dental conferences. I’ve emceed all over the world in dental conferences. And now I just recently graduated from Auctioneer Academy.

Brett Allen 02:18

Oh that’s awesome. So you’re an auctioneer now? I saw you post about that. So, auctioneer, how did tell us about that? What? Like what?

Elijah Desmond 02:27

Well, yeah. Well, first off, I’m gonna kind of let it let the cat out of the bag. I am selling dental practices, and that is not how. So that’s when I. When I announced to the world that I was selling dental practices through dental brokerage. Very important to know. I also announced around the same time I was going to Auctioneer Academy, I graduated. I am a licensed auctioneer. But that is not how I’m selling dental practice. I’m doing benefit auctions. So I’ve been having a ton of fun in this industry. I’m a. I’m obsessed with dentistry. I’m never leaving. And my focus, though, is selling dental practices through dental brokerage. So I hope to give some really good takeaways during the podcast, but I think it’s important to know how I started it.

Brett Allen 03:19

Yeah.

Elijah Desmond 03:19

And you know, I’m the Founder of the Smiles at Sea dental cruises. I’ve done them for about a decade now and time flies. I’m also the Founder of The Dental Festival, along with Dentistry’s Got Talent and some other things. But the long story short is look, during the pandemic, we as a cruise business got shut down because there was no cruises for two years. Well, after the cruises started, I had a year to essentially start marketing, so that was three years off. Well, I took a huge hit on my business, the Smiles at Sea cruise. I didn’t let anyone go. Okay. I had to take the loan out like some of us to survive.

Brett Allen 04:05

Yep. We did. Yep.

Elijah Desmond 04:07

And it was a blessing that I did that. Because if I didn’t, then this brokerage wouldn’t be around. Let me tell you how it was created. I watched even during the pandemic. I watched so many companies sell. They exited their companies. I watched so many companies raise millions of dollars, and I was sitting on the sideline thinking, how are they doing this? So I created something that was called at the time Dental Tank. Dental Tank was inspired from, as you know, today, a company that’s the Shark Tank basically.

Brett Allen 04:37

Yeah.

Elijah Desmond 04:38

So I basically was looking at similar things and thought, man, wouldn’t this be cool to raise money for companies that are startups or younger companies and bring strategic investors to the stage. So I had over 100 companies apply to be on the first dental tank. Wow. And I had to interview everybody during the pandemic. This is during the pandemic. I interviewed everybody and I picked 25, and then I had to then interview all the strategic investors. So I had over 50 strategic investors apply on my stage. I picked eight. The first event that we had, 25 of the companies. We had seven of them ended up getting funded. Wow. Which was pretty awesome. From six of the strategic investors. Wow. And one thing led to the next, and I’ll fast forward this quickly to as of a year that started in 21, a year ago, around a year ago, a little bit more, we started dental pitch brokerage. We took what was working with dental pitch broker with dental tank and converted it to dental pitch. And we decided we would start focusing on dental practices that were not startups, not at the beginning, but at the end of their journey. And we would use a similar model where the dentist would. One at a time, would come into a confidential room with a minimum of ten buyers that were standing up clapping while they had their walk on song, and they came to the stage.

Brett Allen 06:12

That’s awesome.

Elijah Desmond 06:13

And they came to their stage. They were essentially being interviewed by me or my business partner about their practice. No. No numbers, no financial thing was not stressful at all. It’s not stressful at all for them, but it’s fun. They come in the room and they tell us about their practice, how they got started. They tell us about their culture, say how long they want to stay around after the sale, and then the buyers get the chance to ask any questions that they want to the sellers on the spot, and then they get the buyer sign up for 30 minute slots on meeting them one on one after they interview, and then they leave the room and we bring in the next seller and everybody stands up clapping and excited because, you know, it’s a huge deal.

Brett Allen 06:55

Well, it’s fun, no question. You’re going to bring the fun and the energy. That’s who you are. Elijah I remember when I first met you, it was at. It was at a Delivering WOW Conference in Jamaica. And Dr. Holmes introduced us. You were the emcee. You know, your reputation precedes you. I think everybody in the dental industry knows who Elijah Desmond is, but it’s cool that you’re bringing that energy and this unique way of selling practices. So let’s dig in. More on that, I guess, unless you want to keep going on more of the process of like what it’s like for for those. Come on.

Elijah Desmond 07:36

Yeah. So I mean, essentially, look, the process is pretty simple. We select ten sellers for our events and we select ten buyers for our events. And we’re a matchmaker. We’re the brokerage firm and we negotiate the highest price. But more importantly the best terms for that dentist post event. So after they meet we then put the broken wall back up and do all the hard work on their behalf. We’re the experts at selling their practice, and we’re just doing it completely different than anybody else in the industry. But it’s important to know. Look, 75% of the dentists, they are all about the walk on song and the energy getting on the stage being interviewed. But 25% are not. So for the 25% that are not, we actually take them in a more traditional route and we have over 55 strong buyers in our ecosystem. Oh, wow. So we basically will shop them out to all 55 buyers even.

Brett Allen 08:36

And then even after the initial eight that meet with them or yeah.

Elijah Desmond 08:41

The initial ten. No, not necessarily because typically we’re putting the right buyers in the room. So we already know what they want. And so you don’t want to have too many offers. It gets very — it’s a long process. You only really only need to have I’m going to call it 2 to 5 strong buyers and you put them into a situation where it’s kind of like a bidding war. No, no pun intended, with me being the auctioneer. Right. But yeah, it’s kind of like a bidding war. But I will say the most important piece is what happens after the money. You know, you get, you know, millions of dollars for your practice. But what’s life like for you as a dentist after that? Those are terms and how you get the money. The terms are almost just as, if not more important than the deal itself, right? So we take them through to the finish line. We hand we, you know, hold their hand through the entire process because they’re the experts at running their business and drilling, you know, filling and making beautiful, you know, teeth. Right. That smile’s where the expert at making it to the next stage of life, where they get to take that big bag of money and life has changed, and now they’re ultimately moving on to the next step. So I think that’s the most important.

Brett Allen 09:55

Yeah. So let’s talk about kind of some of those components like before and after. When is a good time? When is the right time to position yourself to sell? What do we need to do? Because there’s probably a good year leading up to that that you got to get everything cleaned up in your business. And let’s talk about right.

Elijah Desmond 10:14

I think the time to to discuss to have this conversation is now. Okay. Period. What I know after creating and starting and selling multiple businesses is, is you need to have the exit in mind, even if you’re going to exit in ten years. Just know you know what you want. Do you want to end up with 1 million, 5 million, ten, 20 million? You need to know how much money that you want to end up with, period. That you feel like you can retire. Number one, the time to have the conversation is immediately. The time to to exit or to retire is not now the biggest. The number one issue that I see is dentists. They give us a call when they’re ready. Yeah, that is way too late. Right? You are leaving millions of dollars on the table if you call when you’re ready. Right. The time to call is really 3 to 5 years before you’re ready to actually retire.

Brett Allen 11:13

Oh, wow. Okay. That early even.

Elijah Desmond 11:15

And it’s very important to find a partner that you want to sunset with the right partner. When I say the right partner, honestly, you’re going to make a lot way more money during the sale. If you sell to, let’s just call it an emerging group, a family office, a midsize group, or a large DSO. You’re going to make way more money doing that than you are selling to a regular dentist that’s at one office or an associate looking to buy. You literally are leaving millions of dollars on the table. And if you want that. Totally. Okay. We can help. We can help still. That’s not one of the 55. We have 55-plus strong buyers. And when I say that, I mean family office, emerging groups. Small emerging groups. Larger mid-size DSOs.

Brett Allen 12:05

Scale through acquisitions.

Elijah Desmond 12:07

Yep. Exactly. So but that’s the 55. Now, outside of that, we absolutely have private practice dentists that are looking to buy their associate or they’re looking to get their first practice or they’re, you know, they have one location, they’re looking to get their second one. But I think it’s very important to understand that you have the ability to make I’m going to call it 30-35% of what you, you know, you produce as a dentist and have no, no worries, no stress at all about the business. You go to work, you dentist, as Paul Goodman would say, right? You go and your dentist and you know, you practice and then you go home. You have no employee issues, no payroll issues, no nothing. You just practice. So what happens is, is you take the money off the table. Now, you sell the business and then you work for 3 to 5 years for a good partner, and that looks so different. All groups and emerging groups, etc. they look. It looks different. It’s not all the same. You hear these horror stories like, oh my God, I sold to a DSO and it’s the worst. I also heard many times sold to a group or a DSO and it’s the best. So you got to know, you got to find somebody who’s going to pair you up with the right partner. And I’m calling him a partner because they’re running your business.

Brett Allen 13:30

They’re taking over. But like, yeah.

Elijah Desmond 13:32

Yeah. So so and you may get look, if you have a $2 million practice, you know, you’re going to get between I’m going to call it 80% and 120% of that $2 million, right, depending on the sale price. So say it’s $2 million, you get $2 million. They’re going to probably give you 60, 70, 80% of that 2 million and then 20% they can hold back to. You’re given that on the 3 to 5 years as you exit. Or you may be able to retain equity. You could sell 60% potentially and then keep 40%. So that way when that group goes to that group goes to sell, you get way more for your 40%. There are so many different ways to skin a cat.

Brett Allen 14:15

The creativity behind it. I mean, even just watching Shark Tank, you see some of the deals these guys come up with in partnerships with other sharks, right? It’s like, yes, it’s creative how you can do this. Let’s talk more about like resources. If I’m a practice owner and I’m getting ready to sell three five years out I come to you Elijah and I’m like hey, this is what I’m wanting to do. Tell me what that looks like. What resources. What do you start to implement? What are you starting to look at all of that?

Elijah Desmond 14:44

Yeah. Number one, my business partner has a book. It’s the handbook on dental EBITDA. Okay. So EBITDA is extremely important. And if you look at EBITDA, here’s a big picture.

EBITDA is essentially the net profit after everybody has paid. All bills are paid. So your net profit, plus any taxes that you have paid on your loan. Right. The taxes, you can add that back in. You add back in the depreciation. There’s a bunch of different add backs. Ultimately, you know, for example, if you’re growing your company you need to invest in marketing okay. But guess what. That marketing expense could be an add back. So you’re still you know, it’s crazy not to do marketing, for example. And it’s crazy not to have a consultant because you take the consultant and the marketing to grow you. To this point, a lot of the groups have their own marketing that they use. They have their own processes and systems. So you don’t necessarily — you’re not going to need that going forward necessarily. Right. And so anyways first resource go to dentalbrokerage.com and download the free ebook the EBITDA Handbook. So you actually can get an understanding of what your practice is worth. So that’s number one. Download that handbook that’s free. If you really want to know what your practice is worth right now, you really should get a quality of quality of earnings light, and we work with multiple companies to get that. What is the quality of earnings? Well, the quality of earnings, a full comprehensive quality of earnings is when you have a buyer is going to buy your practice, they’re going to actually get a quality of earnings done with a very high level of financial firm. That’s going to say, what’s the real value of your practice? Biggest mistake I see is the sellers. They get the quality of earnings from the buyer and they just go with the price that they say.

Brett Allen 16:29

Yeah.

Elijah Desmond 16:30

They really should go and get a quality of earnings done on their own. Separately the quality of earnings light right. Get it done on your own separately. So you can actually know what the value of your practice is. And we actually require that for anybody to work with us because we’re defending their EBITDA. We’re defending the value of their practice. But you need like four years back, you know, of all the details of every part of your practice. You know, the payer mix, your overhead, your marketing, your new patients, all of the above.

Brett Allen 17:01

Well, and you’re incentivized as the broker to make it as, as pretty as possible for the seller, right. So you have some resources or connections that they can, you know, reach out to you to get something like that if they don’t know who to go to for.

Elijah Desmond 17:15

Well, I would say that if they’re going to reach out to me, I think the reason why somebody would reach out is to just discuss what does one year, two year, five years, ten years look like, and how can I find out where I’m at now? And like I said, the first thing is download that free ebook. The next thing, I can absolutely refer out to multiple different companies that do a quality of earnings light, which is very important to know.

Brett Allen 17:41

Okay. Yeah that’s helpful. You guys go to dental pitch brokerage, get that free resource. Let’s talk about. You know different ways of structuring the deal.vLike we talked about the creativity behind it. But like for those of us who are novices when it comes to exits like me. I haven’t exited yet. What? What advantages there are to doing it this way? Advantages to going the DSO route. What? Let’s dig into that.

Elijah Desmond 18:15

Absolutely. So when you come to a very, very established DSO and some are some still by this way, you’re going to have an opportunity to essentially buy or sell 80% of the practice and then 20% of the practice, you’re going to get in and earn out. An earn out is essentially they don’t need you to increase your net profit or increase what you’re doing. What they need you to do is maintain it. So what you don’t want to do is go crazy busting your butt before a sale to ramp up production in a crazy way.

Brett Allen 18:48

Yeah.

Elijah Desmond 18:49

If you can’t maintain that because an earn out basically means that you could learn you depending on the deal structure, you could earn make less. That 20% may be worth less if you decide to ramp down. Or you could make more or the same. Right. Yeah. And so that’s called an earn out. Right. And it’s very important to understand that that earn out is negotiated. Okay. Most practices are not going to be just you get your 100% upfront. There has to be an earn out because.

Brett Allen 19:18

There’s some skin in.

Elijah Desmond 19:18

There’s so much risk.

Brett Allen 19:19

Yeah.

Elijah Desmond 19:20

Yep. There’s so much risk involved. So that’s that piece. The next piece is, is that there are some deals in which you can have an earn out, but you also can have equity in the mother company. So like let’s just say for example there’s an emerging group. They have 15 locations. You’re number 16. Well there’s an opportunity for you to invest, say 10% of that money or 20 into the Holdco, into the main company. There could be an opportunity for you to get, say, 60-70% up front, 20% goes there, and then 10% is on an earn out. Right. And like the terms are super important. Do you? Is it, you know, do you want to stay for full time for two years and then pop down to one day on year three? Pop down another day? Year four. The terms are so important. Does anything in your office change? Some groups, you know, everything can change for the good. Yeah. A system that works. Some groups leave the office exactly how it is. They don’t change anything. And something that is very important to understand is, you know, a lot of doctors are afraid, man. Well, what about my team? I love my team. I’ve been with them for 20 or 30 years, and I don’t want them to get rid of my team. Let me give you a newsflash. There is a people problem in our industry. Therefore, your team is not getting rid of. In fact, you should have employment agreements intact for your team, especially if you have an associate.

Brett Allen 20:53

Oh man, I can’t tell you how many docs come to me and they’re talking about how they can’t hire. They can’t find the people or good people don’t stay. Yeah.

Elijah Desmond 21:02

There’s a people problem in our industry, no doubt about it. And so the last thing you have to worry about is them going in and cleaning house, and the team’s devastated, like, oh my God, we’re going to get fired. No, you’re not going to get fired. Now there are instances where there absolutely will be people to get fired as well. Let me give you an example. You have had that relationship with a grumpy front desk person okay. For 20 years. And they’re like family. You’ve celebrated Christmas together. Your kids know each other. You’re close. Okay, but that grump, that grouch ball has no relationship with the new owner, right? New owner comes in. There’s all these one-star reviews. They treat the other employees like crap. I mean, look, they don’t have a relationship with them, so they’re hitting the road. So, yes, if you have a terrible employee.

Brett Allen 21:57

Yeah, that makes sense.

Elijah Desmond 21:58

You call family. It can happen.

Brett Allen 22:00

But that’s up to them. Right, right. Well, that’s — this has been super valuable. There’s I know there’s we’re just scratching the surface. I’m sure you and your team and what you guys are doing at dental pitch, there’s so much to consider in this process. A lot to go through. Before. Before we go anywhere, I got one more question for you. If you could, if you could. And I like to ask this of everybody. If there’s one like big domino, if we could just push this big domino over and help a practice owner understand this one thing that helps set up everything else for the growth in their practice, whatever. Preparing for exit. What’s that one thing, right? Like what? What is that one thing that makes a huge difference?

Elijah Desmond 22:50

Gosh, you said. One thing that’s very hard. That’s hard. Can I give you three things quickly?

Brett Allen 22:57

Yeah. Go. Go for three. That’s good.

Elijah Desmond 23:00

Okay, here’s the three things. Number one, when you are thinking about an exit ahead, ideally your practice should have a minimum of six shares or more. That’s going to make it for an easy sale. It’s not something people realize, but when you have six shares or more, or you’re at least plumbed or have the ability to go six shares or more, that is going to make it to where anybody can expand. So that is number one. Number two, reach out to someone in advance, five years in advance or three years in advance before you’re actually ready to sell. Because if you wait five years, what happens is, is somebody’s going to want you for five more years or three more years. So reach out to somebody now, because ultimately you can get paid the highest amount of money right now, and then you’re going to be paid, you know, 30 to 35% of what you produce going forward, which could mean an additional million, $2 million. So time to reach out is now the last biggest piece of advice. Do your due diligence if you’re going to. If you’re going to work with a group, you need to reach out to somebody or multiple people. 2 or 3 that have already worked with that group have done it. So you know what the experience is like, and you’re not just going leaning on what they said.

Brett Allen 24:23

Yeah, well that’s awesome. That’s great. Guys. Go to dentalbrokerage.com. You can also find Elijah on social media. He’s all over the place. He’s awesome. Elijah this has been great. Thank you so much for your time today. And yeah, if you’re interested in selling check them out. Tell them Marketing 32 sent you their way and you guys have a great one. We’ll see you on the next episode. Thanks again Elijah.

Elijah Desmond 24:50

Thank you. Bye bye.