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July 27, 2020 Rebecca

3 Considerations when going with the Joint Venture Model

It’s easy to think that partnering with a dental service organization (DSO) that acts as a silent partner in your business is a cut-and-dry decision. But because a dental practice tends to take on this Joint Venture (JV) years ahead of retirement or a transition, it’s important to find a match made for the long haul. Here’s what to take into consideration when looking to partner with a DSO.

Duration

The Joint Venture model runs the gamut from decades-long ventures that have acquired practices and returned billions to their investors, including the practice owners, to newer DSOs that carry the same goal to buy, build, get big, and sell. Whether established or new, DSOs should be thoroughly vetted in the exploration process. The goal of the business owner should be to solicit multiple interested offers.

Long term

A partnership with a DSO is not a one-time transaction. Rather, while the investor will put the decisions about the practice brand and strategy in the hands of the dentist, the partnership will ideally last until retirement or another exit transition is planned for many years in the future. These Joint Ventures will continue to provide extensive resources throughout the years while working with the dentist to ensure business continuity throughout the process.

Risks and rewards

As with any transaction, there are risks and rewards to consider before signing on the dotted line. Throughout the process, it’s important to weigh the retained minority equity position and future of the market against a guaranteed exit plan with no uncertainty and long-term gains from retained parent equity through internal practice improvement and acquisitions.

What’s next?

Contact the experts at Professional Transition Strategies to see if a Joint Venture is right for you.



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