Kiera is joined by Fred Heppner of Arizona Transitions to talk through dental practice transitions. Their conversation includes when you should start thinking about your transition, what the economic outcomes will be any way you go, what a private indemnity group is (and how it can help), and more.

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Transcript

Kiera Dent (00:01)

Hello, Dental A Team listeners. This is Kiera. And today I am so excited to welcome an incredible guest to our podcast, Fred Heppner. He's with Arizona Transitions. And honestly, I feel like right now in today's world, dentists need more than ever guidance and direction of like, what do we do? How do I transition my practice? What am I looking at for retirement? Do I go the DSO route? Do I do the legacy practice route? I just feel like there's so much confusion. And so trying to cut through that noise,

 

Fred is incredible. We met him and I just said, you know what? He's incredible. And so he said for him, it's whether a person is buying a dental practice or putting a dental practice up for sale, Fred truly can help you successfully navigate through that transition. He deals with complete transitions of dental offices and also practices securing a partner or an associate, which that is such a hard thing. Like, how do we do this? There's a million ways to slice and dice that pie because he's worked with so many different aspects of the dental industry. His experience allows him

 

to ensure that all parties are satisfied with the transition. So I'm super jazzed. Fred, welcome to the show today. How are you?

 

Fred Heppner (01:02)

I'm

 

doing great. Thank you, Kiera. I gotta meet this guy. Who is this guy, Fred?

 

Kiera Dent (01:06)

Well,

 

here he is, if I'm not mistaken. But truly, I'm so honored to have you on the podcast. When our team met you, they were like, Kiera, he's got to get on the podcast. And so just truly excited because like I said, this is a zone that I get excited to geek out on because we deal with it in consulting all the time. Our clients are constantly asking us like, what should we do? They want to bring on partners, they want to bring on associates, they want a retention model. ⁓ They want to know like,

 

I feel like your dental practice can be your greatest asset or your greatest burden, depending upon how you set it up. And so really being able to just dive in with you. And like I said, I think there's so much noise right now. The dentists are like, it's almost like ostrich in the sand. Like, I just don't want to even think about it. I'm going to put my head in the sand. I'm not going to pay attention. But the reality is like, let's educate, let's learn. Let's bring experts in like yourself. So that way dentists can feel more confident making the decision. I don't think it has to be scary. I don't think it's be daunting. We just need to be educated and.

 

Fred Heppner (01:41)

Yeah, I agree.

 

No.

 

Kiera Dent (02:05)

and hear wisdom and then do what feels right. So Fred, that was my intro, but anything else you want to add of how you got here or, mean, I'm just excited to riff with you today.

 

Fred Heppner (02:14)

I appreciate the opportunity and I can tell you even from what you just said back in, back in 1983, when I started in the business of dentistry, the interesting thing was I didn't hear very often, Hey, what's your transition plan? Because oftentimes dentists were really just going to build a practice and then that was going to be their retirement and they would sell their practice and retire. Financial planners were, were non-existent to a large degree. And it was early on that I heard somebody and it really resonated with me.

 

They asked a young dentist who had just taken ownership or started a practice, when are you going to hang up your hand piece? And the dentist kind of, I just got started. What do mean? When am going to hang it up? I got, you know, I got 20, 30 years here. No, no, no. The moment you take ownership of a business, you want to consider what your transition plan out would be early on so that it doesn't spring it on.

 

Kiera Dent (02:51)

Mm-hmm.

 

Mm-hmm.

 

Fred Heppner (03:09)

We may

 

talk here later on about, what happens if you're not there? What happens if there's an injury or disability or illness and you can't practice dentistry? Now what? And let's consider talking about that maybe later on. So early in the game, it's appropriate to have some kind of idea of some kind of transition plan. Transition plan doesn't mean I have to value my business. I have to procure a buyer act to make sure that financially qualified. I have to get a contract. I have to get a lease. That's not a transition plan. In simple, think.

 

Kiera Dent (03:21)

Yeah.

 

Fred Heppner (03:38)

The transition plan is what do you want to do when you sell your practice, when you move on from dentistry? And you know, as well as I do, you have clients who have been in dentistry and practice for 25, 30, 35, 40 years. And if they stopped doing something that they've been doing for three decades, what are they going to do with their time? And that's, that's really high on the scale of importance in a transition plan, because ultimately they're going to sit back and say,

 

Kiera Dent (03:53)

Mm hmm. Yeah.

 

Fred Heppner (04:08)

I don't know that I want to be home. I don't know that my spouse wants me to be home all day. And you have to think about these things. So it's much more than I have a practice to sell. I've got a purchase price. I have to figure out how I'm going to sell everything and my staff and my patients and so on. It's more than that. So I think in the initial phases of somebody considering what's my transition plan that can pull their head out of the sand and look at a spot and say, what do I really want to do if I

 

Kiera Dent (04:12)

Totally.

 

Fred Heppner (04:37)

If I don't do this, what will I do? And then feels a whole bunch of other questions into the play. Number one, how much am I going to make from selling my practice? What are the economic outcomes? How much in proceeds will I have after all the fees associated with selling the business and the taxes associated with paying for the proceeds? Now, what have I got left? What is that? What does that number look like? Well, I have no idea. Well, I need to find out. That's why I have a business.

 

Kiera Dent (05:05)

Mm-hmm.

 

Gosh, Fred, I am so grateful you brought this up because honestly, feel like so I don't know my financial advisor teases me all the time. He's incredible. And he's like, Kiera, you are the person that has every exit strategy. You're like, all right, so what's going to happen if this happens or what happens? And I love to play this game with my husband. I'm like, okay, so if there was a fire in our house in this location, how are we going to get out? Or if we had this, because I feel like when you have almost that North star, especially in your life of

 

Okay, this is how much I want when I wanna retire. This is when I wanna retire. This is like you said, if I want to, what am I gonna do when this doesn't, like when I'm no longer doing dentistry? Because you're right, I actually, ⁓ working at Midwestern ⁓ University in Arizona, I know a lot of dental students and I know a lot of dentists now. And ⁓ I've been gone from Midwestern for about now, about nine years. And ⁓ in those nine years, which does not seem that long, it's not even been a decade, ⁓

 

Fred Heppner (05:50)

Mm-hmm.

 

Kiera Dent (06:05)

There have been students who have gotten a disability. There have been students who have gotten cancer and can no longer practice dentistry. There are students that have already sold to DSOs. And I'm like, their life looks so different. The student I'm thinking about who ended up getting pretty sick and had to leave, thank goodness he had his ⁓ insurance on him, his disability insurance. But like when I met him,

 

there was no way that we ever would have thought like four or five years into practice. I went and saw him in his practice and now like he's not doing dentistry anymore. And so I think Fred, it's one of those things where I help him pray every dentist who's listening gets to work until they're 80, 90, however long they want to go that they get to practice their craft. but I think what you're talking about of let's think of what would I do if I couldn't do this anymore, whether by choice or whether by life, ⁓ and then be able to make decisions because I feel like

 

When you stair step it back, you're able to actually navigate today way more confidently than if you don't have a plan. And I think that gives you more security than anything else. ⁓

 

Fred Heppner (07:08)

Amen. And if your practice

 

is stable, strong, producing a good profit and you are able to not only retire debt, but start to put away for your own retirement, you are much more in a direction of control also. So retirement may not be a year or a number. It sometimes is an event because injury, disability, illness, sudden death have no discrimination. It can happen to anybody.

 

And if there isn't a plan in place for that, which I would recommend dentists look into, ⁓ if they don't have them in their community, forming private indemnity groups, disability coverage groups, where if a group of 16, 17 dentists that per oculi are in the same community and know each other and respect each other would agree that if anything were to happen, the group would get activated and it would cover the practice a day at a time on rotation for all the membership.

 

until the practitioner returns from the injury or disability or the practice is sold because the dentist is incapacitated and can't come back. As a side note, I want to mention to you that I do this for six different groups here in the Valley in Phoenix where I live. And there are anywhere from about 12 to 22 dentists in each of those groups.

 

So if you're listeners or if anybody in the A team wants to know more about forming groups, I'm happy to pay it forward, provide it for you. It's important. It's really something that dentists, we're invincible. Nothing's going to happen to us, especially when they're 30 years old and they just graduated from Midwestern and they bought their first practice and they're fired up. And it's like, they are looking at nothing other than growth, development, coaching. They're not even thinking if something were to happen to them. So.

 

Kiera Dent (08:38)

Mm-hmm.

 

hope. Right?

 

Mm-hmm.

 

Fred Heppner (08:57)

Just as an aside,

 

let's you and I make sure that we talk more. And for any dentists who want to develop those kinds of groups, it is invaluable. And there are tons of stories that I could impart to you and impart to anybody who's willing to listen about dentists that have a mishap. ⁓ Jim Jorgensen here in Phoenix ⁓ owns Squaw Peak Dental for years. He was in Vegas with his wife, Terry, midnight. They were up in the hotel room and he flatlined. He had a massive heart attack.

 

Kiera Dent (09:15)

Mm-hmm. Yep. Mm-hmm.

 

Fred Heppner (09:28)

She kept him going until the paramedics arrived. He survived. We activated the group. We covered his practice for three months. He came back, continued to practice. A year later, he sold it. So he couldn't have done that. He would have lost that asset and lost the value that that asset has on the open market if that group hadn't been in place. So.

 

Kiera Dent (09:39)

incredible.

 

Thank

 

I will. love that. And thank you for sharing that. And that's something I didn't even know existed. And I, I don't, I'm just very pro. Like, I remember when I was filling out our trust and I had to write my will and I was not very old, still like in my thirties, it was really weird. And it made me feel icky. And when you said the phrase earlier of like death, disability, illness, that has no discrimination. It hit me in my core of you're right. Like we do feel like we're invincible, but the reality is those three are hanging

 

out at any moment and we have no idea when they're going to strike us or our family or someone that we know. As icky as that is. And so I feel like it's like, let's just get, let's get prepared. Like when I had to figure out what's going to happen to me, if I ever am incapacitated and I called my brother, who's my power of attorney. I said, okay, this is what I want. Are you willing to do it? But now I don't like if it happens great. Like he knows, I know there's a plan in place and as much as I would hate for it to happen, there is a plan that's like, and I feel

 

Gosh, maybe I'm just a selfish egotistical human over here. It does give me a lot of empowerment to know that I know if something were to happen to me, things are good. And I will also say my whole team hates it, but I have an entire death plan of if Kiera Dent dies, I haven't made it so sweet that they want to kill me off. So like, that's my, that's my caveat. Like, let's not make it that good. But there's an entire plan because I realized...

 

If I don't have this plan in place, if things aren't able to be transferred quickly to people that I trust and that people need to execute on, this company would die and we would not be able to serve all the people that we have. And so as, as weird and as eerie as it is, I feel like Fred, there's so much empowerment that can happen because it's no longer scary. Just like getting an operations manual, just like getting all your systems in your practice in case someone leaves. I feel like it's the same thing for your business in your life. So Fred, like that's a great tip. And I think people should reach out and definitely connect with you.

 

Fred Heppner (11:42)

maybe

 

for another future podcast. Coming to an A-Team podcast near you,

 

Kiera Dent (11:44)

Like,

 

I mean, hey, I'm here for it.

 

Fred Heppner (11:50)

I don't know.

 

It's really important. People take it for granted. And it's interesting because the people that are in the groups that I have and sponsor just sitting back and say to themselves, why wouldn't anybody not be involved in this type of group? So good for future.

 

Kiera Dent (12:05)

That's helpful. Okay. All right. And Fred, just like, mean,

 

we'll, share it at the end too, but if people are interested, how do they connect with you? We'll just put it in the middle too. So people have the info and then of course we're going to continue on.

 

Fred Heppner (12:16)

ArizonaTransitions.com is my website. [email protected] is my email. Best way to reach you.

 

Kiera Dent (12:23)

And I'm sure people are

 

questioning, you work only in Arizona or do you work outside of Arizona just to clear that up for our listeners? Okay.

 

Fred Heppner (12:29)

Good. Time for a little backstory. So

 

back in 1983, when I started in dentistry, I was a, I was a business coach, similar to how you operate and develop business systems and coaching and training for dentists and their teams to grow and essentially develop profitable and enjoyable practices. I did that for about 20 years. And then about 22 years ago, I really saw a void in Phoenix where I live. moved here in 1995.

 

of the transition space. just didn't see dental practice transitions being done with integrity, in my opinion. They could have been, but I saw some of the aftermath because dentists would call me and say, hey, I just bought this practice. Can you help me? It's a mess. So I would go in and assist them. Well, slowly but surely, I saw an opportunity to be able to jump into the transitions realm. So I jumped deep into ⁓ classroom study and book work on how to do business evaluations correctly.

 

Kiera Dent (13:04)

Mm-hmm.

 

Fred Heppner (13:26)

the International Society of Business Analysts was my education forum. ⁓ Casey Conrad, who is brilliant, he taught me how to do business valuations correctly. And by the way, he writes the curriculum for the organizations that provide accreditation to people who want to be a business analyst. So I'm learning from the guy who teaches everybody. And then I started studying large contract negotiations.

 

Kiera Dent (13:45)

Mm-hmm. Amazing.

 

Fred Heppner (13:52)

As I developed that understanding and saw that there were things that I could contribute to, I jumped into that realm and became more of ⁓ a transition specialist here in the greater Phoenix area. Well, along the way, I came upon a group called American Dental Sales, which is a large cooperative of 40 dental practice transition specialists, 23 different companies. They cover all 50 states and they had a void in Arizona that they needed to fill. So they approached me and said, we'd like you to come on board.

 

⁓ I then met a guy named Hi Smith, who really was one of the preeminent dental practice brokers in the country. ⁓ He was in Naples, Florida. He had a place in Oregon, so he kind of commuted periodically. But Hi was very, very well regarded and still is. He's retired now. Hi was the transition specialist for the Pride Institute, a very well regarded practice management company out of California. And for 35 years.

 

Kiera Dent (14:44)

Mm-hmm.

 

Fred Heppner (14:50)

They referred all the business nationwide to High to develop any kind of transition plan or valuation or partnership or associate ship or practice sale. Well, he was a member of ADS and he actually, I want to say he took me under his wing to some degree because we just became very good friends and he became a really significant mentor of mine.

 

I fell ill and said, I'm not gonna be able to do this any longer, so you're gonna take over my book of business. and by the way, you're also gonna start doing seminars for the Pride Institute. And I'm gonna introduce you to the people over there so that when they need help, like I've been giving them for the last 30 years, you'll take over. So as a result, we were doing seminars all around the country. So four to five times a year, we'd be in Denver, Boston, Seattle, Orlando, Dallas, Chicago, Philadelphia, you name it.

 

Kiera Dent (15:30)

Mm-hmm.

 

Fred Heppner (15:43)

So people that would come to those meetings were Pride disciples, clients, and they would ask me to help them with their transition. So that became more of a establishing services for dentists that are outside of Arizona, not necessarily creating a footprint in each of those territories. The Pride Institute was purchased by Spear Practice Solutions about 10 or 12 years ago.

 

Kiera Dent (16:08)

Mm-hmm.

 

Fred Heppner (16:09)

So I got dragged kicking and screaming over to Spear and developed a really good relationship with the track practice growth partners at Spear and also Amy Morgan, who was the CEO at Pride out still with Spear. So that's the backstory to tell you that I've done transitions in 26 different States. And it's very easy for me to help provide consultation and guidance for transitions really anywhere.

 

Kiera Dent (16:12)

Thank

 

Mm-hmm. Mm-hmm.

 

Awesome.

 

Fred Heppner (16:39)

Florida, as an example, Florida requires a person to be a commercial real estate broker to broker business assets. So I have colleagues in Florida that I refer to. And with my affiliation with ADS, I have boots on the ground in pretty much every territory that if I don't think I can provide value to the client, I simply connect it with the people in my group and everything gets worked right.

 

Kiera Dent (17:04)

That's awesome.

 

That's amazing. And it's such a fun story.

 

mean, I think our our paths have crossed on probably several levels. One of my business coaches is former pride. And as soon as you said that, I was like, Oh, my gosh, I bet we both know Liz. I'm sure we and all the different pieces. But I love that because I figured Arizona transitions might some of the listeners might feel like you can't help them and assist them. So I really wanted to clear that up that it's all across the nation in different areas. So all right, Fred, let's dive into like walk us through I know you've got some

 

Fred Heppner (17:11)

Yeah, chances are.

 

yeah, ⁓ yeah, absolutely.

 

Kiera Dent (17:36)

points.

 

I know you've got some things of like, what is the transition plan? Like how do doctors get to that level? What do they need to do if they're transitioning? Now again, this doesn't mean you're selling. Right now, I think there's a lot of options to sell, but also like prepping in case life, one of those three mysterious, hopefully never coming to you, like orbs is how feel. I feel like they're like floating around and hopefully they never strike. But what do we do? What are kind of the steps? What are some of the things you have for that?

 

Fred Heppner (17:56)

Yeah, yeah.

 

Well,

 

I think the first step in any kind of relationship that I build with a client, it would be a true consultation. And in that sense, it's tell me what your ideal retirement plan or transition plan would look like. You've worked your practice for a number of years. At some point in time, you're going to decide that you will retire from the practice of dentistry. What do you want to do? What does that look like?

 

What would you be involved with? I'll give you a quick example. Jerry Cox, who's a dentist in Old Scottsdale here in Phoenix, called me and said, I'd like you to help me sell my practice. And I said, I'd be honored, thank you. So I went and saw him and we put together the plan and I asked him the question, what do you want to do? What do you want to do after you retire from practice? says, well, I like to do sculpture. And I said, really, Fred?

 

Kiera Dent (18:56)

you

 

Fred Heppner (18:57)

What have you done? kind of work have you done? He says, well, let me show you. He showed me pictures of the statue of Heather Farr. Heather Farr was an amateur golfer 25, 30 years ago or so, who played at ASU, who was an enormous success, played on the LPGA tour, and ultimately ⁓ developed breast cancer and died. Heather's statue ⁓ was sitting at Karsten Golf Course down near ASU, which they've now plowed.

 

Kiera Dent (19:20)

Wow.

 

Fred Heppner (19:27)

and also at Greyhawk Golf Club. And Jerry sculpted that statue. And I got goosebumps right now. Anyway, so as an example, Jerry has a studio at his house. He said, as soon as I sell, I'm doing that. So the point is in the transition planning phase, know what you want to do. Know what you will occupy your time. If it's turn.

 

Kiera Dent (19:33)

Wow. Yeah.

 

So Fred, I'm gonna just like ask questions right here because, and

 

I'm gonna talk for myself. So guys, like this is my own therapy session. So thank you for being a part and a fly on the wall. Like sometimes we don't know. ⁓ So like I feel I'm very much, I know I wanna retire. I know I want more free time, ⁓ but I literally sit here and this, it's like, know how you think about like how time truly never ends. And if you think about like too hard, it actually creeps you out. Like that's kinda how I feel about like retiring of like,

 

Well, I know I don't want to keep working this hard. Like I don't want to be putting in as many hours, but I still love the impact. I still love the legacy, but I don't quite know what that looks like. And I feel like a lot of times people in their thirties, in their twenties, in their forties, I think as you get later on in life, you probably have more of that clear picture. But what about for those that are very fresh, like that truly maybe some people do, maybe I'm, maybe I'm the only one on my own planet. I don't think I am, but like, what do you do if you don't know what you want to do?

 

Fred Heppner (20:46)

You're not alone. So good. part of the time, what did Chelsea, what did Kelsey Grammer say? I'm listening. So the, the, the idea is that there are portions of people that don't know. There are some that are very clear on what they want to do and there's some that are kind of, well, I'm not sure. My, my recommendation would be, think about it. Then don't answer right now, but think about it because I want you to know what you will be doing when.

 

Kiera Dent (20:48)

Thank you. Thanks for my therapy today, Fred. I appreciate it. Thank you.

 

Hahaha ⁓

 

Fred Heppner (21:16)

you stop doing this and it may change over time. It may kind of morph into, my God, I didn't know that I really enjoyed painting. Okay. Then, then that's maybe what you might do because as you retire from the proceeds of your sale of your business, you'll, you'll build out a studio in your home or in the Casita or wherever it is. So it, it's okay that you may not know. It's okay that a person may not know what they want to do, but it's important to start thinking about it.

 

Kiera Dent (21:26)

Mm-hmm.

 

Fred Heppner (21:47)

And then we can kind of move into the rest of the, ⁓ the rest of the questions, which I would say, is it a year that you'd like to finish working? Some dentists may want to finish when they're 55. Some may want to work until they're 65. Some may want to finish working when they're 50 or it might be a number. My investment portfolio has to be at $10 million liquid, not including asset hard assets like home.

 

vacation home, cars, anything like that, boats, whatever, ⁓ but that the liquid assets have a certain number because then I know through my financial planner, because he did a wealth timeline, another side note, right, Kiera? ⁓ He said that if you keep doing what you're doing and you retire at this age and you pull in social security and you have this mandatory required distributions from your portfolio,

 

Kiera Dent (22:16)

Mm-hmm.

 

Right? Exactly.

 

Fred Heppner (22:41)

you'll be able to have this much money when you're 99. So, and that's just a mathematical spreadsheet that most good financial planners have. And I highly recommend it for anybody who's in business, who's developing a portfolio for retirement. So it may not be, I don't know yet. Okay, good. Well think about it and know that I may circle back during our relationship and ask you, have you given much thought? Do know what you're going to do?

 

Kiera Dent (22:45)

Mm-hmm.

 

Fred Heppner (23:09)

Early on, is it important? Not as much as when it's a three to five year window. When it's a three to five year window from retirement, then we want to talk more significantly about it. Because that will be a good...

 

Kiera Dent (23:23)

got it because that's what I was curious I was like should people be talking

 

when they're in their 20s 30s or is it something we're like start to think about it I know Ryan and I from Dentist advisors we we talk shop about this quite often of like there I mean there are studies that show that when you retire you actually start to atrophy in life and ⁓ there isn't as much of a purpose and so we talk often of like how can we continue that

 

mental stamina, the things that are going to fulfill us, whether it's working or something else of philanthropy, like whatever is going to keep you going as a human, whether you're working in the chair or you're not, I think is important. So that's I was curious of like, really probably connecting with you three to five years before we think we might retire, but with the caveat of, hey, if something were to happen to me, what would kind of be my exit strategy? your like death list like I do, like if I die, this is what's going to happen. It's creepy, but it's awesome.

 

Fred Heppner (24:15)

No, it's, it's creepy and it is awesome. And at the same time, it's a really good conversation to have because if we're three to five years out, then one of the first things to do is say, okay, so what's going to happen if you're not here? And that carries on to the discussion we had earlier.

 

Kiera Dent (24:28)

Mm-hmm.

 

The Dental A Team (24:31)

Awesome. Thank you. And thank you, Fred. Thank you, all of you. And for all of you listening, thanks for listening. And I'll catch you next time on the Dental A Team Podcast.