This inaugural installment of 5 Questions With… features Dr. Tony Stefanou, dentist, entrepreneur, and founder of Connect the Dents. Connect the Dents is a consultancy specializing in dental mergers and acquisitions.
Michael Dunn: Tell us about Connect the Dents. What service(s) do you offer?
Dr. Tony Stefanou: Simply put, Connect the Dents is a unique consulting company mainly focused on M & A (Merger & Acquisition) activity within the dental industry. We work almost as “matchmakers” to help any type of dental based company (manufacturers, dealers, group practices, organizations, consulting companies, publishing companies) looking to buy another company or be acquired themselves find the right fit in an efficient manner. In most cases, we work as “intermediaries” to assist both sides in creating a deal that is mutually beneficial. We also provide “target research reports” in cases where a buyer or seller is thinking of acquisition activity but isn’t quite sure yet “what might be out there for them”. Additionally, some sellers like to know what their company might be worth. So we can provide a form of appraisal based on current industry conditions (i.e., what similar type companies are selling at) so they can see what a grounded fair market value would be (and/or starting point with a qualified buyer) and determine if it’s a good time to go “on the market”. Lastly, we also can help start-ups find investors/funding, as well as help develop their business plan, form sales and marketing strategies, and introduce them to potential strategic alliances/partners in the dental industry.
MD: How did you start Connect the Dents? What was your “a-ha” moment?
TS: I have been for quite some time now providing sales & marketing training for dozens of dental companies through the Dental Sales Academy and “How to Sell to Dentists” workshops. This has allowed me the ability to create very strong business relationships with senior level executives all over the world. I also provide recruiting/placement services. Along the way, many companies started to ask me to let them know if I “heard anything” in regards to companies looking to sell. Also, since the economy was strengthening a bit, it looked as if consolidation would be increasing in dental. So, it became apparent that it made sense to start a “formal’ M & A focused division. The last piece was that I brought in a few veteran industry people as consultants who had contacts in companies that I didn’t and so we now have a team that has 300+ senior level company connections worldwide.
MD: What makes Connect the Dents unique compared to similar services?
TS: Several things. First, as I mentioned, we are focused on dental only. There are M & A consultants who work within healthcare, but only “dabble” in dental and really don’t know the industry well. There are also plenty of “buy-side” consultants who are hired literally to hit the phones and cold call companies all day to see if they are available. Most of the time, that’s not the best approach in getting something done. I mentioned that we have hundreds of senior level company contacts, which is very appealing to buyers and sellers, as the most time-consuming part of the exploration process in M & A is getting to the “right person”. One of the ways we do this (also unusual for M & A consultants) is that we are visibly at all the major (and many specialized) conferences so that we are always meeting face to face with people and companies. The most important thing, however, that I believe separates us from others, is that we are not “brokers” per se. We are not representing one side as consultants, hard selling only our “client’s” best interests. Rather, our approach is (in some cases up to the actual final contract phase which the legal advisors take care of naturally) to assist both sides in getting a balanced, fair deal and keeping the process moving along in an efficient manner. It can be common in “normal” circumstances for a deal to take a year or more to get done with lots of back and forth “negotiating” (or fighting!), and what we do is to reduce greatly this time frame/cycle. Finally, as a dentist myself with decades of experience in the industry, I can assist many companies (particularly buyers) in helping to determine the “best” type of product lines/companies they should be expanding into and acquiring. Many M & A consultants don’t have the clinical background to determine what the best “fit” might be.
MD: What trends do you think will have the biggest impact on the dental industry in the next 5 – 10 years?
TS: Certain sectors within dental will see a great deal of consolidation. The most obvious example would be implant companies, but we are also going to see a good deal of the well established, solid smaller to mid-sized restorative, esthetic, and hygiene (many are family owed for a few generations) companies needing an exit strategy and selling. One glaring trend is that a number of private equity companies have shown great interest in dental and are buying mid-sized dental companies with the idea that they will help them grow organically but also more importantly provide the financial resources (sometimes tens of millions of dollars worth) to grow through aggressively acquiring several other companies for their investment within a 12 to 24 month period. Within the practice side of things, with the DSO (group practice) market growing at a 15-20% annual rate, not only are these groups buying up individual practices, but growing larger groups will be buying smaller groups up at a rapid pace as well. Lastly, I believe that within a few years you will see one or two “super companies” emerge that, because of acquisitions, will be able to offer dental practices (directly) just about any and every type of product line to fulfill all their needs.
MD: What’s next for you and Connect the Dents? What can we look forward to next?
TS: Connect the Dents will continue to focus on providing the services mentioned previously, but will also look to add more well-connected industry consultants to the team, and also look to work more with international companies as they look to establish themselves in the U.S./North American market. We are also working on a number of events and projects to assist entrepreneurial and influential people in the industry “find each other” in an easier and more convenient manner.
Thank you, Dr. Stefanou, for participating in this first installment of 5 Questions With… To learn more about Connect the Dents or to ask them some questions of your own, please contact them. I’m sure they’d love to hear from you!
And, as always, I would love to hear from you too. Please comment below or contact me. I welcome your feedback.