Case Study #3: The Boomerang Sale

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boomerangIn 1986 David Phelps started a dental practice called the Gentle Dental.
20 years later, for a number of reasons, he decided to sell.

But before six months had passed, he was in litigation to reacquire the business, and 24 months after that, he sold the business again…this time, successfully.

“Boomerang” Sale?

This was a term David used to explain how he thought he’d sold his business, but it came back to him and he had to take it over and sell it again.

Some Background on David

When David’s daughter Jenna was 2 years old she was diagnosed with a high risk of leukemia. The stress of having to deal with the treatment and care of a very sick child led to the end of his marriage and eventually the treatment for leukemia led to liver failure for his daughter.

During the time he was helping his daughter recover from the liver transplant she received, he realized that he wasn’t capitalizing on the promise that all business owners seem to buy into: living life on their own terms. He needed his daughter’s illness to see that, and he made a decision to sell.

Valuation of Dental Practices

David shared that the formula is usually 60-75% of gross revenue or 1.4 to 2 times net revenue. The multiple is lower simply because the market sees dental practices very often as “technician-driven,” to use Michael Gerber’s terminology.  

Sale #1

Over the years David hadn’t brought on associates with an eye to selling the practice to them. This time he did and he found someone quite technically gifted in dentistry and moved into a sale process with him about 6 months later. Because the buyer had credit issues, he wasn’t able to obtain bank financing to make the purchase. He’d agreed to a sale price of about $1M but it was 100% seller financed by David. David was to find out soon enough that those credit issues were due to character flaws.

Litigation and Damage Control

The former associate had only made five or six on-time payments before missing a payment and, before long, he was in default. David spent eight months and over $100,000 in litigation costs to take back control of the business. That doesn’t even take into account the PR campaign he had to undertake to let the community know that the business was “under new (old) management.”  The revenues were down 50%!

Sale #2

Having gotten this far, David wasn’t going to give up easily. He re-assumed the technician role for 3-6 months, but then aggressively brought in associates – three in all – and expanded the hours of the practice. In 12 months he exceeded the revenues of the business for the previous “sale,” and 12 months after that, one of the associates who’d proven himself a leader in the practice went down to the bank and obtained 100% financing. David sold the business for 100% cash upfront this time, instead of 100% financing, and lived to tell us the story.

Key Takeaways

  • Don’t wait until a family tragedy to build your business to survive without you
  • Strongly reconsider a 100% seller financed deal
  • Make sure you trust your gut when it comes to judging the character of your potential buyers
  • It’s those with grit that survive botched business exits

To learn more details of this story and what David is doing now, click here.

Apex is actively looking for Advisors to join our team. If you or someone you know would like to learn more, contact Doug Hubler at  or 913-433-2303.

Why You Should Hire for Cultural Fit First

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culture fitIf Millennials have added anything to the conversation around hiring these days, it’s the idea that cultural fit matters.

You shouldn’t simply hire people who are competent and willing to do the work, but also who are excited to be with you and fit well into your established company culture.

What is a cultural fit?

An employee who is a cultural fit for your company is far more likely to be a “great” employee who has a future with you rather than the “good” employee who just manages to fill a role. This is because the employee who is a cultural fit is in alignment with the goals, beliefs, and attitudes of the company itself.

Your company culture may be a mirror of its customer-facing self. For anyone who’s ever flown Southwest Airlines, for example, it’s clear that the staff knows how to have fun and that they’re given full permission by the company to do just that. If you still need convincing, check out this safety announcement from a Southwest flight attendant, delivered in late 2016.  

But perhaps your clients don’t get to see your staff in the highly personal way that Southwest employees interact with their clients. In that case, make sure you have a good sense of what the company culture is and how it impacts your company brand. If you can’t answer that right away, no worries!  Think about the top three or four behaviors that are critical for success at your firm.  That’s a good base to start from.

What are some interview approaches to use?

Hopefully, you’re not one of those employers who uses absolutely useless cliche interview questions like, “Tell me your greatest weakness,” etc. But apart from asking good and thoughtful questions, you may not realize that it’s important to ask unexpected and unusual questions as well. Here are a few suggestions:

  • What does a typical weekend look like for you?
  • What values are important to you?
  • What type of team do you thrive in?
  • Based on what you’ve seen and heard so far, how would you define our company’s culture?
  • Why does the role you’re applying for have meaning for you?

In addition to questions, perhaps consider adding a personality test to the process, or even allow for some “white space” time in the interview, where you allow the candidate to guide and even lead the discussion. See how they perform in the absence of direction.

Why does this matter?

Ultimately this is an end-to-end issue, meaning, it’s just as important for the employee to be a cultural fit for you as it is for your company to be a cultural fit for the employee. When people are aligned with the values and practices of a company, they’re less likely to see work as some disconnected part of their day: a location they go to in order to earn a paycheck.

They’ll see their work as an extension of their life. They’ll stay with you longer…and they’ll inspire employees around them to greater heights. All of these results can only enliven and strengthen your company culture.

Apex is actively looking for Advisors to join our team. If you or someone you know would like to learn more, contact Doug Hubler at  or 913-433-2303.

Should You Have a Business Partner?

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“A contract isn’t in place for when things go right.
It’s to account for the possibility that things might go wrong.”

partnershipYou can google the title of this article and you’ll find hundreds, perhaps thousands, of articles, many of which take a position as to why you should “never” have a partner or “always” have a partner.

We’re not going to do that today, not only because we think such a binary answer to a question that involves humans, who are pretty complex in general, never mind when it comes to business, isn’t useful, but also because we really want you to step back and look at the larger issues in place when you consider a business partnership.

Have an agreement in place

Figure out how decisions are going to be made, who’s going to do what, what happens in the case of a death, a sale, or someone just getting tired of it all and wanting to quit. You’ll find that just the exercise of coming to an agreement as a valuable first proof of whether you should have a partnership…and whether you should have a partnership with this particular person.

What are your track records during tough personal situations?

If you aren’t well acquainted with a possible business partner, ask to speak to former employers and close friends and ask the tough questions. Difficulties are going to arise while running your business, and you need to know what’s going to happen to this person when the going gets tough. It’s easy to say, “I’ll hang in there,” but your past performance is your best indicator of future reactions.

Do you both feel equally strong about the business?

We know that sometimes in relationships one person feels stronger than the other. Try to avoid that here. You need to find someone who is enthusiastic about the business for their own reasons, not just because they get caught up in your excitement and get pulled along in your wake.

Are you friends already?

And are you willing to possibly sacrifice this friendship for this business? This is the non-business risk that you take when getting into a partnership with a friend. Things could end very badly, ending not just your partnership and business, but a friendship too. This obviously goes back in line with everything else we’ve discussed above.

Can you do this without each other?

Do you really need a partner? Or do you just need to hustle longer and harder? Sometimes people think they need a partner, but what they really need is to contemplate if they could do the business alone and calculate the possibilities.

Remember that anyone who tells you that you should “always” or “never” have business partners is going for an easy, oversimplified answer to a complicated question. The correct answer is…It depends, just as much on you as the potential partner.

Apex is actively looking for Advisors to join our team. If you or someone you know would like to learn more, contact Doug Hubler at or 913-433-2303.

Book Club #2: Rework, by Jason Fried

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We review books you should read in preparation to buy or sell a business, as well as how to build a company to sell one day. 

About the Authors

Jason and David created a company which was originally called 37Signals and was later rebranded as BaseCamp. It’s a project management tool which was also the origin of the code language known as Ruby on Rails.

reworkWhy should you read this?

Because it’s not just another business book. We’ve all read plenty of those tired titles, and sometimes you need a book you’re going to flat out disagree with at times.

The authors are opinionated and that’s good because it allows you to take the best of what you agree with into your business. It’s more of a series of reflections than a game-changing formula revolving around a single concept.

Three Takeaways

“Let’s say you’re going to schedule a meeting that lasts one hour, and you invite ten people to attend. That’s actually a ten-hour meeting, not a one-hour meeting. You’re trading ten hours of productivity for one hour of meeting time.”

When you examine meetings through this lens, it’s hard not to sit back in a bit of horror. While it may be difficult to implement the “no meetings” policy that they use at Basecamp, you would do well to take a serious look at the reasons and necessities for meetings in your business, and see if Slack, reports or a combination of the two or others couldn’t obliterate some meetings from your schedule and restore some productivity to your schedule.

“How should you keep track of what customers want? Don’t. Listen, but then forget what people said. Seriously…The requests that really matter are the ones you’ll hear over and over.”

Unlike the quote about meetings, which may take some business owners a minute or two to wrap their minds around, this one feels right at a gut level. Don’t run after each suggestion. Many of the throwaway comments from your customers are best characterized as exactly that: to be thrown away.

“Policies are organizational scar tissue. They are codified overreactions to situations that are unlikely to happen again.”

The authors don’t want you fiddling about with throw away internal policies either. Just because something bad happened one time doesn’t necessarily mean you have to fire up a whole policy about it. It’s a big drain on your productivity and time. Obviously, if there’s legal exposure that you need to address, do so. But otherwise, resist the temptation to created a bloated book of policies that reads more like a series of “One time at a company Christmas party, X happened, and now we can’t have nice things anymore.”

You won’t agree with everything in Rework. But you don’t need to. You’ll really treasure the quotables and concepts that resonate with you.

You can find a copy of Rework here.  Jason Fried is also on Twitter.

Building a business is a lot of sweat and hard work. But a fair bit of it is learning as well. If you need book recommendations on building, buying, or selling, we have plenty to give you. Just ask!

Apex is actively looking for Advisors to join our team. If you or someone you know would like to learn more, contact Doug Hubler at or 913-433-2303.