I’m spotting a new trend in UK dentistry.
A Management Buy-Out created as a joint-venture between associates and managers in independent practice.
The Clinical & Management Buy Out (CMBO).
My first experience of this was some years ago, when a far-sighted dental principal changed his sole tradership to a limited company and then sold 25% each to his practice manager and his lead associate. He enjoyed a partial equity release, they were able to re-mortgage their homes to buy in and all three have since worked together to grow the business. Skin in the game all round. Perhaps in a few more years he will sell the final tranche of shares (and the property) then sail into the sunset.
Nowadays, I’m starting to get involved in a few more of these conversations because:

  • few, if any, corporates are interested in private purchases
  • the ‘valuation gap’ I have written about before creates a situation where larger private practices are tough to sell to individual purchasers
  • principals care about their teams and their patients and they don’t want the discontinuity and disruption that a corporate sale can create

So why not offer shares to your best existing players?
It makes absolute sense – and it means you can sell at ‘lifestyle valuation’ and not ‘corporate valuation’.
I also hear more and more principals telling me that the idea of a phased exit, starting early, is attractive – compared to waiting until a significant age or date and hoping that market conditions are suitable.
As MD of the BKH Group, I’m reflecting on what this means to us – perhaps we become a source of mezzanine finance and management services to those CMBO teams.
I’m changing my thinking on acquisitions – and want to talk to the buyers and not the sellers.


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Chris Barrow

Chris Barrow has been active as a consultant, trainer and coach to the UK dental profession for over 20 years. As a writer, his blog enjoys a strong following and he is a regular contributor to the dental press. Naturally direct, assertive and determined, he has the ability to reach conclusions quickly, as well as the sharp reflexes and lightness of touch to innovate, change tack and push boundaries. In 2014 he appeared as a “castaway” in the first season of the popular reality TV show “The Island with Bear Grylls”. His main professional focus is as Coach Barrow, providing coaching and mentorship to independent dentistry.