Dentex arrived on the scene last year. It might just be the only corporate offering co-owned partnerships in the UK. That’s a big deal for anyone interested in creating wealth whilst maintaining independence and developing their clinical career. We spoke to CEO Barry Lanesman, a former dentist with formidable entrepreneurial form, for the lowdown.
Barry, is Dentex the only joint venture partnership in UK dentistry?
We believe we have a very unique offering. Ours is a true partnership in which we focus on people being independent but sharing the clinical, financial and operational benefits of the group. If you look at the practices sold to corporations in the past 20 years, vendors generally stay on as an associate. We encourage our partners to keep a substantial amount of equity, and they ultimately may get shares in Dentex. The bigger their practice gets, the more shares they get in Dentex. A major area where our model differs is that it offers considerably better long-term wealth creation opportunities for our partners compared to traditional dental corporate models.
How did you develop this business model? Does it work on the same principal as Specsavers?
I developed a specialist medical banking service in Australia because as a dentist in the early 90s I knew it was difficult to get funding. The business became a fully-fledged bank with 250 staff [Medfin then Experien Medical Finance, subsequently bought out by Investec and BOQ Specialist], and with that background we developed Dentex.
I did meet the Specsavers team and yes there are elements that are similar. There are also dental businesses in Canada and Australia with similar models, where the dentist retains equity. It’s often hard taking something from another industry into your own, but much easier when you’ve got a tried and tested model in your own industry that’s worked in other countries.
Do you only accommodate practice owners or do you work with associates too?
In our first we year we’ve focused on owners, but working with associates is something we’d like to develop. When associates want to progress, but can’t get funding or lack confidence, that’s something we’ve flagged as an opportunity and a need in the market. That’s why the partnership model appeals to me. We’ve been able to serve a genuine need in the market.
It’s not about running a business model that’s dictatorial, it’s about helping dentists work together. Dentists often face similar challenges, so providing a service that’s really client focused and allows them to build and grow in a collegiate way has been very welcomed. According to a recent BDA survey, over half of the UK’s dentists are planning to move away from NHS dentistry in the next five years, so it’s about helping them do that. Some people think there’s no altruism in corporates, but we developed a specialised dental banking business in Australia that was founded on the ethos.
Describe your typical partner
We’re looking for someone to share growth, not sell and leave after three years, so it’s different to your typical acquisition by a corporate. These partners are motivated and enthused about clinical dentistry. They still want to work in dentistry, but feel restricted by growing regulatory, compliance and administration.
When I qualified in 1982 I think I knew most of what there was to know about general dentistry. It was relatively limited. Today it’s impossible to know everything. You can’t keep up with your financial and compliance obligations if you want to be a focused clinician and continue to grow your skills. You have to let go of those things.
We’re seeing a lot of collaborations. Our partners are happy to continue working clinically in one or two practices and to be connected to a group of dentists and share their clinical insights. Our Regional Partners, who want to develop five to 10 practices, are already very strong clinically and financially. They often aspire to grow their leadership and mentoring capabilities.
What is a Dentex partner’s primary motivation for joining up?
The USP is the financial element — they can share in the growth of the group. This model exists in several similar countries and those who sold their practice into the group early made four or five times their 20% stake in their practice, effectively doubling their practice sale price. We’re out to share the benefits with our partners, this is the fundamental difference in our partnership approach. Corporate dentistry will grow, we simply provide an option whereby our partners can share in all the benefits. Among the corporates that have done well in the UK so far, dentists haven’t shared in that success
How many sites do you operate at the moment?
We have 14 and another 16 in due diligence to complete in the next four or five months, so we hope to end the financial year on 30-odd practices.
Do you have one brand?
We encourage our partners to keep their own branding.
Do you have a centralised marketing system?
Our partners are responsible for their local marketing, but we centralise wherever possible, providing templates and sharing promotions. We are developing a substantial in-house marketing capability which is shared with all our partners.
What is your average profile of practice, are they exclusively private?
We predominantly focus on private, which comprises over 90% of the group. We do also work with NHS practices, particularly when they are stable well-run business that fit within the regional groups.
Is your average turnover more than £800k?
It’s approximately £1m. That’s generally bigger than most corporates, and reflects the entrepreneurialism of our partners. We’ve got five Regional Partners with up to seven or eight practices apiece.
What percentage of your sites are retail-located?
We don’t have an agenda on location. The majority are in metro areas, but we’re not looking at it in terms of sustainability of the practice. Instead, we’re looking for certain characteristics in dentists and the practices.
What is your end game — will you sell to a bigger corporate?
Really it’s around creating a long term sustainable business. There’s no plan to sell off. If you’re in a committed partnership model you want your partners to be around a long time. We have three major shareholders who wanted to invest in a growth industry for the long term. If you’d like to discuss partnership options with Dentex, send an email to [email protected]
NB, here’s what JJF wrote about joint venture partnerships in 2016:
The fundamental constraint here is the perpetual conflict between being a dentist and wanting to own your own shop: what’s your route in to a serious retail operation? A compromise might be to learn from Specsavers and operate a 50:50 JVP (joint venture partnership). This evolved format has powered Specsavers’ dominance of optics and aural services in markets around the world.
It strikes me that the JVP approach coupled with a seven day retail format in the right location wouldn’t just be a disrupter, it would be a true category killer as it leverages the desire of many dentists to own their own practice and addresses their fear of business venture (a fear increasingly exacerbated by changes in the market and the complexity of building a successful practice). The JVP model could deliver many economies of scale too, not least in marketing.
“Those who sold their practice into the group early made 4 or 5 times their 20% stake in their practice, effectively doubling their practice sale price”
Barry Lanesman, Dentex CEO