Acquisitions Anonymous - #1 for business buying, selling and operating - A Dental Lab That Serves NFL Players & Celebrities? Let’s Break It Down!

Episode Date: February 18, 2025

A dental lab that serves Hollywood celebrities and an NFL team?!Business Listing - https://gottesman-company.com/active_sellers/s-3173-4-jpm/🚀 Sponsored by CapitalPad - The marketplace for acquisition entrepreneurs to buy businesses and connect with investors. Learn more at CapitalPad.com.🎿 Join us at HoldCoConf 2025! - The premier event for HoldCo operators, now with a ski trip! Get your tickets at HoldCoConference.com.🔗 Connect with Acquisitions Anonymous:Website: https://www.acquanon.com/Twitter: https://twitter.com/acquanon✉️ Subscribe to our Newsletter: https://www.acquanon.com/newsletter🔔 Subscribe on YouTube: https://www.youtube.com/@AcquisitionsAnonymousPodcast?sub_confirmation=1🎧 Listen on your favorite podcast platforms: https://www.acquanon.com/episodesAbout this Episode:In this episode, the team dives into a full-service dental lab located in the Mid-Atlantic that specializes in high-end custom dental work—including cases for Hollywood celebrities and even serving as the official dental provider for an NFL team. With $5.6M in revenue and $1.7M EBITDA, this 30-year-old business has seen steady growth, but faces disruption from advancing 3D printing and digital dental technology. The hosts debate the future of this space, the challenges of owning a high-touch, relationship-driven business, and whether this is a great opportunity for the right buyer or a slowly shrinking market.Subscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

Dental technology, I think, has changed a lot in the last kind of decade or two. Their business has been growing for the last few years. I don't think this is like a falling knife. So to keep this business growing, which it has been doing, I think that takes a pretty strong sales effort that involves relationships with the dentist. Are you willing to go spend the next three months full time making cold calls to people who are experts about this space? in all this. We don't have 100% to be in.

And thumbs downing on just the plus inventory line. Hey, Michael here. Today we did an episode on a fascinating deal that happens to be the leading provider of fake teeth for an NFL team.

So one of the most interesting kind of twists to a very standard main street-style business that I've seen in a while. So enjoy the episode and tell us what you think about it. Thanks for being here. Hey, everyone, it's Bill. And I want to tell you about maybe the most exciting sponsor we've

had in a long time on the pod. It's called CapitalPad. And it is the thing that I wish existed when I started my journey of operating and investing in small businesses. So CapitalPad is a marketplace for acquisition entrepreneurs that is people who want to buy a business and need capital to list their deals and solicit capital from other people who want to invest. in acquisition deals. So if you want to back somebody buying a small business, CapitalPad is the place to do it. And if you want to buy a business and need capital, you can go on CapitalPad to be introduced to investors. So the really great thing, too, from the investor side, is that CapitalPad takes care of all of the details that can get hairy with small business acquisitions.

They handle standardized terms, standardized governance, standardized distributions all up front in Black and white. Basically, CapitalPad professionalizes investing in small businesses. And the returns can be really, really good. I'm so stoked they exist. It's founded by my friend Travis, who is a phenomenal entrepreneur in his own right. So if this sounds like something that's appealing to you, if you want to buy a small business and need capital, or if you want to invest in small businesses, go check out CapitalPad.com and tell them that Acquisitions Anonymous sent you. Mills, I'm finishing my brunch. I'm like mid bite and like get the crumbs out of my beard. So I want to just reiterate guidance we got.

You know, we had our organizational meeting for the pod. If you call that, it's lowercase with quotes around it. And organization. And Ty told us, Ty told us that we should keep our episodes shorter because we get massive drop off after a minute 25. So we got to get to the point, bro. We got to get to the point and get in and get out.

So there will be a special shout out. at the 28 minute mark for all of those of you who are still with us. Three of you still listening. With a coupon code for a free roof inspection if you're within two hours of Columbia, South Carolina. All right. So let me pitch and run this deal past you. And I chose it because it has a plot twist.

Like it's got a cliffhanger at the end where you're like, what? What just happened here? So this one is often. Good morning, Heather. Welcome. Good morning. I'm late again. Okay.

It's 7.30 in the morning and you look like you look like you've been crushing it, kicking A and taking names for two hours. I have. And I even did a Peloton ride this morning before this. So I feel like powered up for the day. There's closed 14 loans already this morning. I just woke up. All right. Okay. So this one is from Goddustman and Company established in 1985 they were as a brokerage. How come every business broker is like either 22 or 82? There's no in between. Yeah. Okay.

So this is a full-service dental lab with services. It is located in Mid-Atlantic, and it was established in 1994, and this leading dental lab offers an exceptional opportunity in the rapidly growing dental sector. Boasting impressive revenue and significant year-over-year growth, this business is well-known for its high-quality crown and bridge cases, catering to a broad market that includes individual group and corporate practices. The company's diversified revenue streams, including same-day turnaround, chairside services, and custom-shade services contribute to its strong financial performance. The company's in-house capabilities and strong industry reputation provide a significant competitive edge.

A key management team plans to remain in place. It has strong financial performance, diverse customer base and services. They serve common and high-end dentists, individual practices, group practices, and corporate practices. There is lots of growth potential with opportunities in digital dentures, 3D printed crowds, and other advanced services. They currently operate with minimal marketing suggesting significant room for expansion. They have a strong market presence. They've completed cases for Hollywood celebrities and NFL players, and they are an official partner of a top-tier NFL team. That was the hook.

It feels like hockey would be a better change. I was like, what? This just took a thing. Okay, so it's a dental lab that's the official partner of a top-tier NFL team. Revenue. 2023, they did 5.6 million in revenue. 2022, they did 5.4 million in revenue. In 2021, they did 4.5.

EBITA has been relatively steady as a percentage of revenue. 1.7 million in 2023, 1.4 million in 2022, 1.3 million in 2021. So pretty metronomic in terms of its approach there. Management team is in place, and this business has been around for 30 years, according to Goddustment and company. So Mills, what do these guys do? Dang it. Michael, I was about to ask you the exact same thing.

Oh, I was sorry. I know. I think I know. Heather, what are these guys here? We would have just made stuff up for the next 20 minutes. What is this to do? Well, I have financed a dental lab before. and I'm trying to remember a few things that I learned,

but, you know, they're making teeth. So the dentist have to replace, you know, have to create a crown for somebody. This is custom teeth, whatever the issue is where teeth are having to be replaced with artificial teeth. The dentist goes to a dental lab and has them created especially for that person.

And when they say Hollywood celebrities in NFL, you know, I know it's definitely a custom, kind of the old school way of doing it. it. There is a new way of making teeth. It's digital. It's, um, you know, almost like 3D printing, I think. Maybe I'm saying this wrong, but yeah, yeah, right. But do they do that? Well, they're saying that's an opportunity. Oh, that's growth. Yes. So that is not, right. So this is, you're kind of in one or the other camp, um, in the dental lab world today, I think. Um, you're either the kind of mass produced, uh, digital, which are,

cheaper, of course, or you are the custom high-end. So this is like, I would say, like catering to the high-end market, right? The folks, the dentists that I have clients that will pay more for the custom. I don't know that it's necessarily better. I don't know how good the digital teeth are. That sounds funny. But I think that's a, it's a growth opportunity, but that would be a huge pivot for a business like this. And I think of it more as the competition here. So I know that, you know, dental technology, I think, has changed a lot in the last kind of decade or two. And I know that a lot of dentist office have been bringing these types of things in-house. Because, you know, with 3D printing and things like this, they can scan you in their office. And yeah, I think this all used to be done

via imprints, right? You would bite down on this thing. They would make a mold. They'd send it to the dental lab. The dental lab would, you know, make the tooth. You'd come back to the dentist office a week or two later and they put the crown on. And I think that's what this one does like that. I think so, yeah. I think, though, I wonder if there is kind of a headwind for them in the sense that Dennis, they obviously, their business has been growing for the last few years. I don't think this is like a falling knife. I'm more interested. Like I think the person in the value chain on this that's really interesting is the people who are making the equipment that go into the dentist office that where the dentist just says, hey, we're going to do a scan and we'll make this thing right here. Not necessarily the dentist, you know, doing it, but the technology piece of it.

I think there has been a lot of advancement there. Right. I think this is more of a service business and a relationship business when they're doing it this custom way. Again, because you are, it's eventually getting replaced little by little, uh, from the digital side. So to keep this business growing, which it has been doing, I think that takes a pretty strong sales effort that involves relationships with the dentists. And also a lot of times these dental labs will do education for the dentists,

you know, to kind of show you why, you know, our method is better or when you come across a case like this, here's what you can do kind of thing. It's interesting that they say, you know, diversified revenue streams, including same-day turnaround, you know, meaning the dentist is just a lot of thing. telling the person, come back tomorrow, we'll have your tooth ready or your crown. And then chairside services, like, you know, maybe there's really complicated cases where the dentist says, hey, I need you to, I need you to be here because we might need to make modifications or something like that. I don't know. Yeah, right. This is high touch. Custom shade. Like, you know, your teeth are not white.

We need an off white. Mine are white, aren't they? No. I work hard on this. Yeah, that's right. The, The color is a big deal, too, for sure. So technology, like, TLDR, like the technology disruption risk here is significant, right? Like, we think, we suspect. So it's a big open question. Yeah, I think the technology is, is, I don't think you can kind of be in both markets at once. You're either on the technology digital side, and that's a completely different price point and larger mass market and, or you're on the high touch, high service. custom side, which I think there will always be a market for the custom side, you know,

but I do think it'll shrink over time. That's kind of what I'm wondering too is like, is there is there kind of a like multiple levels and maybe it's not just service, but it's also complexity. You know, my mom's an ophthalmologist. There's plenty of people who could come to her to get a glasses prescription, but they go to an optometrist instead. But everybody's always going to have like cataract surgery or glaucoma. And they have to actually go to an ophthalmologist.

I wonder if there's that kind of differentiation here where for really complex cases or, you know, multiple teeth or, you know, I don't know that much about dentistry. But I'm just wondering if there's a kind of a bifurcation that happens. Probably. But there's also the price point. I mean, have you guys ever used your dental insurance? It does or do you even have it anymore? It doesn't cover much, you know, is my point. It's like 50%.

I think. Yeah, it's like 50% at best other than your cleaning, you know. And so what you find is people that need this specialized work, the only folks getting this kind of custom work are the people who can afford it. You know, if they can't afford it, they're going, even if they might need this more, they might still get the digital. So I think it still just kind of caters to a certain economic level. It reminds me when I was doing M&A work, we had a fourth generation business that, was in the funeral home industry, death care services. Death care. And it was interesting because the thing that they always talked about in that industry was the increasing rate of cremation. You know, it was interesting because in the M&A world, people were like, you know, this business was really preferable because they had a low cremation rate. And the margins were lower on cremation, but it was this kind of

constant thing nipping at their heels where they wanted to make sure, you know, that we can kind of preserve margin in this way. I wonder if it's kind of the same thing. Like they're, they're going to keep taking your lunch. It's just a matter of how long you can hang on to it. That's right. I think so. Yep. Yeah. So that's the challenge with this business. And I think you need to be a technician to really own it is, you know, because you're, even if you're a salesperson, let's say, you know, a lot of businesses we say, you don't have to really know the industry too too well if you're really great at sales, but how are you going to sell to dentist? Something like this that's really technical if you can't talk to dentists in their language about

this. So I think that's another thing to consider here is that this is, you could maybe own a digital dental lab without being a dentist or without being a technician, perhaps, but I don't think you can own a custom one if you're not really immersed in the language. So do you think that's why this hasn't been rolled up by private. This feels just like somebody would have put together a dental service lab roll up at some point in history, right? This has all the characteristics of what PE is looking for. Probably. Probably a little bit difficult to run.

And the other side, the digital, you know, nipping at their heels and kind of shrinking the tam of this kind of service. I would think it's both. Do I have to be an owner operator to own this business? You're saying yes, Heather. Well, if you're going to be an owner operator, you need to know what you're doing. could someone come along and do it like an independent sponsor and bring someone who knows what they're doing and yeah I think you could do that how big was it again Michael I can't remember yeah what was the EBDA five million is revenue one point five point six million of revenue is pretty steady of the

last three years one point seven million EBida I think even enough enough free cash flow though you know to to to pay for for some kind of in this seems like a pretty good searcher deal if you are willing to get in and you want to nerd out about stuff and look I considered being a dentist for like three seconds. And then I was like, wait, I have to spend my life looking in someone's mouth all day. Like, I'm not interested. That's how simple I was to figure out it didn't want to be a dentist. But like if you're somebody, Heather, if you're somebody that wants, is willing to like go neck deep in understanding how all this works.

And like I'm with you. You got to become like a nerd of crowns and implants to own this business. Yeah. Like, if you're, if you want to do that, this doesn't seem like a bad searcher business. Three years ago, Kelsey and I decided that we wanted to launch a conference. It was in a space that nobody else was talking about yet, Holdco's. I only attended three live events last year and only one big conference. And that was Holdco conference.

We ran two amazing events in Cleveland, one in 22 and one in 23. And after the event in 2023, we decided that we really had to take it up to the next level. We took a little bit of a break. we started looking for how could we turn this conference into something that a decade from now, we can be proud that we launched it. Someone and some team needed to step up, and we're doing that. I'm partnering with Kelsey and John to host Holdco Conference in 2025. We're so excited to partner with Gurley and his team for HoldcoConf 2025. If you're somebody who runs a Holdcoe wants to run a Holdco in the future, isn't our buddy named Matt Paulson who hates Holdco's because he has problems.

And you want to learn how to manage multiple businesses at once, want to learn how to incubate companies. That's my joy. I love doing it. I'm excited to talk about it. And you want to connect with other people that are building portfolios of companies as a hold co-practitioner, then this is for you.

The big news is it gets to be a ski conference plus whole-co-conf. So this conference is for folks that are building a holdco as their main strategy. So you're going to be incubating businesses. You're going to be buying businesses and you're going to be growing through holdcoes. You should come to Utah next spring.

We're not doing this like other conferences because frankly, I hate those other conferences. This is much more of a sense of camaraderie and very little of the let's get drunk and have a cocktail party and pretendants progress type conferences that a lot of things are. So space is limited. Get your tickets now and we'd love to see you. It's going to be very small, very intimate, and filled with great people. Check out Holcoconference.com for more deeds. Yeah, I agree.

I think I'm just relaying the deal that I remember was actually based in Beverly Hills. And so did cater to like the celebrity market. and those kind of dentists. And it's still very competitive. And they spent a lot of money on like a training room and all kinds of content and education. And the owner was the one doing the training. So, you know, it's really, really hands on. And they grew doing it that way.

So I think to try to bring in somebody else to do that would be a little risky. You know, you're banking the whole thing on somebody being it for the business. You know, that's not easy. I imagine this is one of those things that is highly relational. Like they're, it says mid-Atlantic. We don't know where this is, but you've got to imagine they're not the only person who's doing this. And so there is some competition. And so you would want to find a way to transition those relationships.

I also have bad news for you. There's only there's only one place where this exists. Completed cases for Hollywood celebrities and NFL players, official partner of a top-tier NFL team. You found it. You're moving to Baltimore. That's the only congratulations. Oh, that's, okay, Baltimore. That's tough.

That's mid-Atlantic. Okay. Well, okay. I mean, let's go through who this is going to be. Nobody in D.C., which is mid-Atlantic, is going to refer to their team as a top-tier team. Like, not going to have it. Wait a minute. They did well this year.

I know that. Philadelphia fans, Philadelphia fans are too busy throwing batteries on the field to call their team a top-tier team, despite the fact they're in this room. What's the Hollywood connection? though in mid-Atlantic. So you're left with Baltimore. I mean, that's the only thing you can be. It's probably one or two formerly famous people that live there. It's their girlfriends or the wives of the NFL players.

Yeah, there you go. That's what it is. I do think let's talk about this because they, they, you know, it was the twist at the end that really got Michael's attention, this NFL thing. My experience with anything like this is it's marketed, you know, in this teaser as a huge benefit. Really at the end of the day, all that it is is it's a cost. They're spending probably, I don't know, $25, $50, $100,000 a year to be like the official implant provider, the official crown provider of, you know, like, I think that's the way that's the way it works. We've been

pitched on this. Mills, do you want to be the official roofer of the South Carolina Gamecocks? Like, well, how much is it going to cost? $400,000. Yeah, no, thanks. Yeah. That's probably right. They even take it further. Like if you go to an NFL team, let's say hypothetically you go to the Dallas Cowboys, right, in here in Texas, right? You go to them and you say, hey, I want to sell you fireworks for your shows to do at the end of each one of your games, right? I want to sell those to you. They'll say, congratulations. You're giving it to us for free and we're going to give you a discount on your advertising.

So you're going to get to pay us to be our vendor. Yeah. And you're like, wow, only the Dallas Cowboys does this? No, every professional sports team does this. The only thing they spend money on is players and their owners. And then everything else just turns into a money grab to get money out of your pocket or a business pocket. So it's, I've tried. It's not just professional.

College is the same way. Yeah. I like this. And I think it's interesting. I think you hit the nail on the head, though, Michael. If you're a searcher, this is one of those things where. maybe there's been a lot of consolidation here. You know, maybe it's been very picked over.

But if you like really did a deep dive on this, you could probably get 80% of the knowledge that you need about the industry in a relatively short amount of time. And you go to like, you know, the dental lab, you know, annual association meeting in Las Vegas or something. And I mean, you could carve a really nice little niche for yourself in this corner of the market. Look, there's a lot to like about dentistry. There's a lot of baby boomers and your teeth start to wear out.

Guess how many times a year I go to the dentist just for cleanings? More than twice? Four. What? Yeah. Despite how gorgeous my teeth look, I'm waiting for my compliments, by the way, guys. Oh, they look beautiful, yes. Your camera is kind of zoomed out.

We need a very zoom in for that analysis. I'm sure the editor will come in and be like the Larry Dayman. music and like zoom out my teeth. All right. That's what we need the thumbnail for this episode to be. Yes. Just a picture of Michael just with like huge teeth to take up the majority of his face. No, actually I have

like genetically my teeth are like hyperporous and my mouth chemistry is really bad. So it causes me to like build up plaque like it is an amazing rate. So like I have to go get cleanings four times a year. Like they're like, hello Mr. Gurdley. Like, yeah, I'm back. Yep, back.

Good to see you again. See you in a couple weeks. Yeah. So I like this. I think it's interesting. I think it's unique. It's worth somebody spending the time on it. And, you know, there's probably some licensure.

There's some kind of piece of this that you would have to navigate, but it's not that you have to go to dental school, which is kind of a nice step up in terms of the barrier. It's probably, it's probably the first test if you should own this business or not. Are you willing to go spend? in the next three months full time making cold calls to people who are experts about this space like calling owners getting them taking them to lunch learning how it works reading every article getting the like i'm sure there's like a trade journal for dent there's dental lab weekly like are you willing to go back and read the last two years of episodes there of issues there like and like this is the right business if you're willing to do that like go become the foremost expert in these dental

labs over the next two to three months and then then make an offer on a business like this. But I would kind of had a Freudian slip there, Michael, but they could start a podcast and become the industry expert. Yeah. Well, it's a genius. It's a genius way to suddenly become known as an expert in your field and get people to talk to you as you start dental lab, you know, the dental lab podcast and go from there. Yeah, smart.

Just a little hustle. That's all it requires. That was a good one. That was a good one, Michael. you didn't disappoint. Thank you. Well, the NFL thing was kind of a twist. Was there an asking price on this?

No, there was not. Just that it's available. Goddustman is a good broker. They seem very high quality. Were they based out of? Goddessmen or? Yeah, goddessmen. They have a 2-1-2 number,

but if I recall correctly, they have a global, like a bunch of offices. Yeah. So let me look here about our buyers. sell your company, contact us. They may just be New York. They have a 2-1-2 number. But they claim to be an international network

of business brokers. This is not a young group of people. There's the boomers. This dude, look at this dude. Richard, if you're not on the, I pulled up the profile pages for the people who run the brokerage. It looks like there's 10 brokers

of different ages and the youngest one looks to be 70. Like this is not a this is not a young group of people. Anyway, kudos to them. Keep going. Yeah, it is an interesting thing. Like I've talked to a lot of 70-somethings and I had coffee with one the other day. And he's like a 75-year-old commercial real estate broker. And he was like, he was like, I keep trying to retire.

keep calling me with deals and I'm having too much fun doing them. I was like, okay, thanks. Thanks a lot. Thanks a lot. Lisa for the rest of it. He's like you can have the scraps off my table. On that note, on that note, it sounds like we, Heather, where are you thumbs up, thumbs down, or middle finger? We have a new category. I've never done that before. Just, but that's a, I'll keep that one in mind for future episodes, but I think I probably thumbs up. with the right person. Yeah, it's a nice business, stable.

T-th ain't going anywhere. I'm a thumbs up. I'm a thumbs up. Yeah, I want to know more about it. How thumbs up? Is this like cheese factory thumbs up or like below that? You know, I think, I still think my favorite deal was the I wear, the kids I wear one that we haven't yet published.

But I'm curious. I'd want to know more about it. You know, if you get the book on this and they're saying, hey the seller's willing to stick around for two years and help transition it and you find that you know they do have like a really nice niche and an interesting geography like you could go you could go from mildly interested to very interested and i'll come meet you on site next week pretty quickly