June 27, 2022
5 Reasons to Sell Your Dental Practice to a DSO
We’ve all heard the conundrum of selling to a dental service organization (DSO). DSOs are solidifying their place in dentistry and growing fast, as evident by the industry-wide consolidation trend. Depending on your transition goals, now is a good time to join a DSO. Here are the top reasons to sell your dental practice to a DSO.
You don’t need to be ready to retire
Some dentists love practicing and aren’t ready to retire but don’t necessarily like the managerial aspect of owning a business. As long as clear lines are drawn, you can sell to a DSO and still practice at your original location. Affiliating with a DSO will give you more flexibility by releasing the office management and human resources components of your practice. Most dentists open their own practices to focus on the clinical side and patient care, so selling to a DSO grants you the freedom to focus on your patients and the clinical side of your practice with a professional office management to handle the billing, staffing and all the other aspects that come along with owning a business.
You can work fewer hours
DSOs fit the dentist who craves a work-life balance. Working 32 clinical hours instead of six days a week with early mornings is appealing to both the younger and older generation. Plus, the money made doesn’t go toward various expenses like when owning your own business. In fact, with multiple practices under one roof, equipment and supplies are usually sold for a better deal. For those looking to ease into retirement, working for a DSO can offer an abbreviated schedule rather than the added stress of a transition to another dentist.
You have the chance to expand
With a fluctuating patient base amid the pandemic, joining a DSO gives practices a chance to expand. DSOs are extending their reach to smaller, suburban communities with a critical shortage of general dentistry to include specialty care, such as comprehensive orthodontic services, oral surgery, dental implants, oral hygiene services and pediatric care. Trends have shown patients these days are looking more toward the one-stop-shop model.
Your dental practice’s value increases
When it comes to putting pen to paper, selling to a DSO can make financial sense for both the buyer and seller since, typically, a DSO’s valuation of a practice comes out higher than an individual’s. Not only will your practice value for more if selling to a DSO, but you also have the option to stay on and earn a salary, unlike with a straight buy-out. Not to mention, DSOs already have financial backing versus the unknown of the underwriting process when an individual buyer is being financed through a bank. Private equity money, economies of scale, cost structure optimization and loan amount all contribute to a higher valuation.
You have options
Just like not all dental practice transitions are created equal, there is much more to DSOs than signing on a dotted line. DSOs can acquire as few as five practices in their group or even more than 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. Before deciding to partner with one, it’s important to explore other options beyond selling 100% of the practice to a traditional DSO. A professional broker will help you decipher your options, including a joint venture model, sub-DSO, equity roll, direct investment with private opportunity and competition-based model.
Contact the experts at Professional Transition Strategies to get the selling process started.