July 5, 2022
3 Things You Should Know Before Affiliating with a DSO
It would be seemingly impossible to begin the process of selling your dental practice without considering joining a dental service organization (DSO). Sure, any good dental practice broker will point out the advantages and disadvantages of selling to a DSO. But even if you are sold on the idea of affiliating with a DSO, there are some considerations you’ll need to take into account during the consolidation wave. Here are the top three.
DSOs have earned a bad reputation in the past for being very corporate, but that has changed over the last few years because many DSOs are updating their models to be more receptive to what dentists want and look for in a partner. DSO might also be a good fit when the seller is looking to stay on with the practice but wants to release managerial responsibilities, such as in a retirement situation, anyone who is looking to maintain a work-life balance, or a dentist who wants to focus on the clinical side and patient care without contributing time and money associated with running a business. And lastly, DSOs can pay more for your dental practice than individual buyers because of private equity money, economies of scale, cost structure optimization and loan amount.
Just like entering any proverbial marriage, a DSO can end up being an active participant or silent partner, each providing its own set of values. DSOs can acquire as few as five practices in their group or as many as 45. So, depending on the burdens of the practice you are willing to let go of, there’s a DSO that will pick up those tasks. Say you still want full control of all clinical decisions related to your practice of dentistry but don’t want to deal with payroll — there’s a DSO for that.
Consider your goals. Do you want to retire in two years or 10? You might be able to do both in a DSO environment. It all comes down to timing as you’ll want to sell your dental practice at its peak value. However, because a well-laid plan can take up to five years, you don’t need to (and shouldn’t!) wait until you’re ready to sell to conduct a comprehensive practice appraisal to determine ways to make your practice more valuable and profitable, whether that’s an increase in production, collections or otherwise. Then, compare that with what DSOs look for when purchasing dental practices.
Contact the experts at Professional Transition Strategies to get the selling process started.