In this episode, hosts Brad Adatto and Michael Byrd are joined by David Mandell, Partner at OJM Group. David brings his unique perspective as both an attorney and wealth advisor to share tips for life after selling a medical practice—especially how to handle a large cash payout. Learn how to manage your money effectively, protect your assets, and avoid investment mistakes physicians often make. Tune in for insights to help you make the most of your financial future post-sale.
Unlock your financial future with the OJM Group’s latest book, Wealth Strategies for Today’s Physician – A Multi-Media Playbook! Visit https://www.ojmgroup.com/product/wealth-strategies-for-todays-physician/ and download your copy today at a discount by using promo code: BALAW.
Listen to the full episode using the player below, or by visiting one of the links below. Contact ByrdAdatto if you have any questions or would like to learn more.
Transcript
*The below transcript has been edited for readability.
Intro: [00:00:00] Welcome to Legal 123s with ByrdAdatto. Legal issues simplified through real client stories and real world experiences, creating simplicity in 3, 2, 1.
Brad: Welcome back to another episode of Legal 123s with ByrdAdatto. I’m your host, Brad Adatto, my co-host, Michael Byrd.
Michael: Thanks, Brad. As a business and health care law firm, we meet a lot of interesting people and learn their amazing stories. This season we are in the sophisticated season of a business, Brad. Our theme this season is Buying and Selling a Business.
Brad: Yes. And the buying and selling business is just one of several seasons of business. And Michael, for the last time this year, for those who don’t know, what are the other seasons?
Michael: I can’t believe I’ve said this so many times, it’s almost with a little tear as I share. We have the building season – starting a business, the operating season – running a business, the scaling season, so you’re growing [00:01:00] a business and then the buying and selling season.
Brad: Well done, sir. It sounds like you’ve done this before. I’m excited for a long time friend to be joining us today. It’s, it’s going to be a lot of fun.
Michael: Yes, me too. Before we start, I have an important question for you, Brad.
Brad: Yes. I am better than you.
Michael: Well, I do like your confidence, admire it, even if it’s a little delusional, but my question’s a little more personal, Brad.
Brad: Okay.
Michael: Has your family been hit with lice in the past?
Brad: We have not. We’ve actually dodged that lice bullet more than once. How about you?
Michael: Unfortunately, we have not. I have five kids, so we’ve had it a few times, and I have to say it’s one of the worst non-life threatening illnesses to experience with young children. It’s incredibly difficult to get rid of them and very easy to spread. Somehow through a couple of different episodes years ago, my wife and I avoided [00:02:00] getting lice, which is great because you feel like every second you now have them. But it was spread to the other kids, and then with one of our daughters who has incredibly long hair we thought they’d be gone and it would come roaring back, and that happened two times.
Brad: Oh, no. And the last time we had a life scare, my kids were much younger. We were staying at my little sister’s house, Catherine, in New Orleans. And Catherine’s son’s best friend had spent the night there a few nights before. And the best friend calls up my little sister, Catherine’s mom, and she’s like almost in tears saying that her son has lice. So then my sister starts freaking out because my kids have been hanging out with her kid and sleeping all in the same kind of area. So she called, which I didn’t realize this happened, they have a lice response team.
Michael: Oh, yeah. I know.
Brad: They came to her house and started checking through the house. Did like combing of every little kid’s hair. They had all the kids line up. Somehow none of the kids had it, but we ended up nuking all the bedding [00:03:00] and everything else the lice special response team re recommended. But it’s pretty traumatizing for the little kids because they didn’t know what lice was, and all of a sudden we’re telling them there’s something in their hair. And then for the parents, especially the parents that their kids ground zero, I think they feel like they were like a bad parent.
Michael: Oh, yeah. Stigma is very real. So there’s all these emotions. Number one is that, you kind of want to light your house on fire and just get rid and be gone because it’s pretty disgusting. But then this, I mean, it’s like the proverbial scarlet letter. Like, if you’re that family that has lice, because the email goes out at the school, there’s been a child that’s got lice and who is it that caused it? Well, yeah, then we’re pointing the finger at whoever spent the night at our house and gave it to our kid.
Brad: Well, where are we going with this lice talk. We have a guess here.
Michael: Well, I just covered a different kind of lice recently, and it also has a stigma.
Brad: [00:04:00] A little fuse. Are you talking about a new species of lice?
Michael: Kind of. I read an article about gate lice recently. Are you familiar with that term?
‘
Brad: Yes. And I believe it is a new species of lice.
Michael: This is a term used to describe people who try to board an airplane before it’s their turn to board.
Brad: Yeah. And apparently it’s upsetting a lot of the business travelers and those who pay extra money to board the plane first.
Michael: Yes. And the article I read, the airline industry is cracking down with some new technology. And it actually will make an audible sound if someone tries to scan their boarding pass before their boarding group has been called.
Brad: The old shame technique.
Michael: Yes. And I personally, you know, you talk about airplane etiquette, we travel a lot and our guest today travels a lot. My biggest pet peeve is actually not the boarding process, but the deplaning process. [00:05:00] I actually think we should trademark the deplane lice, and that’s the person who rushes to get off the plane and does not wait patiently for everybody to get off in order. And yes, there are sometimes that they’re going to miss a flight and they’ve got to go, but that’s just the proverbial excuse they use to cut through a lot of times.
Brad: Yeah. I’ve seen that one too. And I know that gate lice, I guess, deplane lice is not an expertise of today’s guest.
Michael: Well, we don’t know that.
Brad: True. Maybe we should bring him on and just wash away all this lice talk.
Michael: Okay. Sounds good. Our guest today is Dave Mandell, a little bit of his background number one. This is a second time guest on our podcast, and we’ve been on his, we’ll talk about that in a moment. Dave, his background, he graduated from Harvard.
Brad: Did you graduate from Harvard?
Michael: I did not graduate [00:06:00] from Harvard, but I did graduate from college.
Brad: Well, there you go.
Michael: He went to UCLA School of Law. I did not go to UCLA School of Law either. And he went to UCLA to get his MBA. Dave is a partner with the OJM group. It’s a wealth management group with a heavy focus on working with doctors, dentists, and other health care providers. So yes, we swim in the same waters. We’ve worked with and known Dave for many, many years, and spoken together multiple times and written together. Dave has a passion for education. He’s authored many books on asset protection and general wealth management, been on national publications, all the media stuff. And then like I said, we’re on the circuit speaking together, often at medical conferences. And we’ll learn a little bit more about this, but we actually are in his latest book, [00:07:00] which is pretty exciting.
Brad: Hot attorneys?
Michael: It was making fun of you.
Brad: Like the calendar of hot attorneys?
Michael: It was the calendar.
Brad: Awesome.
Michael: And Dave has his own podcast, the OJM Group podcast. You can find it on wherever you kind of enjoy your podcast. We’ve been a guest a few times on his podcast as well. Welcome.
David: It’s enjoyable to be here and I am excited to learn more about plane etiquette. I do travel a lot like you, so I like the idea of a sound going off when people are trying to board when they shouldn’t be.
Brad: You’re not a fan of the gate lice is what I’m hearing.
David: I’m not at all. No.
Brad: Welcome to the club, sir.
Michael: Yep.
Brad: Yes. Yes.
Michael: Oh, awesome. We’re so glad you’re back again. And for the audience members that didn’t hear you the first time, or don’t otherwise [00:08:00] know you from all your other educational materials that are out there, I’d love for you to first introduce the OJM group, and then let’s talk a little bit after that about your new book that’s out.
David: Great. Yeah. So OJM Group is a wealth management firm. We help folks build their wealth for whatever financial goals they have and save taxes along the way. We’ve been in business 17 years, but myself and a couple of the founding partners, we’re really working with clients more than 30 years. And we’ve got young partners too, which is great, folks in their forties and thirties, so we’ve got a good future ahead of us. Two things were kind of similar to, I would say ByrdAdatto in theory in terms of how we approach things from wealth management side. One is we’re multidisciplinary. We’ve got people who can handle different areas like you guys have different specialties [00:09:00] within the firm. So my background is as a lawyer, right? That’s one of the reasons you guys like me, I guess, we’re all in the same hot attorney calendar from back in the nineties maybe. But Carol, my partner, she’s a CPA, Jason who is an insurance expert. We’ve got qualified plan people, we’ve got money managers, we’ve got certified financial planners under one roof. We’re also content creators like you folks, with our own podcast that you guys have been on, and some of your partners have been on. The books, that stuff we’ve written together speaking.
The other thing is that you guys are really innovative in how you work with your clients. You’re not typical attorneys just billing by the hour. You found ways that work for docs and businesses to, and you, to deliver what they need in a way that makes economic sense with your programs. And we’ve tried to do that ourselves. We have a pretty robust [0010:00] planning process that’s a flat fee process that most clients start with us. We might get a client who’s referred in by somebody we’re managing their assets, and they come and say, “Hey, I want you to manage my money,” and we’ll work with them on that basis. But most clients come to us, they need help. They want to build a relationship. They’re not ready one meeting to like turn over their investments. So let’s take them through a diagnostic process for a flat fee that they can understand and know what they’re committing to. Docs seem to like that, and we’ve been doing that for hundreds and hundreds of physicians for 17 years. So, a little bit about us.
Michael: I think you called us when we were on your podcast lawyer-preneurs, which I’ve never heard that term. So I guess that’s you as well, although you’ve also got accountant-preneurs as well as other disciplines.
David: Yeah, that’s right. Somebody trademarked that. You guys get on that.
Brad: Yeah. We’re working on it right next to our deplaning lice.
Michael: Well, talk [00:11:00] to us about your book. The one that Brad believes that we’re in as a for our good looks.
David: You are in, but not photos. For those of you watching, and some of you may be listening, here’s what it looks like. It’s depending how you define it – our 12th or 15th book. I wrote a book called The Doctor’s Asset Protection Guide in 1998 – so 26 years, 27 years of writing. This is definitely our best for a couple reasons. One, we just get better at what we do. And if you see that, you can see this is about 250 pages of written material. But what makes it really unique and why we actually call it a playbook. It is called “Wealth Strategies for Today’s Physicians: A multimedia playbook.” That’s the subtitle, is that it actually has within it QR codes if you’re using the hard copy or links if you’re using a PDF or ebook version, to 90 different pieces of audio and video.
[00:12:00] A number of those audios are interviews we’ve done with you and other podcasts. So not only are you getting the expertise of OJM in the different areas, but you’re really leveraging, if someone is really more a listener or a viewer rather than a reader, they’ve got 90 pieces of things they can go to. And it goes beyond just the expertise of OJM to folks like you, to investment bankers, to other CPAs, to practice managers, to fellow physicians. About of those 90 videos and audios, at least 30 are clips from interviews of other docs talking about challenges they’ve gone through, whether it’s in investing or insurances, or we’re managing their practice or state planning and how they handled it, and so people can learn from each other. And that’s not really something I’ve seen out there in the physician space with books, so we’re excited about it, and yes, you guys are a part of it.
Brad: Yes. I love it. That’s a really cool idea, by the way. [00:13:00] Michael, I have an idea of what book that we need to put together.
Michael: Multidisciplinary.
Brad: Oh, wait, yeah. We’ll talk about it later. Well, Dave as Michael kind of introduced a show this season we have been focusing on the buying and selling of a practice. And after a physician, they sell their practice, a lot of times this is like one of the biggest cash events of their life. It could be for a lot of these doctors, depending on their being bought by private equity, it could be life changing money for them. And with your new background as an attorney, as you said earlier, and a wealth advisor, talk about the things a physician or a seller should be thinking about when they have that big cash event from a wealth management perspective.
David: Yeah, and I’m going to answer that. One thing I forgot to mention in the book is that anybody watching this or listening to this can get it for free. So we’ll put in the show notes, a link and a code. People buy it every day in our bookstore. But because I like Brad and Michael and we’re part of the community here, we’re giving the book out for free. So we’ll make sure you guys get [00:14:00] a code you can check out and get that, also take advantage of it if it’s something that you might like. Now to your answer. Like you guys, we’ve seen private equity come in, maybe originally in pain management derm 12 years ago, whatever it was, and grow through different areas. The main question that we come in at OJM to answer or that we should be answering before the transaction, when they have a sense of what the multiple and the EBITDA and what the deal might be is, is it life changing?
Brad, you said it could be. And that is a huge if, and we’ll talk about maybe as we go through this interview things like taxes and things that people don’t remember that are part of the deal. But when someone thinks they may be doing a transaction, our role is to say, okay, let’s assume you get this deal. This is even before the LOI or as you’re going down it, going down with folks like you, the business and the transaction. We are working [00:15:00] with the doc and their spouse if they’re married, to say, “Okay, if the numbers come in, let’s model this out.” Because typically, yes, there’s a lump sum less taxes, but there’s also going to be a reduction in income. That’s typically how it goes. So what does that look like for their financial goals? Education for the kids, that second home, retirement, maybe a legacy? Is it enough to move the needle that they’re excited about it? Because the last thing any of us want, the two of you, me and the docs, is to have buyer’s remorse day two after doing the transaction, being like this is not really the way I wanted to practice medicine, and it wasn’t really life changing. It’s a nice check, but it’s not going to change my life in a really significant way. Or maybe it is, and maybe it is happily ever after. But our job at OJM is to help them model that out so they have a good [00:16:00] sense of it before they even sign the deal.
Brad: So they should not be buying private jets right away?
Michael: He’s asking for a friend.
Brad: Yeah, I’m asking for a friend.
David: Yeah.
Michael: Well, he hasn’t even listed anything for sale and he’s wanting to buy a private jet. But we still don’t have the money, Brad.
Brad: Is that a problem?
Michael: Yeah. That’s fascinating.
David: Come with the check card, don’t buy the whole thing. You can buy the milk without the cow.
Brad: Can I borrow your credit card, Michael? I have a little purchase. I want to make sure.
Michael: Yeah, I’m sure it’ll get accepted.
Brad: Yeah. And that’s all good thoughts there.
Michael: Yeah. Walk us through you get them to this point in time where they do decide, yes, this does check the boxes, this does make sense. It is life changing. Or I get it, it may not be life changing, [00:17:00] but it’s worth it. Talk about how your team kind of guides them on the planning for the future in light of all these different variables you just talked about, the things that they should be considering.
David: Yeah. So when docs come to us and they’re considering something, either their existing clients or their new clients, et cetera, they’ll al always ask, “Hey, is there a way to do something tax wise with this deal? And Carol, my partner will say most of the times, once you have the letter of intent kind of locked in what the transaction’s going to be, there isn’t that much wiggle room. If we’re before that, maybe she can put in her 2 cents, and ideally on the team is some transaction accountant or tax attorney who’s going to try to leverage that. But as you and I know that, we know that you can plan the margins, but there’s going to be tax due, right? So that’s that. Now, if they have other side hustles or other businesses or other opportunities [00:18:00] to do some tax things like charitable or qualified plans and other things, we’re going to look at that too. That’s number one.
Number two is, once we know the dollars are coming in, my area of expertise on the team is asset protection. So let’s make sure that we structure that large lump sum and any other assets that were sitting there before in a way that reduces their exposure to malpractice or the kid’s car accident or family or friends suing the family because their kids got lice. Any sort of liability, would be something to be concerned about. So, let’s do the right thing and get those in the right structures, so they have a level of asset protection. And then there’s the blocking and tackling of managing those assets. Sometimes they want to, and again, I can go into case studies and stories, clients want to buy the jet card, [00:19:00] do something on vacations or do something charitable or do something or buy the boat or whatever it is. It’s their money, so we’re advising them but we’re also like sitting on their shoulder thinking about life expectancy. Married couple could be in their seventies, eighties, nineties, a hundred, et cetera. This transaction could be in their forties or fifties, so we’ve got to think long term. And part of our role is to help them, allow them to – give them permission to spend a bit and go a little crazy, but also be thinking long term. And that’s being the quarterback you guys are texting, so that’s being the quarterback of their financial lifeline.
Michael: A quick question, Brad, I know you have a question too, but just the 32nd context for our audience who are not familiar with the term, talk about what asset protection is.
David: Yeah. So asset protection is a discipline of law, [00:20:00] but it also involves insurance and financial areas. And the goal is very simple – to protect assets that a client may own from future potential liability. And that could be malpractice, that’s what’s mostly on the mind of docs, but it could be employee claims. You guys could tell stories of all different ways people can get in trouble liability-wise. it could be driving from kids, it could be slip and falls, et cetera. So what I’m doing is doing a full diagnostic and laying out here are the options. Things like limited liability companies and corporations and partnerships and trusts and certain kinds. Texas which is a community property state, but a state in Florida, like where I live, we can use something called tenancy by the entirety if you’re married, to protect against. So there’s lots of different tools. We go through them in the book, which you can get for free, and it’s not one size fits all.
Brad: Thank you. And so now you kind of established certain things [00:21:00] they should be doing, but what are some of the common mistakes you see a seller make when they do come into this large sum of money? And I’m hearing one of them that they should be doing immediately though, is buying that private jet, so that’s probably a mistake if they don’t do it right.
David: I mean, lifestyle creep is something that can happen in this transaction, but it actually you guys know this, can be happening with docs when they first get their first job coming out of fellowship and residency. It’s not the jet, but it might be the car, right? Or the house that’s bigger – get the biggest house they can afford, which sometimes isn’t always the best idea. That’s just human nature. But I think specifically on a transaction, it gets back also to taxes and how these deals work. So let me just give you an example, and I know this, because again, I look at the… one of the only businesses that have more private equity come into it than medicine over the last 10 years is the business that I’m in, being a registered investment advisor and financial firm. [00:22:00].
So we’re approached all the time, we’re not really interested, and we’re not the position we want to sell, but I know what these deals look like. So let’s just say a transaction’s going to come in for 10 million. Often what’s going to happen is that’s going to be split between cash and a roll up. So let’s just say they’re going to give you 6 million in cash today, and 4 million, you’re going to need to, as the physician, as the business owner, roll up into the bigger deal as they’re acquiring others. And the hope is that in some point, you’ll get another bite at the apple because they may sell that and hopefully they’ve executed on their business plan, and that 4 million has grown to some other number. You guys with me?
Brad: Yep.
David: Okay. You pay tax generally on the full 10. A lot of people don’t realize that. So you’re getting six in this example in cash, but you owe tax on the full 10. In some states, that could be up to between capital gains and the state taxes, three point [00:23:00] something million bucks. So now all of a sudden that six is really two and a half. And if your income’s being cut as well, again, this gets back into my first answer to you, which is, model it all out. Because you go buy that jet from that six, and then next year, April 15th, you owe two and a half, you might have to sell that jet.
Brad: Well, I’m so sad now for that person.
Michael: That’s awesome.
David: It’s something people really need to keep in mind and model it out. That’s the good news is, this is not a mystery if you do it right from the beginning.
Michael: Well let’s go to our – I think we have time for one more question. I’m going to ask you to get your crystal ball out now, Dave. Love to hear your thoughts on just where we’re headed; the medical industry economy, [00:24:00] you can answer it however you see fit. You’ve been in this world with us for a long time and have a lot of wisdom.
David: I don’t know about the second part of that question. What I see is, especially with younger docs, docs coming up, is a real interest. We’ll get back to this term, doctorpreneurship. I see a lot of physicians who may be employed now, they may be part of large groups, they don’t have the flexibility like when we were coming up in our practices where most docs have their own practice. There’s still plenty who do or have med spas, et cetera, but even that is a passion of entrepreneurship, the reason they have the med spa, the reason they have gone, like my brother, who’s a solo cardiologist, not many of those around anymore, is because they want to have their own shop. And part of having their own shop is not just having their own boss, but it’s being able to have the flexibility to make some income and create tax savings, [00:25:00] like qualified plans, non-qualified plans. So on our podcast and in the book, we’ve talked about everything from side hustles like locums work, to moonlighting, to medical case review or expert witnessing. We had a great guest on talking about that. Lots of different ways that docs are trying to leverage their knowledge to make money outside of traditional clinical practice. And I think that’s going to increase. I think that passion is there, and I think they’ll need folks like you to help them structure it legally. They’ll need folks like us to help it be tax savvy and retirement savvy and do all the things financially they should be doing.
Michael: Interesting. I mean, the ever co constant pressure on reimbursements is pushing doctors into finding other revenue streams, and so I like that. Well, we’re out of time. [00:26:00]
Brad: Man, time went by too fast.
Michael: Appreciate you joining us on the Legal 123s with ByrdAdatto. It flew by. We are grateful for you, Dave. And what we’ll do next is go into break and Brad, I’ll come back with a little legal wrap up. Thank you.
David: Sounds great. It’s great to be here.
Access+: Many business owners use legal counsel as a last resort, rather than as a proactive tool that can further their success. Why? For most, it’s the fear of unknown legal costs. ByrdAdatto’s Access+ program makes it possible for you to get the ongoing legal assistance you need for one predictable monthly fee, that gives you unlimited phone and email access to the legal team so you can receive feedback on legal concerns as they arise. Access+, a smarter, simpler way to access legal services. Find out more, visit byrdadatto.com today.
Brad: Welcome back to Legal 123s with ByrdAdatto. I’m your host Brad Adatto, my co-host, Michael Byrd. And Michael, this season our theme has been Buying and Selling a Business. [00:27:00] And we had a great conversation with Dave about what’s going on in the M&A world, but more importantly, how he sees it from asset protection planning and other aspects of an entrepreneur physician. What are some thoughts that you had?
Michael: Yeah, I liked at the very end when we asked him to get out the crystal ball, it resonated with me when he was talking about just the entrepreneurial physician continuing to kind of expand beyond their day job of whatever they’re doing, to treat patients. I think he called it side hustles when he references his book. And it resonates because we see that, and I think even mentioned to him that there’s pressures usually, it may be decreasing reimbursements, but otherwise, and my only kind of – I’d like both of us to kind of pull the thread there a little bit. One of the things that I [00:28:00] thought of is, you have to look at your employment agreement if you’re an employed physician because there will be provisions that talk about – we won’t use the word moonlighting, but it’ll be basically what are your boundaries for being able to go do these side hustles? And we’ve seen major problems arise where physicians haven’t looked and they have done something and or they don’t negotiate that on the front end. And then all of a sudden they’re like, “Yeah, I’m ready to go open my med spa.” And they realize that their employed contract with the hospital would prevent them from doing that, and they can’t get the consent. Even if you’re a partner in a practice, there may be some restrictions on how you spend your time and whether you have to bring your partners along. And so, it’s really important to first understand kind of your business obligations under your contracts before [00:29:00] you go down that road.
Brad: Yeah. And two real quick points since we’re almost out of time, number one, just because you’re insured by that employer, does not mean that that same malpractice will carry over. So if you are doing a side hustle, make sure you have that done correctly. And two, obviously compliance is the number one thing you should be considering, which is, if I go over there, am I violating state laws? Am I violating federal laws? Because there are a lot of rules that have to do with the ability to refer back and forth between the different entities you’re employed by or other entities you may be working by, so just make sure you run that through council first that understands that. But Michael, that is all the time we have for this season. Well, guess what? Today we’re releasing this on Christmas Day, as such, ByrdAdatto team wishes all our fans a very merry Christmas and a Happy New Year. Our next show will be next year, Michael, in 2025 when we launch season 19. And until then, enjoy the holidays. Thanks again for joining us today. And remember, if you like this episode, please subscribe, make sure to give us a five star rating and share with your friends.
Michael: You can also sign up for the ByrdAdatto newsletter [00:30:00] by going to our website at byrdadatto.com.
Outro: ByrdAdatto is providing this podcast as a public service. This podcast is for educational purposes only. This podcast does not constitute legal advice, nor does it establish an attorney-client relationship. Reference to any specific product or entity does not constitute an endorsement or recommendation by ByrdAdatto. The views expressed by guests are their own, and their appearance on the program does not imply an endorsement of them or any entity they represent. Please consult with an attorney on your legal issues.
