By Dan Fine, Business Adviser at Hive Business.
Former Navy dentist Mike Hesketh has pulled off what every dentist dreams of. He bought a practice and in under five years sold it for a handsome profit. Now he’s taking his kids out of school to sail round the world on the mother of all sabbaticals, but not before we caught him for a Hive Five…
Mike, before we get onto the Hive Five stuff, give us a rundown of your story so far
My wife Lara and I bought The Exeter Dental Centre in 2012 and by the time I left to start a full time MBA in 2016 the business was running itself with 10 dentists and 40 staff. We had 200 new patients a month, £2.4m turnover up from £480k initially, and profit touching £400k.
It really was a team effort between Lara and I. Having a supportive business partner who had strengths in areas that I as a dentist was weak in really helped. Then building the team around the ethos of both Lara and I meant that standards were reaffirmed between the both of us.
Lara had the vision to make the customer service element so much stronger, having learnt in more competitive industries outside dentistry. She was previously in talent management. I had to practice dentistry while Lara fixed most systems, and then I gradually cut down on clinical hours.
I’ve just finished at Exeter University — my dissertation was a business plan for a dental chain with a financial backer.
How did the sale go?
I had offers from two corporates. Oasis went higher but was being bought by Bupa, so we had to wait for the Competition and Markets Authority to complete on that deal. Due diligence only took a week because our files were so well indexed on Dropbox that we could send 500 documents to our solicitors Abrahams Dresden immediately. They put them in the format the buyers wanted, and within a week we had 750 documents back.
Our broker, Leah Turner at Dental Elite, was brilliant at creating competition between the corporates. We had two terms: a minimum price and money up front. We paid capital gains tax at 10% with Entrepreneurs’ Relief.
Going in, Leah was able to confirm that yes I could get a walkaway deal because I wasn’t in the business. She lined up one viewing a week for seven weeks but we only got to number two.
Very nice. So what’s next?
I’ve got till December 12 to learn how to sail, and then I’m off round the world with Lara, Poppy and Hugo, who are five and three. We’re also in the process of buying our dream home. We’ll see about the nationwide franchise idea I theorised about at uni. I might be happy to be a minority shareholder and let financial backers run it.
OK, thank you Mike, sounds like you’re extraordinarily well equipped to handle the Hive Five questions…
1. How has dental business changed over the past five years and what are your predictions for the next five?
I think the rationing of NHS contracts has created a true marketplace in the private sector whereby quality care and online reviews have become really important.
Getting high spending new patients is really competitive. You need to be ticking boxes: regulation, accessibility, and once you get beyond £1m valuation you come to the attention of corporate buyers who want to see solid growth across profit, EBITDA, new patients, and automated business processes. The more of these you tick the better price and terms you get.
Digital is now critical in clinical, with 3D milling and imaging, and in marketing, with SEO, PPC and social media. Dental practices will get left behind if they ignore digital because patients will drop them for up to date practices.
About 12% of dental businesses are corporate, predicted to go to past 50% pretty quickly. They’ll be lots of versions of corporate owned chains. Bupa and Portman are looking good right now, but I think the market is ready for a fresh start up chain.
2. How do you deal with the dichotomy of your clinical and business roles?
I say put the tools down if you want to do business seriously.
3. What advice would you give to ambitious dentists who wish to acquire or grow a practice?
The poorer the practice the greater the opportunity. When buying you want thousands of patients on the book that aren’t getting looked after like they should be in the modern world. Don’t look for a polished practice, look for one that’s poorly run, poorly administered, and out of date.
You want it to be dated so you can buy at a decent price but still get the patient list. Also try and get the owner to leave immediately, which is a bit controversial. Have your 15% deposit in the bank, ready to move fast. Talk to a proper finance person like David Brewer at Frank Taylor & Associates.
If it’s growth you’re after, change everything from top to bottom. Patients like to see investment. You get about 10 people who will complain. Remove them from your life if they don’t self-select out themselves. Then start afresh, improving things for everyone who wants to move with the times.
4. With infinite time and budget, what would you consider implementing to transform your dental practice?
We would have invested more heavily in digital efficiencies to go totally paperless. I didn’t need to because we were just about to sell after four years, but we were still using paper to get treatment plans signed, which should have been on iPads.
My dissertation featured a high street squat practice with big set up costs, heavy marketing, totally digital and open seven days a week. That’s what I’d do, and for interior design I’d probably use Steve Coombe at 3idog.
5. If you could give your 21-year-old self a piece of advice, what would it be?
That everything that you do, be it education or business or work, is leading you onto a path of achieving whatever your ultimate goal is. Everything you do is worthwhile, even travelling.
Once you build your own business you lean on all your experiences, so even if you don’t see the immediate benefits of meeting a certain person, doing a certain course, they are there. Once you’re ready, don’t be too hesitant about stepping forward and buying a business and getting on with it.
If you would like to be interviewed for our Hive Five or if you have any questions about topics raised in this article, please get in touch on 01872 300232 or email us at hello@hivebusiness.co.uk.
