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What does it take to turn a run-down, two-chair dental clinic into a 10-chair market powerhouse, and then execute a lightning-fast, 81-day exit directly to private equity?
In a recent episode of The Exit, host Steve McGarry sat down with Adelaide-based dentist turned serial entrepreneur Dr. Michael Filosi. Michael pulled back the curtain on how he scaled his practice, built a self-sustaining business model, negotiated directly with buyers without intermediaries, and pulled off a clean “walk-in, walk-out” deal.
Here are the key strategies, scaling frameworks, and hard-earned lessons from Michael’s exit story.
1. Recognize Opportunity Where Others See Chaos
Michael began his career as an employee dentist at age 23. However, he quickly realized he wanted to solve business problems with his head rather than work endlessly with his hands.
After a chance conversation over coffee, he bought a 40-year-old practice on Fullerton Road. It was so neglected that it quite literally had possums living inside the walls.
“My first week was Googling how to get rid of possums from walls… I didn’t wait for the grass to grow under my feet, just jumped in.”
Dr. Michael Filosi
Key Takeaway for Founders
Don’t wait for the perfect asset. Look for distressed opportunities with solid physical or strategic fundamentals that you can systematically modernize.
2. Scale via Strategic Real Estate and Expansion
Over ten years, Michael didn’t just grow the team; he methodically expanded the physical capacity of the business:
- Initial Renovation: Scaled from 2 dental chairs to 4, and then to 6.
- The Neighbor Strategy: He quietly negotiated a first-right-of-refusal agreement with the 99-year-old neighbor living next door.
- Unlocking Capacity: When he acquired the neighboring property, he turned it into a car park. This allowed him to build right to the back fence on the main site, ultimately creating a 10-surgery practice with 35+ staff.
[2-Chair Practice] ➔ [Renovate to 4-6 Chairs] ➔ [Acquire Adjacent Property] ➔ [10-Chair / 35+ Staff Hub]
3. Eliminate “Key Person Risk” to Secure Clean Terms
When it came time to sell, Michael wanted a walk-in, walk-out deal with no earn-outs, no clawbacks, and no prolonged retention period.
To demand those terms from private equity, he had to make himself redundant first:
- 0.6% Billing Contribution: Michael stepped off the tools entirely. His clinical billings represented less than 1% of total revenue.
- Turnkey Functionality: He could show buyers that replacing him meant hiring an administrator or integrating corporate oversight, not replacing a primary revenue generator.
If your revenue drops by 50% when you go on vacation, you don’t own a turnkey business; you own a high-stress job.
4. Run the Sale Like a High-Speed Race
When Michael felt burnout setting in (“post-traumatic boss disorder”), he skipped hiring a broker and managed the sale himself.
| Phase | Action Taken |
| Market Mapping | Identified 7 potential Private Equity buyers. Consolidated down to 5 candidates. |
| Direct Approach | Cold-called all 5 prospective buyers directly. |
| Bidding War | Flew 4 PE teams into Adelaide for walkthroughs and created strict submission deadlines to build competitive tension. |
| Execution | Went from emailing his accountant to deal closure in just 81 days. |
5. Master the Valuation Multiple
In service-based healthcare industries like dentistry, valuation multiples typically range between 3× to 5× EBITDA.
Because Michael built a market-leading asset with clean financials and low operational risk, he pushed his valuation to roughly 6.5× EBITDA.
“When you sell a business, you want it easy for people to appraise too. Clean books remove friction and reduce buyer risk.”
Dr. Michael Filosi
Mistakes to Avoid & Wisdom for the Journey
- Don’t Wait for Burning Embers: Sell when there is still “gas in the tank”. A distressed seller loses all negotiation leverage.
- Quit Sooner on Bad Fits: Stop tolerating poor performance or bad cultural fits out of guilt. Set uncompromising standards early.
- Get a Hobby Early: Build a life outside the office. Obsessing over a business 24/7 without a healthy outlet makes the scaling, and exitin, process much harder emotionally.
