ALS is here to stay for dental laboratories

Julian English spoke to Peter Marson (pictured above), the CEO of a new corporate in the dental laboratory sector.

Renowned lab Leca Dental recently took the decision to capitalise on its market position and transition to becoming the founder member of one of the UK’s market leading dental laboratory group.

In late 2018, Leca met with the team from ALS (Amalgamated Laboratory Solutions). They soon discovered a shared vision for the dental laboratory sector and for future growth and shared objectives. Therefore last year, Leca joined forces with ALS.

Julian English spoke to Peter Marson, managing partner of Ansor, the investment company that is backing ALS, to find out how the organisation started. He explained where it’s heading and how it can benefit UK dental laboratories.

How did ALS come about?

I actually didn’t come from the dentistry industry, my personal background is as an entrepreneur. I started my own business 20 years ago. Then I built that up and subsequently have built up a number of businesses in different sectors. They are mostly B2B businesses, some of which have grown quite big.

Recently we expanded our group and raised new funds to make investments in UK SMEs.

We think here, there’s an opportunity to transform a sector. We have viewed different sectors and progressing investments in areas where we think there are great opportunities. We’ve looked into the dental supply chain and how it works, and how the typical dental lab operates.

My colleague Peter Stafford and I have been monitoring the sector for the last three to four years.

The advent of digital has highlighted some interesting characteristics in terms of the traditional way that dental labs do things. It reveals the exciting possibilities of how things may be done in the future.

Digital transformation

We are well aware of the possibilities of digital transformation, this as an interesting opportunity to build a bigger group.

It’s hard to come across large, well-funded companies in the UK lab sector. We are trying to bring together a really powerful group that can service dentists with everything they need.

The future of the group will ground itself on the foundations of technology, digital approaches and automated manufacturing. Our vision discloses a digital process from the point of the scan. To use automated production, so that the product turns around overnight and is back with the dentist ready to go with perfect quality. That’s the plan. And for that we need likeminded technicians and labs all over the country to join us.

There’s still progress to be made in becoming 100% digital, but significant steps forward from traditional dental manufacturing have been made.

Interesting lab profiles

We’re interested in talking to labs and raising them to the next level in their business.

Often they’re family businesses. These businesses have been successfully built up between family members or two or three individuals over many years. They are not necessarily ones that are able to invest in the next stage of development.

We are looking for high quality businesses that have got a strong initial base, from which we can build. Ideally, we want to keep the people that built them successfully and retain their staff.

Who was first?

Our first port of call was Leca Dental Laboratory in Glasgow.

We spent a lot of time talking to them. We signed an initial head of terms on the day that they won the Dental Lab of the Year 2018. Then we concluded the deal to buy their business a year later when they were runner up.

Brothers Nick and Martin run Leca, their father founded the business. They’ve done a fantastic job of building it up into one of the leading businesses in the UK. It’s certainly one of the leading businesses in Scotland.

I think Nick and Martin are both very excited about how we can take the business to the next stage. We’ve already invested heavily in technology with them including a new digital lab.

The second business that has joined forces with ALS was Ashford Orthodontics, which is based in Sunderland. It is what we believe to be the largest orthodontic lab in the UK.

Again it is a very successful high-growth business. It has three founders, Sean Thompson, Craig Stevens and Graeme Winyard, who are staying on to build it. They have been growing very rapidly over the years and they’ve got a very good plan to accelerate growth going forward.

There’s a lot of interesting products and programmes that they are working on as orthodontics evolves. We are seeing very rapid progress there with the digitisation of their processes. Consequently, we’ve gained solid foundations in the orthodontic field and the business is doing very well at the moment.

Dental Technique Laboratory, in Perth, Scotland, has also recently joined the group. It is another high quality business with a very strong reputation with its customer base in that part of Scotland.  Charlie Gallagher is the guy in charge there.

Most recently Casterbridge Solutions joined the group. Casterbridge have a dental lab based in Poundbury, Dorset. It’s a different part of the country, but again has a strong business model. Renowned technician David Bentley and his team have built it up. Casterbridge have carried on with it as they look forward to seeing the potential of Casterbridge as part of a bigger group.

We have got discussions going on right now over the next three to six months to bring on other labs in London, in the Midlands, and right across the country as part of the group.

Is the plan to have regional coverage? Or is it just the right people and the right type of lab?

It’s important to us that the lab is a high-quality business and has high quality people, as well as a good reputation with its customer base.

We aren’t looking to strip out the labs and close down the local presence and centralise everything in Glasgow. That’s not our model. What we want to do is to say to businesses like Casterbridge that we believe in you and back you. We want you to grow your business and want you to think about how you can double or treble the size of it over the next few years by doing more for your customers and offering them more in terms of service level so you can do things at a better quality, faster, lower prices and you’ve got a bigger product range.

There is not really an interest in taking over failing labs.

We take interest in labs that have got something special about them. Aspects such as fantastic customer bases or unique capabilities, where they fall into a niche, making them strong.

Those businesses we are very keen to bring in as part of the group.

Do you plan to have one single brand for all of your labs or are they going to retain their existing branding?

For now they are retaining their existing branding.

The labs have an excellent reputation with their customers under the established brand. We’re not planning to change that.

The group comes under the ALS name. We are going to start introducing an ALS website and some ALS branding. There may be some products and services that we sell direct as ALS, for example a range of PPE products for dentists that we’d likely sell directly as an ALS offering and we might expand that into other products that dentists might want to get.

More business opportunities

One emerging opportunity comes from the drivers and vans we will have going out to dentists every day all over the country.

It makes sense to utilise those to offer other products and services to the dentists who can get same-day delivery on handpieces or burs or other supplies. It makes sense for it to be on the same van as the crowns and bridges and other products that are coming out to them every day.

I think you can probably expect over time, some branding. It might be Leca Dental Laboratory, an ALS Company for example. But that’s the extent of our planning at the moment.

Any lab owner you would not talk to?

We would talk to any lab to see if there’s any common ground. It’s important that they are going to buy into the vision.

We are looking at a lab currently that is a retirement sale, but at the same time the owner has already put in place a management team and he himself is not especially involved. We’ve met with that management team and made sure that we are comfortable. It’s vital that their team have enthusiasm regarding the future journey to build up that business in that part of the country.

An important part of it is the people that are going to be staying with us. It isn’t a case of looking to strip out the key people. They are often the people that have built relationships and built the business. We want to keep them around and motivate and incentivise them to accelerate the group with their business.

Often you find that people have ambitions to grow the businesses that they’ve worked on for many years but they’ve hit certain natural barriers to grow. This is in the sense that they are working all hours of the day and night already dealing with invoicing and admin and queries and tax and legislation and HR issues and so on.

Whereas if some of that burden can be lifted from them, we can put in place a professional finance system. As well as this we can organise a HR management.

They can spend more time with customers. They can also unlock growing their business from what might have been £1 million turnover up to £2 million or £3 million.

I think we’ve got the advantage of people in the group, like Nick Leca, who’ve already been through that process. They’ve already worked out how you grow a business to having 60-70 employees and a multi-million pound turnover.

We can share that but also put the backbone of a professional larger business in place.

In particular, it allows those guys who love being in the lab and talking to dentists – but don’t especially enjoy the headache of running a business – by helping with that weight.

How did COVID-19 affect the business?

Well it was certainly unexpected. The support from the government schemes has been extremely helpful to help manage this period.

Very luckily for us, ALS as a group have great financial backing. I think we’ve got unusually deep pockets for the sector, so we haven’t had any issues financially.

This has given us the ability to think about spending time looking at other businesses that we could bring in.

Additionally, we’ve been able to think about processes and technology developments. The systems, we are very keen to build an end to end system from the dentist’s initial scans to their products and so on.

So, we’ve been able to spend time on that but obviously for many months there’s been pretty much no revenue.

We didn’t shut down, we kept operating through that period, and providing service to the customers and the return has been varied across the different sectors.

Unsurprisingly, once things started to open up in orthodontics, it came back very strongly. This is because it’s less invasive work and there’s a lot of people with an interest in progressing orthodontic treatment.

Summary

We are in a building process. We want to build the leading laboratory business in the UK. That’s what we are investing in. We think there’s an exciting opportunity to do that. We are very interested to hear from anybody in the industry, who would like to work with us in some way.

Ultimately, ALS holds an interest not only in lab owners who would like to discuss joining the group, but also other people that have interesting products or services who would like to talk to us.

We are an entrepreneurial business, founded by entrepreneurs. We are keen to get people that have interesting entrepreneurial ideas as part of the group and see if we can grow it into something special over the next four or five years.