From the British Army to Building a £24M Dental Group | Mark Aichroth #46

Can a dental practice owner sell part of their business without surrendering its culture, identity or day-to-day control?

In this episode of The Business of a Clinic, Jared Aron speaks with Mark Aichroth, co-founder and CEO of DeNovo Dental Partners, about a different model for dental consolidation: shared ownership.

Mark’s career has taken him from 10 years as an officer in the British Army to hospital administration with Humana and HCA, health insurance, the early team at Circle and, eventually, dental acquisitions. Those experiences shaped his belief that healthcare businesses work best when clinicians have genuine ownership and influence.

Mark explains how DeNovo grew to 16 practices, approximately £24 million in revenue and more than 300 employees. He breaks down how its partnership structure works, including its combination of cash and parent-company shares, incentives for EBITDA growth and the balance between practice autonomy and financial accountability.

Jared and Mark also discuss why the traditional “buy, combine and sell” rollup model is becoming less effective, why simply acquiring more practices is vanity without operational growth, and how shared ownership can improve culture, succession and staff retention.

They cover:

•  How military leadership translates into healthcare 
•  Earning trust and credibility with clinicians 
•  Building a dental group from an idea 
•  The economics of shared ownership 
•  Why dentists resist top-down consolidation 
•  Practice autonomy and EBITDA accountability 
•  Shared services and dentist-led knowledge sharing 
•  Staff ownership and retention 
•  Measuring clinical excellence 
•  What makes a dental practice attractive to DeNovo 
•  The importance of chemistry during an acquisition 
•  DeNovo’s ambition to grow beyond 100 practices 
•  AI, digital imaging and the future of dentistry 

A conversation for dental practice owners, healthcare entrepreneurs, investors and operators looking for a more durable way to build healthcare groups.

Transcript

SPEAKER_00 0:00

I started in healthcare a really long time ago. It sadly coincided with the global financial crisis. And um I never forget we were on the sort of stream of building hospitals and I think we had 500 million of debt with uh Leland and 500 million debt with Raw Bank Scotland. Must have been a lot of fun. And well, no, but you can imagine where those lines of debt went very quickly. So best product, best people, and thirdly the best systems and operations. You can put those three together for that best product, then you'll have a great business. There's a graveyard littered with people who basically bought lots of practices and smashed them together, irrespective of the quality and thought they would get at a high amount of when those days are sadly over. Doctors really hate the stylingness top-down. We're also gonna paint you blue and these are uniforms. Immediately, dentists bat against it. I always remember one of our early stage um dentists, and she won't mind me saying this, said, Look, I'd like to uh buy my practice nurses some pretty nice handbags at Christmas. Can I still continue doing it? I say, yes, you can, because what we do is we give them autonomy, but we also ask them to guarantee their rebill. So we asked them to guarantee on the way in for five years. I'm very proud, actually. Our staff turnover is below 4%. The industry average is 20, and post-transaction it's normally 25%. I always believe, you know, healthcare is like having your kettle on the stove. At some point it's going to explode, you just don't know whether. However, the people that ask the toughest questions, and maybe a bit niggly with it, they're showing they're engaged and they're thinking about it. And actually, some of the people who've asked the toughest questions have been some of my most successful partners.

SPEAKER_01 1:54

Great. So we're back for the business of a clinic. We're here with Mark, who's going to share a bit more about his journey in private healthcare leadership and what came before that. Mark, do you want to introduce yourself and tell us a bit about your journey at a high level from start to what you're doing now?

SPEAKER_00 2:09

Okay, sure. Um hello, Mark A. Croft. I'm uh currently uh a co-founder and chief executive at De Novo Dental Partners. Um I started in healthcare a really long time ago, because I'm pretty old now. Um uh as I uh but prior to that I spent 10 years as an army officer um in the Bush Army and uh did lots of exciting and and interesting things and really sort of fell into healthcare in i in some ways. My father was a was a surgeon, my wife um is a nurse, and so I'd always had sort of medical around me at that time. And uh I was I was lucky enough that uh company called Humana, which eventually went in well or its hospital side went into HCA, um, ran a training program um for people that had come out of the army. Um and that was in the States and then sort of finished off quite a lot of it in in Europe. So I went on to that uh training program, and that was in hospital administration, and it was phenomenal. Uh it was a one-year program, and they you know taught you everything from each different specialty following patients through to engineering in the hospital, etc. You really got ground up and uh and I I I really found that I enjoyed it, I enjoyed hospital administration, and I was I was very lucky in that uh my first job was as uh a senior director was uh um with what is now HEA, the hospital they had in Giva and Switzerland. Um and I suddenly found that I had a real interest uh for development and I got to know quite well Rick Scott, who was the chief executive of Columbia HCA, which it was then. And uh he's since gone on to become the Governor of Florida and uh very eminent man. But uh I I got I got really into development at that stage. HCA went through a few problems and I so got recruited and went into health insurance. Um and spent time with uh Humana Health Insurance and Blue Crossblue Shield in in Chicago. But all the time I was very interested in doctor ownership. I felt that if doctors owned part of something, that they could completely it was different how they interacted with it, particularly when 85% of the cost in healthcare is influenced by the doctor. So if you don't have them engaged and on site, it's always very, very difficult. And came back from the States in in the early 2000s and had the good fortune to meet uh Ali Parser at the time, and you know, so shared our view very much on on doctor ownership and was one of the first three, four people to to join Circle in a very small office in the city. And we took it very much from an idea to then buying some hospitals and then building our own brand of hospitals, all the time the shared ownership. Circle, we took it actually to the next level at that time. 50% of the equity was owned by everyone who worked in the company. So it was a really, really exciting time. Uh it sadly coincided with the um uh global financial crisis. And uh I never forget we were on the stream of building hospitals, and I think we had 500 million of debt with uh Lehman and 500 million debt with Raw Bank Scotland. Must have been a lot of fun. And well, no, but you can imagine where those lines of debt went very quickly. Um and you know, we we we've very much had stare life, but we managed to keep on course and weathered through it. Um company uh went public in 2012. And Ali left in the end of 2012, 2013, ISA left fairly soon after that. And uh, you know, I suppose the next thing is I did a couple of other entrepreneurial things, but uh I got asked and got involved in in dentistry just really straight after COVID, really. I had a contact, uh, Australian with some Australian investors, and they had this sort of shared ownership model, this partnership model that I thought was really, really interesting, which had been tried before in Australia, New Zealand, and Canada. And they asked if I would go out and uh help set up and help help roll it out, which I was very pleased to do so. Um it was at an interesting time. It would play to something I I liked. I enjoy working and interacting with uh with the dentists, very much like the doctors or the surgeons that we were doing before. And uh I spent I spent just over a year in the States buying practices and and and moving it forward. I I felt I felt a little bit at the time it was not entirely what I wanted to do. Um I felt a little bit of an employee and I still had this sort of entrepreneurial itch that needed to be scratched. And and also the investors were very keen about move to the United States at the time. And um my wife just said 20 years ago, yeah, great, but not half. Um, which I was a little disappointed at the time, but I could understand her point to you. So actually on the way back on the plane, I uh started writing the business plan and the mission and vision values for what we've uh created here in the UK with DNA Dental Partners. And uh and I I I flew back and I spoke to a couple of my colleagues that I'd worked with with United Dental Poor in in America and said, look, I'm thinking the UK is really interested. It's unconsolidated, it doesn't have anything um like the amount of DSAs uh that there are in the States. I think it's really interesting we should have a look at this. Um the interesting thing was I didn't know any dentists. Um, and uh and uh I was very lucky with Kristen Pope and uh Derek Schnack joined me um as part of the sort of founding team of De novo. And uh yeah, and we we took the idea of the shared ownership model, which I'm sure we'll get into in a moment, but we took the shared ownership model and we managed to find um some dentists that were really interested. I also talked to a a dentist who was working with me on something else, and I took the idea to him and I found out that he, you know, he had he had run a dental consulting business, and I sort of took the idea to him, and he said, Wow, yeah, this is really interesting. So we started developing as and rolling it out with dentists in the UK. Um, and there were some very gracious dentists who said, We love this model, um, we're really interested, we'll go with it. So we said, Great, and we signed these letters of intent, but then it took a little bit of time for us to get funding, about a year and a half of that, um, because it was interest rates had gone up, etc. And we have a lot of rejections from private equity. A lot. Um, and then we came across one and they were very gracious, and and here we are today. I have a lot of questions.

SPEAKER_01 9:32

Yeah, sure. Um I think uh maybe it was too. That was one flop. I I I I think there's a the the first of all, it's a very interesting journey because it seemed like um there were multiple points in your own career where the next step was perhaps not the obvious one, and yet it is the one that you took. So for example, as you suggested, um coming out of service, moving into healthcare, there was a one-year program that seemed to be the right foray into the next space. But I imagine that it could have just as easily been something completely different. And for whatever reason, that was the pull. You had some personal connection to healthcare. Yes. And then similarly in dental, uh, not a space that you necessarily had great connection to or knew very well, and yet you found yourself again where the opportunity collides with this the idea. So I'd I'd love to understand, I guess, going back to the beginning of the journey. You did this one year program, which you said was was really wonderful, took you um all the way down into the the weeds of the healthcare environment. This is in the US, this is in the US, which is a different animal in some ways into itself. I'm curious, what married or what carried across the experience from being in military service to becoming a healthcare leader? What were the the sort of principles of service and leadership that you found were completely natural as a bridging function to the work you then did in healthcare? And what did you have to sort of learn from scratch as completely unfamiliar territory?

SPEAKER_00 11:03

I think that's um it's a really good question. I think the first of all, you've you know, if you're not a young army officer, you learn from an early age you've got to be able to talk and you've got to be able to relate and you've got to be able to work, and in many ways, you've got to be able to sell internally a lot of what you've got to do. Um you've also got to be incredibly collegiate. Everyone thinks the army, the British army is very authoritarian, it's not. It's it's very collegiate. You will have people who have a lot more experience, you're sergeants or corporals who will will let you know the way they think, but they expect you to still lead, they expect you to still carry out that plan. So in many ways that that's very similar. I think and and they they want to see, you know, they wanted when I remember on training program, they wanted to see great drive and enthusiasm and uh, you know, bias for action and and working, they want to see a a good level of written. The big gap I had was I hadn't had any financial training of any type. And um I remember they sent me on this the first uh was the first year of coursework of ACCA charts accounting uh thing. And uh yeah, I realized I didn't want to be a good uh accountant. One year of scripturing to Well, it it was compressed and um but actually it it gave me a really I was really because certainly working for an American company like HCA and their growth that they were going through at the but at the time, you know, they uh ever you know, I I didn't even know what eBid that was then. Um and then I quickly learned how some multiples of and and just MA and all the rest of it. And I had some wonderful people that took me under their wing and really showed me how to do transactions um right way through from you know opening your term sheets all the way through to completion and selling post agreements, etc. So I was incredibly lucky to have had that. And I and then I think my time in the military combined with um some mice of uh education that I got just uh allowed me to sort of find that I really enjoy doing this. And I think I always enjoy you know the developing of the relationships, you know, whether that was in Spain, Switzerland, the Middle East, South Africa, we did a lot of work. You know, it was a really, really exciting tone.

SPEAKER_01 13:26

It's it's interesting to hear you describe the journey of becoming uh my words, not yours, financially literate in a way that perhaps you hadn't been.

SPEAKER_00 13:34

Mind you, I might point out probably um my managing director in chief financial officer might doubt my literature.

SPEAKER_01 13:42

We'll invite them to this conversation. But but I think it's interesting because I I imagine in some ways that may actually give you andor the DNA in de novo a sort of empathy for some of the practices that you go on to work with. Because I know from the work that we do, many of the clinic leaders that we engage with uh are extraordinarily competent and thoughtful in and around all things patient care, patient experience, patient journey. And when it comes time to uh wrestling down the financial backbone of provider operations, perhaps that's a less familiar space. So I I do you think at all that that experience of having to learn and play catch-up has sort of given you a slightly different, maybe more rounded view as a leader in the space? Is that idea that oftentimes consolidation comes with a very clear private equity hat, and oftentimes people may not have the same form of empathy that you might have moving into that space. Has that been something that you've seen at all in the work?

SPEAKER_00 14:44

I think that the the sort of three things that I sort of learned very quickly. You've got to have the clinicians on your side. If you're running a private hospital, they are you like that. If you don't work with the clinicians and recruit the right surgeons, always was sort of told you pick your studs, pick the right ones. Don't pick, you know, the top one. Because you've picked the top one, the rest won't join you, you know, and really be careful in who you work with going forwards. And you know, you will always have issues. Um, you know, when discussing, you will have problems. And and I always remember I I was told, first of all, you know, in many ways a clinician will look at you, a surgeon or a dentist, and they they will think, Look, I've been trained to do what I do. I've been trained extremely seven years of my life, I've been trained to do what I do. I can probably do most of what you do, and I could probably learn it. So you've got about 30 seconds all maybe lucky, in which to really m make me believe that you're gonna make my day easier. And then if you combine that, secondly, with um you've got to remember that that the surgeon or the doctor is or the dentist is always going to look at everything from the patient's point of view. So if you can prove to them that their patients are gonna be safest in the environment you're gonna create or the systems that you're gonna create around them, you you're starting to to make progress. And if there's a difficult decision, they will always look at it from the patient point of view. So you've really you you've really got to get that in your head. And uh it's one of the things. And then, you know, the other thing is if you're trying to create a great company, um and these aren't my own, I I borrowed them from other people, but um, you know, if you can first of all have the best product, whether that be a hospital, dental company, insurance product, whatever it is, and you can have the best product, that is really important. Then if you can hire the best people to hire to to sell that best product or to make it work. So best product, best people, and thirdly the best systems and the operations. You can put those three together for that best product, then you'll have a great business. It's relatively straightforward, it's relatively simple. But I I've always sort of done that, and you've got to try and convey those aspects to plenitials going forward. So that's what you're gonna do.

SPEAKER_01 17:16

I have a colleague who says simple but not easy. Yeah. Um, which is I think very much the case here.

SPEAKER_00 17:21

But but also, you know, you mustn't forget a lot of people are always looking for the simple answer in healthcare, and there isn't necessarily. Very often you have complicated problems that have complicated solutions. It doesn't necessarily mean that you have a simple solution to everything.

SPEAKER_01 17:36

So we're now uh into the de novo chapter. The uh the the backstory for how makes sense. You saw an opportunity. You became curious about the UK. Obviously, you are British by background, so you probably had a first-degree understanding for consumer behavior, market behavior. Obviously, there's an NHS backdrop in this as well. Where are we now with De novo? So you're up and running, it's it's capitalized, you're growing, you have a leadership team. What is the reach? How many practices and or patients are served and or metrics of your choosing? Where is the business now?

SPEAKER_00 18:11

Well, very grateful to our investors because essentially we didn't have anything to sell with. You know, we came with an idea. Um we said, here are some lessons of intent for some practices we'd like to buy. Can you fund us? Um and they said that's unusual. Uh and so they they very much sort of said, Well, we'll work with you to build the company around you. This is really exciting. And so that that that was a start. So actually, when we started, which is only in Mark's the first 25, so just what 15 months ago, um, we had at that point six practices, four transactions to which we bought the same day that we also funded the business. So everything happened on the same day. And I'm very grateful because we we really had some amazing people um at that point. Someone, Karen Best, who's had, you know, in nearly 40 years in um in dentistry, done every job right for up to COO of some of the largest companies. Brad Southwood, who had done a number of exits within private equity, came on at the time as CFO, um now has moved into the managing director position, and he had done a number of exits, really understood the private equity world. And then Udie Wickrainer, who's now moved into the CFO, who had a strong MA background and understanding, and but we had no officers. Um Kristen, um, who's my co-founder, was based in the United States, and she was running the transaction process and a lot of the programs. We had no bank account. We had do nothing. And all the time. So for the practices and things built practice buildings, and you know, it was, as I said, it was um you know slide building aeroplane as we were flying it. But we had to do it. And then we also had a huge drive from our funders, right you say, to get to to get to um uh break-even. Um and we could only do that by acquiring some more practices. And literally the day we got funded, our whole pipeline for one roo reason or another started to fall apart. So we had to focus on getting the six practices um together. Um this is where Brown was um MD Bantalfort was just remarkable. He said, Right, let's let's take it back to basics again, let's redo the cred stack, let's redo the marketing, let's think about how we're gonna do it. And it was the right call. And uh we then started buying more practices, and uh, you know, at the end of last year we managed to get to, you know, approximately to uh city doll break even. Fantastic. Huge amount. And uh we now have 16 practices. I think we've got about 24 million in revenue and about 300 something employees, and uh, by the end of the month we'll have another five practices um with some sizable acquisitions going on. But look, this was this is easy by comparison. It's it's vanity buying practices. Everyone says in dense real night practices too that there's a graveyard littered with people who basically bought lots of practices and smashed them together, irrespective of the quality and thought they would get a higher multiple. In those days a sadly. Um so and what is really important now is okay, buy the practices, get the get the eBid DA, but then show you that you can grow it. And show that you've got something. Different to you build up every culture and all the rest of it. So there's actually the hard part, and I'm you know incredibly grateful for the operations team under Karen integration with Kristen, the way that we've managed to pull the these practices together and get us to where we are at the moment.

SPEAKER_01 22:17

It's interesting. I'm I'm I'm reflecting back on some of the other folks who have joined us. We had a a gentleman from uh Shore Capital out in the US who do a lot of healthcare consolidation. Um another gentleman who leads MA in the MSK space. And it's very interesting to hear you say that because A, it echoes what we've heard, which is that the good old days of buy and smash and sell are sort of the thing of the past. But also when you start to look at that uh value creation story, the question then becomes sort of where do you go first? Because you can start sort of hacking off the bottom or adding to the top. And it's usually a bit of both. So I'm sort of curious when you think about the value transformation story at a site level, what does that look like for you? What is the sort of the de novo story of we take a practice from A to B? What is A and what is B on that journey?

SPEAKER_00 23:08

Okay, so that uh well, I I think this is really getting to the meat of what we weren't all about. And we have a very unique different model. It's not our M model, it's one that had been tried very successfully in Australia and Easyland and Canada. We've adapted it for the UK market. But essentially what we do is we um we buy at a fixed multiple with eBITDA on a cash-free-dept-free basis. Um we buy the practice and um we we pay multiple with eBITDAR and we pay 70% in cash and 30% in parent company stock. Is a parent company stock? This is a s institutional strip stock. Um hasn't had any monkey business, it's not got loads of vesting and heaven knows what, is as if as I say it's the same. It's the same stock as if I which I did invested all with my colleagues in the business. Okay, so so we do that. Um and our multiple is quite a bit lower than everyone else's, I might point out at the at the front. So that that's always quite interesting. Secondly, we say, look, you now become a partner at that point, you know, and collectively after the investors, the dentists say the most um stock in the in the company. Um, and you are now a part owner of the business, and part of being a part owner in the business takes a responsibility. It's exciting, and it's only through shares that you have a real say and a real input into the business. So they're listening at this point. Um now, as I said, we we pay a little bit less on the going in. So we pay on the going in, we pay on the way through, and hopefully with some liquidity event we pay on at the end. On the way through, um uh so if what we essentially do is we set what their last 12 months E-bit DAR is. So let's set 200,000 for a practice. Um, if they manage to grow that e-bit dollar, we then pay them a multiple of that e-bit dollar at the end of the year for just the growth amount. And again, we pay 70% in cash, 30% of the stock. And we do that at the end of year one, year two, and year three. So they can actually make quite a sizable amount. And essentially what you're doing is you're paying a certain amount for what your e-bit dollar will be in three years' time.

SPEAKER_01 25:29

And and is the growth so I I'm about I'm running a dental practice hypothetically. I'm a six surgery, 2.5 million turnover, 350k even whatever it might be. I'm approached by de novo. I think it's really interesting. I like the idea of shared ownership. I'm c I get comfortable with a lower ticket on the way in. Now I'm gonna try and do some of his growth over the next 12, 24, and 36 months. Is that growth entirely on my shoulders? Am I pulling on the shared services and expertise of de novo? What does that sort of growth model look like?

SPEAKER_00 26:04

I'm now gonna if I could, I'll just take take you a bit further into the So one of the reasons why they really like uh de novo and and what I've been trying to achieve my whole life. Um I've been in healthcare is that you know doctors really hate the styling this top-down. Um, we've decided that we're going to you're gonna use these types of implants because we decided we got the best price and we decided the product quality's good. We're also gonna paint you blue, and we these are uniforms. Immediately dentists bow against it. And you know, the traditional model of a lot of our competitors, and it wifed up the time, but we're different, that's all I'm saying, um, has been to buy them, pay 70% up front, and then pay the other three years based on growth and hitting various targets. But what happens then is they immediately use control. Okay. And what we've just said is with our model, we're gonna pay you at the beginning, but you're gonna keep control. And we don't just mean clinical control, we mean complete autonomy. You're able to continue running your practice going forwards. And that's really exciting, and they get really excited. I always remember one of our early stage um dentists, and she won't mind me saying this, said, look, I'd like to uh buy my dent my my practice nurses some pretty nice handbags at Christmas. Can I still continue doing it? I say, yes, you can, because what we do is we give them autonomy, but we also ask them to guarantee their EBITDA. So we ask them to guarantee on the way in the five years. If they take another one of the additional things, then it's another year added on for each additional year they take to go out to eight years. So they get the autonomy, but in return, they have to guarantee the EBITDA. Nice. So it's kind of uh an interesting thing. And then, you know, during this whole process, they'll have amassed quite a few lot of shares. Hopefully, we go through our process. They feel comfortable that they're the same shares that that we all have, that we're all motivated together, and that they understand that our investor is going to, you know, want to get out at a certain point and allow someone else to run with it. So it's very exciting from that point of view. So there's this you know, on the way in, then the way through with the the growth, and then and then the shares at the end. There's the autonomy, but also the path to growth. Now, initially many many of the dentists will initially say, Okay, you said autonomy, leave me alone. I don't even want to see you for six months. Okay. I'll check in on the monthly basis and we'll do team schools, but I don't want you turning up and looking at the practice because I've gone with you because you've offered autonomy. I understand what I've committed to. I've got to meet that last twelve months, you bit dark. I understand that. I will do that, but just leave me alone. You sit in that. We obviously make sure that there's an element of IT connectivity protection, obviously compliance systems and banking. We have to make sure those all because ultimately I'm the non nominated individual and responsible from a compliance point of view. So we have to make sure that all of that comes together. That's really important. Um But the and then you you you sort of said, but actually after a while, then they suddenly say, Well, look, I could actually do quite well on growth. Um So then it's when Aaron and Becky and their team may stop coming in and and and they say, Well, look, here are some of the things that we can help you with. We can help you win your supply costs. We have great relationships with dental directory, Henry Jai. We have fantastic relationships with the um with Dem Plan, um uh patient plan, Patient Plan Direct, that provide the uh sort of uh payment plans for dentists. We have a lot of different uh opportunities that we're able to roll out. So part of what we've been doing, this is where the team has been saying, is we've been creating these playbooks, creating an onboarding processes. Remember, I talked about systems, you've got to try and document all of this so it all works, then do it time and time again, which is is is really important. In in some ways, in some cases, some of the dentists they want the autonomy, but they want us to do everything. And we have to say, no, no, no, you'll still get every run your practice, and you're going to be doing that for a number of years. So you've got to you've got to get comfortable. We support them, and actually, we find that having our team there reinvigorates them. They really get very passionate about what they're doing. And then at the same time, we have a lot of central functions that we're trying to do. So we're trying to get this collegiate feeling. And, you know, some of them are really interested in clinical governance, some are interested in, you know, finding out the latest system or whatever. And so we have groups led by the dentists, the executive will support them, that actually try these things out and test them and roll them out. So we get this dentist-to-dentist sharing of the knowledge and information.

SPEAKER_01 31:17

It's interesting. I I used to run a uh multi-site medical aesthetics group, and uh one of the things that uh, and I've spoken very openly about this, one of the things that was missing for me in that journey was exactly the thing you just described, which was sort of practice leader-to-practice leader. Rooted in shared winning. You have that far to frame it. So the idea that um you've made this mistake down the block. I don't have to make that same mistake, I'll learn what you've done, and hey, by the way, I've figured out this thing, and this might be really beneficial to you. I found it very hard to create, despite best efforts, that sort of relationship with out-of-group uh practice leaders, perhaps on a surprise. So I can totally understand why you're uniting practice leaders who otherwise may not be in contact, and you're giving them that forum to say, hold on, we we have a shared brain of how to do things well on an opt-in basis, because that's what sounds like the the DNA of the group is.

SPEAKER_00 32:17

Yeah, it's it's completely opt-in. They don't have to do it because they got autonomy. But they say, Why wouldn't why wouldn't I? Probably much nicer to have that ball than to have it sort of be pushed, which I think is exactly exactly. You've got to con you've got to constantly work in that. And it doesn't happen overnight. I really jarred it, it doesn't happen overnight. It sounds you know, you've got to understand when you when you buy when you buy them initially, you know, suddenly there's this change. You know, the banking is different, compliance is different, the IT is different. There's there's quite a lot that they've got to deal with uh initially. So you've got to and some people it takes longer, some some people it's quicker. You've got to keep that communication there and make them feel really part of it and make them see the prize. That's that's the exciting. But I think the the beauty of what we're trying to achieve is that you know, we're now starting to um uh enhance or extend shareholding to within the practices. So one of our practices up in the north of England, she's already um shared a lot of her shares with all of her staff in the practice. Beautiful. So, you know, I always joke and say, you know, we want to create a John Lewis always of uh of dentistry, although that's just a profit share, I might point out. But um, you know, we want to really create this feeling of ownership. And and and I always have people speaking and talking to us about that that shared ownership, the responsibility of being a shareholder in a company. And then we're also looking at associates. So we're you know what's going to happen when that dentist might want to be able to do that. So we're always looking at um associates that we can in some way incentivize and can take on some of that commitment agreement for the eBit Doc, but also then take the business forward in the in the next use. And we've had some really successful examples on that. And I think that will make us more interesting as a company because we could almost show, you know, if we've got guaranteed profits in perpetuity going forward.

SPEAKER_01 34:24

And it's much more durable as well. You don't have this when everyone's always concerned about the hyper-exposure to a single principle or two principles, three principles. What you're saying is actually we found a way to compress some of that practitioner exposure on a revenue contribution basis in the in a single clinic side. I'm actually thinking we we work with a few dental practices, and I'm imagining that if they end up seeing this, they will suddenly start wondering if there's a different path forward. I think one of the things that we see in in dentistry where we do work, but also in other healthcare sort of specialties, is that uh the teams in clinic that really believe in shared value creation, you you feel it in the in the clinic. You you feel that sense of uh of shared purpose, of winning means we all win. We have a clinic that we work with that was just acquired by a medical aesthetics group, US-based, and they have a small and growing presence in the UK. And much as you're describing, the clinic co-directors decided that they would create a stock option plan for employees of the clinic, people that had been there for a certain amount of time. And it was a wonderful outcome for the whole clinic. And I think that, you know, particularly on the front line, you have massive recruiting obligation, churn issues, staffing issues. Half of the cost in human capital in clinic is just going to be around that retention and incentive alignment. So the fact that there may be a model for practice owners to actually do that. I can see how that alone would be self-fulfilling in terms of its ultimate contribution to profitability and durability in the group, which is very interesting.

SPEAKER_00 36:00

I'm I'm I'm very pleased, I'm very proud, actually. I know we've only been just over a year, but our staff turnover is below, is around 4%.

unknown 36:09

Okay.

SPEAKER_00 36:10

And then you have it. And you know, the industry average is 20, and post-transaction, it's normally 25%. So it it it says something is is is slightly different, but I think also I I I feel our sort of cult our culture, you know, I remember you are saying our roses on on on the plane, on the waves. And I'm not going to go through all of it, but there are some really, really big things within that. You know, we've we try to be very inclusive. Um, we believe, you know, the um the subrain power of the many is better than the few. Um may take us longer to make decisions, and it does. But when we take that decision, we're very ruthless in the execution. Um, but we've got we've got a lot of a lot of thought and uh uh and everything that goes over there. We also um we like to you know be a little bit quirky or a little bit different. Um and we also made a conscious decision that no one was going to put themselves forward more than anyone else. We're not going to, you know, paint everything pink and have you know lots of excitement over everything. We're just gonna studiously get on with it and make it and make it happen. The the the aspect of ownership has been really, really important. So we felt that if we could create that that feeling of ownership across the whole thing, make the pe make everyone who's a partner feel a partner and that they had influence. So we have to have partners events, which we do, and um we've got us a big partner event in in November and some some fantastic people to work with. I think one of the most exciting things, and you'll hear a lot of people talking about this, but I think is an opportunity very much for us. Um and I think it'll be a couple of years, but one of the practices we bought in the Southwest, um, Ian Mills, he was uh he was uh dean of the School of Dentistry in the in the Southwest and very, very passionate about excellence and quality. And you know, when when I was at HCA, HCA really had moved forward in outcomes and understanding. And, you know, as an executive in in a hospital, I I could say, you know, someone who's done an ACL reconstruction, I could find out what their failure rate, there's how many they're done, products they use, their infection rate, their rehab rate, everything. And likewise in prostate surgery, which is is terribly important. Although there'd been some outcomes that I have to be careful here within the NHS thing, I don't feel that there's that real excellence agenda to the same level. And there's some real, real opportunities. And that I think if we can create a company that can differentiate on excellence, that would be really exciting. And that's something that we will be investing in and we will be uh starting to capture. Everyone gets very passionate about it. It's actually having doing it and and seeing it through and making it happen that that becomes terribly important as we if we go forward.

SPEAKER_01 39:16

It's funny, before uh being in clinic operations, I uh I was part of building medical devices. And the things you were saying in my head, uh you say, you know, what materials were used and what was the failure rate. To me, this is a bill of materials for building a medical device. You have to operate to that standard. And it was so surprising to me that um then taking that medical hardware into a clinic environment and coming to realize that there was a slightly less rigorous view of clinical excellence by comparison to the devices that were being used in clinic. Now, on the one hand, you say, great, uh, much like driving a car. You you need the car to be reliable, but everyone drives a bit differently, so there will be some trade-off. But I think the USP or one of the USPs of the group in what you're describing sounds like it is um not only the shared ownership component, I think there are a lot of brands, particularly as private healthcare starts to embrace a little bit more of a consumer positioning in some parts of the market. What you're saying actually is we are going to be the place where the quality bar will be nothing shorter than here. This is going to be the place of clinical excellence, potentially even standard setting in clinical excellence. Is that part of the brand ambition for for Donogo?

SPEAKER_00 40:34

We've been very, very picky about practices that we've gone for. Um diplomatic way. And and we continued, continue to be, we've said no to a lot. Um, and we will continue to do so. Look, I don't want to, I'm setting myself up for a forward. You know, I always believe, you know, healthcare is uh the you know, it's like having a uh a kettle on the stove. At some point, you know, it's gonna explode, you just don't know when. Um and and it will always catch you up. But if you have the policies and the procedures and the the focus on excellence, and you will live to bite another day and things will be good. But that is gonna happen, and I'm not stupid enough not to realise that. But um, I think your point is right. If if we if we can differentiate, you know, we've got a unique offering, we've got we've got quality practices, we've got scale, um you know, we've got a an opportunity where profits are locked in and where and and and also some succession within that. Why have so many dental companies failed to go public in the US? It's because of succession. They have not been able to continue having dentists working within them, you know, particularly base coded. And so I think if if we can crack that, I think we'll be in a much better but you know, we've got to do a lot. It's not going to be entirely easy to do that.

SPEAKER_01 42:01

What is the journey here forward? So now you said you're doing your 16 sites. I'm assuming four or five surgeries per site on average, six surgeries per site?

SPEAKER_00 42:11

No, generally it varies. Minimum of three surgeries. Minimum of three. Okay, so some quite a lot more. 60 surgeries, yeah.

SPEAKER_01 42:19

I'm making it up across the group thereabouts. Uh you mentioned 24 million in top line, profitable, in and to itself a huge accomplishment. What does if we sit down in a year and we say, how is the last year made? What is the journey forward for de novo on the next 12 month, 12-month basis? Is it uh more of the same? Is it uh a slight change in appetite for practice profile? What what is the what is the next chapter of the story?

SPEAKER_00 42:49

Yeah. Jared, that's a very good question. I think look, we would like I would like to get us to over a hundred practices. When you get to that sort of size, you uh you get the economies of scale and and uh and many different things. To get there is hard. You know, you remember at the moment we're doing about one and a half acquisitions a month, let's say. Um but for us to get there, we're going to have to really ramp up and and and and do a lot faster and better. And you know, you just doing two, that means you know, you've got two unionary letters of intent, you've got two investment committees, you've got two closing, you've got two eporthy. So the MA just with having two is is huge. And um you've got to be able to do that. But you've also, you know, we're seeing a bit of a change at the moment in practices. So one of the great routes to getting brightness to us is through the brokers. And brokers have been um phenomenal. We mo work with most of the brokers. In fact, most of the brokers have sold us um practices. But we're starting to see now um dentists coming direct to us, which is great, which we never expected. And it it's now fifty. How of our inquiries are direct to us. And uh so we need to keep that going and keep expanding it, etc.

SPEAKER_01 44:08

I I imagine that the the network effect of dentists joining, having a wonderful experience, is the best distribution for for you into wider market. Then I mean I know brokers do a wonderful job. But ultimately, a WhatsApp message from me to my uh dental colleague who I went to dentist dental school with, who set up his or her practice 20 miles away from me, uh, when they hear of the wonderful experience that I've had, the uh relationships that I'm now building, the second life uh reinvigoration of working with a new management team, I imagine that that amplifies and compounds. So probably getting to 16 was a lot of uphill battling. And I imagine getting to 32 will be a lot of uphill battling. But at some point, perhaps there's this a little bit of a tipping effect where at least pipeline and deal origination starts to stabilize, I would imagine. But I'm I'm also not in the consultant.

SPEAKER_00 45:04

I think what what we've seen is with interest rates coming down, and then I think banks being sort of interested in loaning to companies that are not going to perhaps be as affected by AI as other companies, I'll say, what we're starting to see is independent dentists um getting loan to value at 95% and 100% loan on the on the property. We're starting to see more independent dentists competing for the practices we're looking at, which we didn't see a year ago.

SPEAKER_01 45:33

Interesting. If if I think about a uh I have two uh dental practices that that we work with that I'm thinking of w when is when is big enough to have a conversation with de novo? What is my revenue and or EBITDA position? When when should I start thinking about a conversation with yourselves?

SPEAKER_00 45:52

So we do have uh acquisition criteria. We look we look for around 200,000 in EBITDA. That's on an associate net basis. So it assuming the principal charges himself back at a certain level. We like to have a minimum of three chairs, um and the uh opportunity, even though it's not completely maxed out if this see what the name. We don't like to have more than 30% NHS at the moment. Private equity has been burnt over the years by the NHS. And that's fine and we live with that. But we think there's also an opportunity with the NHS and also converting some of the NHS as well as as we go forward. Um and, you know, someone who's entrepreneurial um and you know could really soak up the values of being a partner going forward. That's all we're lucky. And you know, we're w we're we're really gonna be we try and initially have a uh a Teams call. Um I do the first bit, then Brian comes on and said does a much more tailored this is what it would mean for you. And then we go and visit us straight away. Um we're also very lucky because everything is the same. So our offer is the same, our our share purchase agreement is the same. We can from LOI to completion, the fastest we've done is in three months, and we normally do about four months, which is half the time the four compost is. We're really quick, we're really focused.

SPEAKER_01 47:20

Um that that first conversation I'm imagining is uh and I I mean we we recently held an event and there were uh there was a speaker on the panel who spoke about his uh the acquiring in medical aesthetics right now, and um he said the the criteria almost above Ebita on revenue, which are of course very important, is chemistry. Uh and chemistry is the thing that uh they will start the deal focused on and they will end the deal focused on. Your first conversation with the practice leader, I'm assuming, is about the chemistry. But please let me know if that's not the case.

SPEAKER_00 47:52

Yeah, I think I I i it is, you know, I like to feel I can get on with most people, and my colleagues say the trouble with Marxism likes everyone. Um I think that that there is an element of truth in that. I try to see the best in people and and try to work with them. However, I I also very much believe that the people that ask the top toughest questions, and maybe a bit niggly with it, they're showing they're engaged and they're thinking about it. And actually some of the people who've asked the toughest questions have been some of my most successful partners. Um we all want to be light and we like to like each other and all the rest of it. So it's a combination of everything, but I'm not put off. Not put off by having and it's amazing how much people, you know, say not just now, and then something happens in their life and they say, you know, we spake last year I'd be willing trust as a talky go.

SPEAKER_01 48:46

I'm I'm conscious of time and you've been very generous with much time senior. If if if we um we're in 2026 now, if we imagine in 2036, or as far out as the the timeline and lifespan of de novo is, what is the what is the one thing that you think will not change? And I guess similarly, what is the one thing that you think will change the fastest in terms of how the clinics operate, how the partnership develops, your choice, but where do you feel this sense of gravity in the business that you're building? This is our true rooted foundation. We will not move from this position, and maybe it is shared ownership, I don't know, but this sort of forcing function down into the earth. And then similarly, what parts of the business are sort of the wind blows, and maybe there's an opportunity here, there's an opportunity there. How do you think about that over the next three, four, five, ten years?

SPEAKER_00 49:40

No, I think I'm not in there, I'm not arrogant. Tenure plan. You can really get God to laugh at you when you tell them your tenure plan. But look, I I'd like love to think that we could still maintain the shared ownership aspect and the you know, the collegiate style that we have and that works with us. Um I I would like to see that we had, you know, I'd like to see more and more of the dentists are making more decisions or everyone methods, making more of the decisions that affect the company um going forwards and and really engaged, and that they become much more current in in business and the operating of a dental business. I would love to see that in the in the next ten years. I think things will change dramatically. I think the digitization of healthcare. We um we recently um hired uh Edgy Coyle, who's our our medical director, he's right at the forefront of AI in in in digital imaging within healthcare. And if you know he was um he was also medical director, one of our bigger competitors. And you know, we are just scraping the surface of what's going on and what's capable. And creating this, you know, end-to-end service is very, very exciting. And you know, it's it I think we'll also see we'll see see a big ch change within dentistry. And everyone gets uh a lot hung up in many ways on some of the cosmetic aspects of dentistry, but that is dentistry too. Um you know, the way things, technology is going to be going, we won't be drilling uh fillings much longer. Um and you know, with the remineralization coating, such as Mavardis, Securident, etc., you're going to see a big, a big, big change. Um and interestingly though, you look at some of the cosmetic people, you know, someone comes in and says, Look, I'm not happy with my smile or my my length of my teeth or whatever it is. There's a it's very interesting now how dentists are looking at that and saying, Well, look, actually we need to sort out your perio, your gums. We also need to sort out some of your occlusion, and we can we can do that. So I think we're going to see this sea change. Uh and we mustn't forget, you know, the mouth is the gateway to the body. If you get your teeth right, everything else is rooting. And uh that's very important.

SPEAKER_01 52:02

I I I'm I've uh I suddenly find myself very excited about dentistry given that I can't have the description you just gave of where things are going. Um, the the fact that there's a path to non-invasive or less invasive, the fact that uh the mouth, and actually I've seen more and more of this recently, the uh connection to uh oral health and sleeping and breathing and to your point the rest of the body. I know that there is a uh a massive sea change in longevity and wellness and better looking after yourself full stop. Um, and I think not being from dental, it sounds as though one of the things you're describing is dental will have its world and its role inside of the the changing expectation of people pursuing, in this case, private, partially NHS, but largely private healthcare.

SPEAKER_00 52:55

I think, yeah, the changing expectation is is phenomenal. Like one of my favorite products, um Ward Remann founded it and um she was at MIT. Um and and this product is phenomenal. It's called Overjet. It basically goes into your um picture archive system for your imaging, and it finds all the stuff the dentist might have list. It and in the States, as I understand it, it then books that patient in for that to be removed, and it already goes to the insurance companies and gets pre-authorization for that work to be done. That's that's phenomenal. And that that was five years ago.

SPEAKER_01 53:34

Yeah. Yeah. Yeah. Interesting to think what Imagine where we'll be uh in five years. Mark, thank you so much um for sharing a bit of the story. Uh I think that there's a lot to uh take for those who are building in dentistry, and similarly, people building outside of dentistry, operating outside dentistry, who I imagine will connect with a lot of the things that you've said. So thank you very much for joining. We really appreciate your time.

SPEAKER_00 54:01

Gerald, it's been a real pleasure, and thank you so much for inviting me. It's an honor to be here. Pleasure. How are you?

SPEAKER_01 54:09

Uh that's it. Thank you so much for joining us. This is Mark with DeNovo Dental Partners. If you are building in dental, if you are operating in dental, if you are bringing interesting products into Dental, Mark is probably a great person to reach out to. Um, I'm sure that uh he is very findable on LinkedIn and or by email. And if you're thinking about shared ownership as a future of your dental practice, then this seems to be the only show in town, not only the best show in town, but also the only show in town, which is very exciting. So thanks very much, everyone.