Sydney dentist and medical appliance innovator David Penn has sold a majority stake in his Southern Cross Dental Laboratories to private equity player Ironbridge Capital in a deal worth nearly $100 million.

Dr Penn will remain chief executive of the business he started nearly three decades ago but told The Australian Financial Review it was time to bring in a partner to help take the company to its next stage of growth. “This has not been an overnight success; it’s been a lot of hard work,” he said “On my experience and expertise on a corporate level, I think I have reached my zenith.”We are growing nicely and there are some incredible opportunities. The biggest challenge of all has been managing this growth. It’s been difficult to take the business to the next level” Dr Penn, whose wife Linda is a Lowes Manhattan retail clothing heiress, said he expected Southern Dental to continue to grow as much as 20 per cent a year in revenue and gross profit in the next three years. The 56-year -old saw an opportunity to break into the local dental prosthetics market by going to Asia to have crowns, dentures, veneers, bridges and grinding splints made 30 years ago. “When I graduated I knew that in Australia the cost of dental prosthodontics was high,” he said “I thought there was an opportunity with local laboratories. I went to Hong Kong in 1983 and it took a while to get that right. There were tanks at the borders. That was when we communicated by telex machine.” Dr Penn got involved with Hong Kong University dental school in 1986. He said this move “set the company up for change given the high level of dental technology”. Dr Penn and his wife gained some unwanted media attention in 20 1 0 after buying a $44 million Point Piper harbour front property, Villa Veneto. The media-shy Dr Penn said he was adopted as a baby and grew up in Sydney’s Bondi. He went to Sydney Boys High School and graduated from the University of Sydney at age 22, when he bought his first practice. His relatively humble background, growing up with his mother who worked as a pharmacist’s assistant and a father who worked in a hardware store, has kept him grounded despite his business success, he said Dr Penn is not only a successful dental surgeon in Double Bay, he has also developed of range of new appliances for temporomandibular disorders and sleep apnoea. He still works about seven hours a week in this Double Bay practice and also teaches internationally on aesthetic dentistry and the invisible braces known as Invis align. “We see a lot of growth opportunity in the Invisalign products;” he said “I wrote the accreditation course for

Teaching general dentists how to use Invisalign. We have a very powerful education arm. Basically, anything you can put in your mouth we can make it.” His most recent developments include the Penn Composite Stent, which is a system for producing morphologically idyllic, inject able composite veneer restorations without tooth preparation.

Under the deal with Ironbridge, Southern Cross is valued at $95 million, including debt, which is an estimated six times earnings before interest and tax. Ironbridge will control about 60 per cent of the business, while Dr Penn and management will retain the remainder. The joint chief executive and founding partner of Ironbridge, Neil Broekhuizen, will join the new holding company, which will own 100 per cent of the Australian and New Zealand operations and 40 per cent of the UK and Ireland business. “Ironbridge has been a consistent investor in the healthcare sector and we see significant growth opportunities both in Australia and New Zealand and to develop overseas businesses that Southern Cross Dental has already invested in,” Mr Broekhuizen said.

SOME investors are betting that Townsville-based dental ”roll-up” business 1300 Smiles will match another practitioner of this type of business strategy, InvoCare, the funeral-home operator.

The former’s 30 per cent rise in the past eight weeks suggests its investors may be on to something.

The ”roll-up” business model involves buying a large number of smaller operators for three times their earnings, and then putting them into a business that is trading on a price-earnings (PE) multiple of 20 times-plus (the average for industrials is about 11 times). At least in the early phases, acquisitions can add to earnings growth from day one.

InvoCare is a definite success story, with a market worth of more than $900 million, and a share price that has almost doubled in the past three years.

With its shares at $5.15, 1300 Smiles is becoming one, with a market capitalisation of $122 million. It listed in 2005 after raising $1 million at 80¢ a share.

Driving this is phenomenal earnings growth. 1300 Smiles has more than doubled its profits in the past three years. But will this breakneck speed continue?

The stock is priced as though it will, trading on a PE multiple of about 20 times. To keep generating 20 per cent-plus profit growth, 1300 Smiles needs to attract more and more dentists to regional Australia and keep them smiling, as they are its most important asset.

The connection between a patient and a dentist is crucial, whereas in InvoCare the relationship is somewhat more detached.

1300 Smiles managing director Daryl Holmes (who keeps in touch by working half a day a week as a dentist) owns a 62 per cent stake in the company and is dismissive of any suggestion that there is a difficulty in finding professionals.

”We take away all the admin and management issues, and let the dentists concentrate on what they do best … I’ve just come back from the British dentistry convention and I met over 50 dentists wanting to relocate to Australia,” he says.

After watching several episodes of British sitcom My Family, which stars a dentist, Radar has no doubt that this is the case. Written by Richard Hemming

This article was originally published at evancarmichael.com and written by: Dan Barton

Growing up, Geoff’s family spent the summers in the countryside near Montreal, Canada. During the summer he was sixteen, his neighbour and friend Karen, who had very bad teeth, was unexpectedly taken to the dentist by her father. When she returned home with her father, Geoff was in his yard enjoying the sunshine with his friends, but instead of smiling, saying hello, and joining in, Karen got out of the car and ran straight into the house without a word. Her father walked directly over to Geoff with a smirk on his face, and wiping his hands, said, “We just had all of Karen’s teeth extracted, so now I won’t have to worry about Karen’s dental bills anymore.” Geoff was shocked, and it was at that  _ moment he emotionally and partially unconsciously made the decision to become a dentist as Geoff knew this was a problem he could help solve, and did not want to watch anyone else suffer through an ordeal like Karen’s. After many years of school, and after finding the proper mentor, he found himself setting up his own successful practice in Ontario, Canada.

Geoff and many other practitioners  both nationally and globally are being presented with unprecedented opporttJnities for investing their money and growing their practice. However, with these opportunities also comes the chink in the proverbial silver lining of the clouds that can either make or break your investment and the success of a dental practice.

Over the past year, we have taken surveys, researched practices, and spent countless hours finding and pouring over data to bring you this comprehensive, in-depth study. Through our research, we have isolated the five most dangerous trends affecting dental practitioners today. These are trends that each and every dentist will come across during their years of practice, and these trends have the possibility of quickly eliminating the positive results that all those years of hard work and dedication have created. We have developed  this report in the hopes that it will shine a light on these often tabo. subjects, as they so desperately need to be addressed especially in today’s often confusing and changing market place.

While researching this report, a common thread we found to be the main underlying passion many dentists expressed, was to provide for their families in a way that they themselves never experienced in their own youth, coupled with their strong desire to help others maintain good oral health practices. Through their hard work and dedication, dentists have the ability to ensure that their children do not have to face similar hardships  and difficulties in attaining their goals. Providing privileged and care­ free lives for their children is a top priority for most dentists; however, the nature of the profession makes that goat more distant than one might assume. In order to provide more and more for their families, dentists find themselves sacrificing precious  family time, which can be far more beneficial to a child’s upbringing  than iPod’s, PC’s and latest whiz games from Xbox and Nintendo.

Or. Bob Muster, having spent the last 14 years in the dentistry field, has seen the ins and outs of the subsidized dental market and believes a change is in order. Muster knows what poverty feels like firsthand. He grew up poor, and now, as a dentist treating Medicare  patients, he knows the industry needs a change. Muster opened his first dental office in Huber Heights, Ohio, which focuses on treating Medicare patients both young and old. The 7,800-square-foot dental office will cost about $1.6 million to open and feature state-of-the-art  waiting rooms  and dental implements. Muster worked for several Medicare  dental offices and as he found the quality of care to often be poor, he was prompted to open his own practice.

When posed with the question, “Why did you become a dentist?” another practitioner  replied, “I wanted to be involved in a medical profession, and my uncle, who was a wonderful dentist, was a great role model for me. Dentistry has an artistic component to it as well; dentists use their hands to sculpt teeth. Sometimes  they use their skills to create more appealing  smiles especially  in cosmetic dentistry. I wanted to be involved in a helping profession which would also allow me a reasonable standard of living. Dentists provide a valuable service to their communities  and if they do their job competently, they are respected by their patients. I have been a dentist for over 25 years and I have enjoyed helping my patients, and I get great satisfaction from the work itself. I continue to find Dentistry both challenging and interesting.”

While each and every dentist has their own passion about why they originally got into this field of practice, another common  theme we found is the passion  to create more confidence  through the smile. This is no wonder. Researchers of a study led by Dr. Dacher Keltner of the University  of California were able to predict the future marital status, even 30 years down the road, of various 21 year-old women, just by looking at their photographs. The key appeared to be the intensity of the women’s smiles.

“Women who displayed more positive emotion were more likely to be married by 27, less likely to have remained single into middle adulthood and more likely to have satisfying marriages  30 years later. This means we can take photos at a wedding and from them we may be able to tell how the marriage will go,” said Dr. Keltner.

Additionally, how intensely a person smiled was related to personality  tests, and psychologists  ranked the participants by how they expressed emotions like joy and happiness.  How did they know the smiles weren’t being faked? They used computer technology  to measure 44 aspects of facial activity. If a smile was not genuine, certain muscles would not move (for instance, certain muscles  around the eyes that we don’t consciously  control move when we feel emotion).

Dentists definitey seem to be on right path for creating more confidence  through helping create better smiles. According to The British Dental Health Foundation,  a smile gives the same level of stimulation as eating 2,000 chocolate bars. The results were found after researchers  measured brain and heart activity in volunteers as they were shown pictures of smiling people and given money and chocolate. Dr. Nigel Carter, chief executive of the Foundation, pointed out, “We have long been drawing attention to the fact that smiling increases  happiness  both in yourself and those around you, so it is good to receive the backing of this scientific research … a healthy smile can improve your confidence,  help you make friends, and help you to succeed in your career.”

What’s even better is that the more you smile, the more others will too. Says psychologist  Dr. David Lewis, “Seeing a smile creates what is termed as a ‘halo’ effect, helping us to remember  other happy events more vividly, feel more optimistic, more positive, and more motivated.”

Dentists are passionate  about their work, and understand  the power of good oral health and a great smile. However, despite their passion and desire to help others, their jobs, futures, and practices can still be placed at risk, which is why we have created this special in-depth study. As a real-estate investment company, Oasis Properties generally  does not provide reports on other professions; however, considering that many of our clients who are dentists have expressed the same concerns and reasons for investing  with us, we felt that providing this report would generate a high number of solutions for many of our current and future clients in this specialized field of work.

With strong reliance on scholarly journal articles, government published  data and information  from other reputable sources, this report will provide some unique answers and options that dentists typically will not expect from the traditional sources of knowledge and opinion. In the next section of this report you will discover one of the scariest pitfalls that have the potential to cause the most staggering amount of unnecessary damage in any dental practice. The top five most dangerous trends facing dentists today are trends which cannot be ignored, and we hope to set you back on the right track, mentally, physically, spiritually and financially. In this paper as we review case study after case study of dentists who are experiencing  setbacks with maturing practices,  we hope that this report will provide you with the answers needed to continue positively on with your life, your work and your mission in creating beaming smiles.

1. Lawsuits -The Single Biggest Fear

The first pitfall of practices that we will analyze is the one that has the potential to cause the most staggering amount of unnecessary damage. An article from the Journal of the Canadian  Dental Association explains  that since the mid-1980s,  lawsuits have injected unprecedented levels of panic into the dental profession.  An American dentist was successfully  sued for the first time for neglect, which led to several of his patients contracting the HIV virus. The dental profession has since had to adopt a constant vigil to ensure patient safety. Following several lawsuits in the 1990s, dentists now have to face the threat of a lawsuit even for everyday missteps, such as spraying water in a patient’s eye. Though that particular case was successfully  defended by the dentist, the doubt and fear that a lawsuit raises is enough to turn away future clients.

Running a dental practice requires the precious care of every patient’s safety. Managing  one’s own practice s extremely  time consuming, but incidents sometimes  arise that compel patients to feel as if not enough precautions  were taken with their dental procedure. This in itself is a stressful and dissatisfying aspect of the profession, especially as according  to the Journal of Occupational Psychology, most dental practitioners cite interaction with patients as the highest cause of job satisfaction. Moreover,  it is said that the single biggest fear of any licensed healthcare practitioner is being sued by a patient. Not only can a lawsuit be damaging financially, but it can tarnish a dentist’s reputation and place even further time demands  on the office personnel through lengthy proceedings.

Recent state and provincial laws disallowing dentists from refusing clients that are infected with life threatening diseases  adds another level of risk to a practice. While patients with perilous diseases are undeniably entitled to dental care, it means that dental practitioners  are obligated to dedicate even more of their already limited time to ensuring procedural tasks such as sanitation are properly completed. A recent case against Dr. Stable in Ontario proved that some clients will pursue legal action even after a minor incident such as a non-scarring  burn that occurred during a routine dental procedure.  In addition to having to close his office for the duration of the trial, a trusted legal expert from JW Dental Legal malpractice lawyers, expressed  that “The financial cost to Dr. Stable and loss of trust in dental professionals by Mrs. Fretter could likely have been avoided.”

The only way to truly protect oneself from potential lawsuits is “not only to do well, but to be seen doing well.” There are four common methods to ensuring your protection. The first is to keep up to date on new practice standards and keep informed on any developments  or research  within your field. The second is to maintain and enforce a constant level of communication with staff so that they do not omit any pertinent patient information. The third is ensuring all dental equipment  is diligently inspected and maintained, and the final and- most effective method is to meticulously record all patient information and keep it well organized and separated. These files should also contain relevant conversations  so they can be referred to should a patient pursue legal action.

While the above methods  will provide piece of mind to concerned dentists, it further leverages a dental practitioner’s time towards administration  tasks as opposed to patient care. By adding so many safety precautions  to a dental practice’s existing administration  tasks, it becomes necessary to hire additional staff. However, as we will see, this solution is not as simple and pain-free as one might believe.

2. Staff- The Leading Cause of Office Losses

In light of all the aforementioned time commitments that dentists must sacrifice to their administration and safety tasks, it becomes  apparent that most dentists need qualified help within their business operations. As lawsuits  can be costly and damaging  to an office’s reputation,  hiring quality administrative  personnel  and dental assistants becomes  quintessential  to the long term success of a practice.

Unfortunately,  the process of identifying quality help can be extremely time consuming as well. In fact, the difficulty and level of expertise required  to adequately  staff an office has resulted in the opening of several businesses that focus exclusively on matching  prospective dental assistants  to offices in major urban centres. For any potential candidate, it is extremely important to check their qualifications as well as conduct  a reference check. Administrative personnel hold a great degree of responsibility, as their organization and awareness on the job is the first line of defence against a lawsuit.

Aside from causing damage  to the office through negligence,  the Canadian  Dental Association (CDA) warns that dental assistants and administrative staff can also knowingly cause damage. Many dentists have listed employee  theft as one of the leading causes of office losses.

While the risks and difficulties of hiring adequate staff for a dental practice can be viewed as a necessary evil, they also bring with them rising costs. As a dental practice expands  its personnel to take on more clients, its profit margin is significantly  reduced. In 2000, a study by the International Journal of Health Studies showed that Canadian  dentists spent a total of $928 million on administration expenses.  When all the admin expenses  are factored in, the actual practice owner can only expect to receive 35% of total revenues in compensation.

Possible mitigating measures  may incorporate  the use of staffing agencies. These agencies can save countless hours in pre-screening employees  and finding- suitable matches. They can also provide valuable training to employees  such as CPR certification or radiography  training. One of the best features of these agencies is that many will allow for a trial period, whereby an employee  can be tested out for a short period of time to make sure they will fit with the organization. However, the best staffing practice remains holding on to current staff members  and keeping them satisfied with their job. Tenured employees will know what is expected  of them, they will be less likely to break an employer’s trust, and they will develop a sense of ownership  and responsibility for the practice.

3. Job Satisfaction  -A Highly Emotional Decision

In Geoff’s story at the beginning of this report, we identified one common factor that was shared by most dentists: that the decision to become a dentist is usually an emotional one. For many dentists such as Geoff, the profession of dentistry offers a promise that one day you will be able to protect people and ensure that those closest to them smile brighter and more often. For many others, their dedication to their profession is a way of ensuring  that their family will always be well taken care of. Unfortunately,  in today’s times we are seeing a trend of dentists fearing the response of their patients and sacrificing treasured family time to ensure the success of their practice. We have taken the time to analyze some of the main factors contributing  to the high levels of work stress that is attributed to the dental profession.

Despite holding re atively strong job security and accumulating a high level of pay, dentists  continue to cite extremely low levels of job satisfaction. While every dental practitioner  will likely have their own life factors that are adding to their level of stress, there is a common denominator  that appears to be present within most of the profession. Constant time constraints appear to be the number one cause of stress for dentists, as they also inhibit them from properly performing the tasks that bring the most reward. As a possible  solution, we will examine how dental professionals can leverage their time in order to overcome  this stress factor.

Firstly, it is important to identify the aspects of dental work that contribute most to job satisfaction levels. A case study by Harry and Rutter et. al, for the Journal of Medical Education,  has shown that the most gratifying  aspect of dental work is interaction  with the patient and being able to help the patient to the point where they are satisfied. Not only is properly treating a patient beneficial in promoting  the practice, but it provides  a moral reward that reminds  dentists that they are helping people,  not just servicing teeth. Dentists  who expressed  the most opportunity for personalization with patients also provided the highest  job satisfaction ratings.

Two of the five most common factors to stress are patients’  negative perception  of the quality of service received and staffing problems. It is understandable that a lack of appreciation by the patient could cause extreme  job stress, as pleasing the patient is the main reason why most dentists started practicing in the first place. The aforementioned difficulty with staff is statistically  one of the most common sources  of job stress for dental practitioners. Not only is it difficult to find qualified professionals  to trust one’s practice to, but sometimes friction can arise between  employer  and employee,  and absenteeism is a common problem.

The remaining three most common causes of job dissatisfaction are all interestingly enough, time related. Most dentists  we spoke, interviewed  and studied, expressed that working under constant pressures, keeping to appointed schedules, and conflicts  between profit and ethics are the leading causes of stress in their life. Due to rising overhead expenses, dental practices need to schedule in clients on a tight timetable that does not leave a lot of time to focus on clients’ distinct needs and concerns.  This work environment means that practitioners are placed in a position  whereby they must sacrifice quality of care provided for quantity of patients  serviced.

The relationship between profits and quality of service  places many dentists in a desperate  cycle, where in order to keep increasing profits they must continue sacrificing their own work satisfaction. Several studies (including the aforementioned one completed by the Journal of Occupational Psychology)  have even proven that the described work environment  when combined with the perpetual time constraints,  can often lead to severe health problems for dentists.

Not surprisingly, these job stress factors extend far past the office. The aforementioned research has also shown that dentists can face detrimental effects from these stressors such as elevated levels of cardiovascular disease, alcoholism, drug abuse, divorce and suicide. The real irony of this comes into play when one considers  that many dentists enter this field in order to provide a happy upbringing for their family.

After assessing all the above stress factors, it becomes clear that the key to increasing job satisfaction is to allot more time for patients and personal needs. However, due to increasing expenses  and administrative needs, dentists across  the country are finding themselves working longer and harder hours. One viable solution is for dentists. to delegate more of their administrative responsibilities to handpicked  assistants they can trust. In order to cut down on the daily patient load, a dentist will have to ensure that his practice is generating revenue as efficiently  as possible. Under many circumstances, this may involve investing  revenues  into passive income sources such as stocks, bonds or real-estate.

4. Exit Strategy- A Buyer’s Market

It seems that current  students suited for the dental profession are confused about what dentistry may offer them and if it justifies the necessary school commitment. With the average  20-something now changing careers  over 5 times in their lifetime,  dentistry needs more of a commitment. Attention spans are shortening  with the introduction of intense  video games, cell phones, and technology, making commitment harder for people who would have been ideal for the position just a few short years ago.

In an online thread, an Australian student was looking to undertake a number of interviews  to hopefully gain insight into pursuing a dental science  program. In preparation for these interviews, he was looking for feedback  from those reflecting  on their reasons for wanting to study dentistry, and was hoping someone  who had been through a similar experience could offer him some feedback  or advice.

The biggest questions  he had to answer for himself  were, “Why dentistry?” and secondly, “Why dentistry over medicine?” Provided below is one of the most sincere replies he received:

“My personal motivation to pursue a career as a dentist comes from the very nature of the work. It’s diagnostic, technical, and surgical enough to be continually interesting. I realize that like any job, some aspects would become mundane, but with the human form, I feel like there would be enough patient variation to constantly pose a challenge. Coupled  with this is the human aspect. I’m not an extremely outgoing “people person,” but I do enjoy communicating.”

Canada’s dental community is currently undergoing extreme changes that will affect the exit strategy of current dentists. Retiring and selling one’s practice has always been a careful process, and the decreasing number  of potential buyers is sure to make this process even more difficult than in previous years.

Traditionally dentists have been known to retire at an earlier age than most other professions. Due to the high level of stress produced by the job and the generally high wages, dentists usually need to retire earlier and can afford to do so. However, in the upcoming years, Canada will be faced by the predicament  of many baby-boomer  dentists retiring within a narrow time frame. As over 30% of the country’s dentists are over the age of 50 already, the upcoming decades will see a large sum of dentists and dental workers going into retirement.  Recent studies by the Canadian  Dental Association (CDA) have revealed that this generation is expected  to retire at an even earlier age, as “inheritances, safe investments, and a changing attitude towards full-time work will encourage  this segment of professionals  to sell or close their practices and enter into full or semi-retirement at an earlier age than the previous  generation.”

In recent years, medical schools have seen their ranks filled to 50% or more by female students. While male dentists on average pursue their careers  for an average of 35 years before retiring, CDA statistics show that female dentists will usually retire 15 years earlier than their male counterparts. As women only started entering the industry in numbers  equal to men in the mid 1980s, the Journal of Dentistry (2008) stated that we should be feeling the consequences  of these early retirements in the upcoming decade. This trend has a twofold effect, as not only will it further increase  the amount of dentists selling their practice, it will also decrease  the amount of part-time employees  that are available, as well as increasing the numbers of dentists who decide to reduce their hours or accept part time work.

Dental journals and professional associations have forewarned the dental industry about a shortage of dentists for several years now. The Canadian  government  has reacted by increasing the accreditation standards for immigrating dentists that received their degrees from outside of Canada, which means that they will have to take additional coursework  in order to be able to practice in Canada. Ironically,  the demand for qualified dentists is at an all time high in Canada, as the population ages and proper oral hygiene continues to be increasingly accepted by the general population. With Canada’s growing need for geriatric dentistry, many new graduates  will be able to quickly establish  a client base and set up their own practice rather than purchasing an established office. Thereby, in the words of the CDA, “It becomes  clear that there will likely be a shortage of full­ time dentists across Canada. This shortage may lead to lower selling prices for established practices when combined with normal death, disability and retirement rates.”

In terms of finding a solution, there are no creative strategies for overcoming the current market condition. The best course of action remains to follow traditional guidelines and maintain a healthy business while awaiting the sale. The following four steps are widely considered  the most appropriate for efficiently and effectively selling a practice:

1) Plan 3-5 years in advance. Giving yourself plenty of time to find an adequate buyer and set yourself up for retirement  will ensure that this crucial career stage is handled properly with ample due

diligence. During this time it is also important to access professional legal advice to ensure the

process is handled  properly. Setting a deadline also ensures that you continuously take steps in reaching your goal, rather than constantly putting it off.

2) Enhancement  of the practice and aesthetic details can greatly increase the value of a practice. Equipment renewal should only be considered  if it is absolutely necessary to keep the practice running safely.

3) Choose an appropriate  buyer. Sometimes it is not necessarily best to sell to the highest bidder. For example, if you accept the financing in order to make the deal go through, there is a chance the buyer will not be able to make their payments. Additionally,  the whole sale process might be streamlined if the practice can be sold to an associate.

4) Access the professional  help of an accountant and dental attorney. As the buyer and seller will

want to present the assets in different ways for tax purposes, it is important that a tax accountant handles the matter fairly and professionally. Also, in order to be protected from future legal repercussions, it is wise to seek the help of a dental attorney when finalizing  the sale.

5. Retirement- Affording the Lifestyle Your Family Deserves

The sum of all these pains that are plaguing dentists is that the average practitioner will see a diminishing return on time invested towards his or her practice. Dentists that chose not to own their own practice might even be at an advantage in some cases, as selling a practice is becoming increasingly  frustrating.  As there are dwindling numbers of dental practitioners, many retiring dentists will be forced to sell their practice at a much lower price than desired. Similarly,  as a practice’s number of patients continues to grow over time, more and more administrative  expenses  will amass and decrease the overall profit margin.

As most practice owners will seek to avoid this profit spiral, they will end up taking on more and more administrative responsibilities  themselves, which means even more time will be dedicated to their practice instead of to their family.

According to research conducted by Woolhandler,  Campbell and Himmelstein,  the final drain on profits that most dental practitioners encounter is an extremely high tax bracket. The average annual income for a dentist in Canada, working full time, is $105, 800; hence, the average  dentist will have a solid portion of their earnings fall into the highest provincial income tax bracket  and the second highest federal bracket. For the average British Columbia  dentist, this means  that over 27% of profits are lost to federal and provincial taxes. Through investments  such as RRSPs and TFSAs, many will be able to protect a part of their earnings from taxes. Unfortunately, RRSPs are fully taxable upon withdrawal while contributions  to a TFSA are not tax deductible. Additionally, Canadians  are only able to contribute $5000 a year to their TFSA, which essentially rules them out as a retirement  financing vehicle.

Traditional investment  strategies that have been embraced by dental practitioners  in the past have also added to the grief of securing long-term financial security for practitioners  and their families. The last few months of 2009 have seen even the most conservative investments  plummet in value. Although all mutual funds have been devastated by the after-effects of the sub-prime  credit crisis, the CDSPI (the investment arm of the CDA) has shown that even its low-risk investments  are a gamble.

While dropping at rates comparable  to the market average over the past year, most CDSPI funds show negative or marginally negative value increases  even over a ten year time frame (see table below). This volatility is due to the fact most investment funds depend on the US stock exchanges, which have always been extremely susceptible to speculation. CDSPI’s conservative investment options share a common characteristic with most conservative mutual funds -their portfolio is made up largely of bonds. As seen from the graph below, the most steady (bond based) funds provided a minimal return on investment (about 4% over five years).

Alternative investment methods, such as investing in emerging markets or investment trusts, have also proven to be unreliable when retirement is at stake. Emerging markets will often require qualitative analysis  due to a lack of relevant historical data. While this strategy has been known to discover diamonds  in coal mines, it has also been prone to much higher, longer-term  uncertainty than most investments, due to limited availability of information, political instability, and market limitations. Investment trusts, though a staple of the Canadian  investing for many years, seem to have reached their peak. Due to recent government legislation, they will no longer be able to benefit from the same tax protection. Consequently, the Canadian Real Estate Investment Trust announced in its 2008 management  discussion on operations and financial condition that it is expecting an 11% decrease on its return on investment.

Protect Yourself in Uncertain Times

As we all know, it can be stressful time in today’s  busy world. Terrorism,  natural disasters, bankruptcies, world hunger, global warming- the list of frightening  events goes on. These are just a ew of the issues that bombard  us every time we turn on the TV, open our newspaper, or log onto the nternet. Let’s face it: our world is changing  at an astoundingly rapid pace. Technology is advancing  a speeds we never could have imagined,  and seismic  shifts in global economic powers  are happening overnight.  In fact, we’re even walking faster than we used to.

An experiment conducted  by Professor  Wiseman in his book, Quirkology, revealed that in a sample of

32 cities, average  walking  speeds have increased  by about ten per cent since 1994. Psychologists said the findings reflected  the way that technology such as the internet and mobile  phones had made people more impatient,  leading them to cram more and more activities into a day.

The steepest acceleration  was found in Asian “tiger” countries  such as Hong Kong and Singapore, which have experienced particularly  marked  social and economic  change. Pedestrians in these nations walk between 20 and 30 percent faster than they did in the early 1990s. Singapore  has the quickest walkers in the world.

Such rapid change  has brought along with it more uncertainty  about our own lives, practices and financial situations. The more unpredictable the world becomes,  the more we strive for a sense of control over our practice, our investments  and our life.

As for, Geoff, he has recently been able to diversify his portfolio between  well selected CDA advised investments and investments  in private equity opportunities such as real estate investment  firms. He currently took the initiative to protect his investment funds in five positive cash flow rental properties and believes  this is helping  secure his future should it become too much of a challenge to sell his practice. By diversifying his portfolio into real estate, Geoff has effectively  eliminated the market uncertainties that plague other dentists while continuing  to steadily increase  his wealth.

As growth in our economy grinds to a halt – some would argue is already going backwards – there is one sector that is still expanding rapidly and investing millions of dollars in the process: the dental corporate.

In my case, running one of the groups.A few  months  ago  the  banks had   all  but stopped lending and  even  after the Rudd government’s   stimulus   packages  and    guarantees, lending criteria has  stiffened tremendously and  investments in  new   ventures are rare.  This is with the exception of the dental sector where not only   have   the banks honored their previous commitments to fund the growth of some of the dental groups, but also vastly increased their investment in the sector. This is an unprecedented move by the banks and should be viewed positively by all involved in the profession, whether in private practice or

Even in a recession, money needs to move. Banks need to lend,   business need to borrow and expand and we all need   to stay focused on staying optimistic and positive. What does change however is the way money flows as the banks will only invest in areas they believe to be tremendously secure. A flight to the health- care sector by the banks and corporate investors is a clear indication how secure our profession is currently viewed. So amidst a sea of depression, one area of the economy is still looking strong: ours.

Saying all of this, we need to be as vigilant as every other sector. Dentistry is not totally recession proof   and   I am   sure   you   have   all noticed some change within   your    practice over the past year.  This may  be  a  reluctance to comply with regular recall visits, or a more conservative take up  of treatment plans and  I am  sure  you  have  all  had  at least one  patient not go ahead with work, blaming the current economic situation.

At Dental Partners, we are confronting these challenges head   on with the full   knowledge that improving efficiencies at this time, will not only safeguard us now, but as the economy eventually improves we will be more effective and profitable than our competitors. As one of the largest dental groups in Australasia, one of the ways we can improve the profitability of every practice within our group is with economies of scale.

There is strength in numbers and although all   the dentists within Dental Partners are totally free to choose their choice of lab, equipment, consumables etc. we are able to provide these services at reduced rates, which drop directly to the bottom line.  This is an important factor right now as these savings can easily offset a small downturn caused by the current economic situation.

Economies of scales are only one of the benefits of joining Dental Partners at this time. A few commentators predicted that our group and others would not be able to continue to expand at such a rapid rate. Well as previously stated, the support of banks only gets stronger and with the additional support of our major shareholder, Abano Healthcare Ltd, in New Zealand we are continuing to look for successful practices to become part of Dental Partners throughout the country.  The   current economic outlook has not changed the way we value a practice and practitioner and one of the unforeseen benefits of joining Dental Partners at this time is how you can use the equity released to you from the transaction.  Property prices are  dropping rap- idly,  there are  great deals  to be done  on  items such as prestige cars  and  other luxuries and  as the year progresses this will  become even  more acute. Doctors joining Dental Partners this year are going to be highly liquid at a time when they can really benefit for this liquidity.

Releasing the equity trapped within your business is certainly a major benefit of the Dental Partners model, but we truly believe so is the collegiate. Running a business, in particular a professional business, where you are providing both the actual service as well as managing the business can be a lonely job. Running a dental practice in my opinion is a full time job, but currently you do this as well as eight hours or more of dentistry per day. As part of the Dental Partners model, we can help remove some of the more mundane tasks you currently have to do allowing you to concentrate on the more rewarding aspect of running a vibrant practice.

Dr   Gavin Clarke joined Dental Partners in 2008 and has this to say about his involvement:

“I would like you to know how pleased I am with the transition which has   been totally seamless.  From   a daily clinical view, all continues as before – for both staff and   patients. The Dental Partners team has at all times been extremely helpful, courteous and   efficient. I look forward to the continuing working relationship between myself and Dental Partners.” Dr Gavin Clarke (Tweed Dental

Centre)

Whether the Dental Partners model is the correct opportunity for you and your goals, and indeed if your practice is the right fit for Dental Partners, can only be truly assessed through private and confidential discussions. Should you wish to organize a preliminary discussion, simply contact us on the details below and we will be delighted to arrange a time to visit you.

As  for  this year,  we  intend to be diligent but remain optimistic in  the knowledge we  are  possibly better placed than any other sector in society to not only  maintain our  businesses, but expand them. I wish you well with the challenges 2009 may hold, and if appropriate I look forward to helping you with these.

Lifcos activities include subsidiaries in 29 countries with sales in more than 40 countries. The Group is divided into six business areas: Dental Products, Machinery & Tools, Sawmill Equipment, Contract Manufacturing, Interiors for Vehicles and Environmental Technology. According to the company, Lifco Dental Group for many years has been the market leading distributor in Sweden, Denmark, Finland, Norway, Estonia, Latvia and Lithuania.
In January 2011, Lifco entered the German market when acquiring the majority of the shares in NetDental GmbH, an internet based distributor of consumables to dentists and dental laboratories. With the addition of EDP, Lifco wants to expand its market presence in Germany and establish market positions in Switzerland, Austria, Hungary, Czech Republic, Slovakia, Slovenia and Croatia.

Furthermore, the acquisition of EDP ought to make Lifco one of Germany´s largest import based dental laboratories. After the acquisition, Lifco Dental Group will have a combined turnover of approximately SEK 3000 million (€336 million) and 1100 employees. The transaction is subject to regulatory approvals.
EDP, based in Lübeck, has an annual turnover of approximately 120 million Euros and employs around 630 people in nine countries. The company consists of two business areas, both within the dental industry – business area dental distribution and business area dental laboratory production.

Lifco states, after the acquisition of EDP the Lifco Group will have a total turnover of approximately SEK 6100 million (€638 million) and employ about 3000 people.

What had started as a one man operation with his wife as the receptionist had grown into a booming business including four other dentists plus administrative staff in purpose built premises.

Now in his mid 50s, Ian was looking to retire in the near future but was facing the problem of how to dispose of the business.

With no family involved in the industry, there was no one to pass it on to and none of his staff were interested in running their own practice, preferring to continue earning a good income without having the day to day hassles that come with being the “boss”.

The obvious solution was to sell it and accordingly Ian had asked his accountant to give him an estimate of what it might be worth as a going concern.

After doing some research, his accountant came up with what seemed a very attractive figure to Ian.

The problem was now how to get it. He knew of  some of the bigger players buying but how to ensure he was making the best decision was impossible.

He knew none of his immediate competitors would be interested as they had their hands full with running their own operations and, in any case, were all in a similar age group to himself and were probably looking to get out themselves.

The thought of putting the practice on the open market didn’t appeal much at all to Ian and the chances were, according to his accountant, that a potential buyer might be someone in a much younger age bracket who may have trouble raising the necessary funds to complete the purchase which would mean Ian would have to effectively become a financier of at least part of the purchase price which wasn’t an attractive concept at all.

Besides how did he know if someone so much younger would have the experience and necessary skills to run the business as well as he did.

Ian cared a lot about his staff and clients and the thought that they wouldn’t be looked after as they were used to filled him with dismay.

Luckily for Ian, a colleague suggested he contact Collins Acquisitions and we met with Ian to get clear on his needs and concerns.

It turned out Ian still enjoyed the interaction with his patients, many of whom he had known for years and he confessed that he would really miss that.

In short, although Ian was tired of running the business on a day to day basis, he wasn’t really ready to retire just yet.

His accountant had also advised him that there would be some significant financial benefits if he could continue working a bit longer.

Once we were clear on Ian’s situation, we were able to come back to him in a relatively short time with a couple of options for him to consider.

One was an attractive offer to purchase the business on the basis that he walked away at settlement and the other allowed him to stay on for an agreed period earning a good salary without having to worry about running the business.

After due consideration and discussing both proposals with his wife and accountant, Ian chose the second option and today happily remains interacting with his much loved clients and former staff without the hassles of being the boss.

Oh and the purchase price… well let’s just say the accountant was also surprised!

American Dental Partners Inc. said Monday that it agreed to be acquired for about $317 million by a group led by the private equity firm JLL Partners Inc.

The company, based in Wakefield, Mass., has affiliations with 27 dental group practices with 282 dental facilities located in 21 states.

Under terms of the deal, its shareholders would get $19 per share in cash for each of its outstanding shares. That represents an 83 percent premium over the stock’s closing price of $10.38 on Friday.

Its shares rose $8.20, or 79 percent, to $18.58 in afternoon trading Monday after rising to a 52-week high of $18.71 earlier in the session.

American Dental said a special committee of its board members negotiated the deal and recommended it to the full board, but it still needs shareholder approval.

The buyers would also assume $81 million in outstanding debt, boosting the value of the transaction to about $398 million.

Under terms of the deal, American Dental can seek acquisition proposals from other parties for 40 calendar days from the date of the merger agreement, and New York-based JLL Partners has the right to match a superior proposal.