How Partnering with a DSO Can Help Preserve Your Dental Practice’s Legacy

You’ve dedicated years to building a thriving dental practice alongside partners, cultivating relationships with patients, and establishing a legacy of excellent clinical care. If you’re considering the next step in your professional journey, selling your practice to a dental service organization (DSO) might be the perfect opportunity to continue that legacy while opening doors to new possibilities for all parties.

When contemplating this transition, you should understand how selling to a DSO can not only preserve – but also enhance – your practice’s reputation and results. In this blog, we’ll explore some key considerations that can help you navigate this decision with confidence.

Understanding the Value of Partners or Associate Presence

It’s quite common for one partner to retire or leave the practice while the other continues. If your business has a partner or associate staying on to continue providing clinical care, it’s a significant advantage when selling to a DSO.

DSOs value continuity in patient care, and having a familiar face remaining at the practice can help execute a smoother transition. This presence not only enhances patient retention but also translates into higher collections and, therefore, higher valuations on your business, as patients are more likely to continue seeking treatment from a trusted provider. If you decide to sell to a DSO, continuity of care can ensure your practice continues to thrive under new management while maintaining its established reputation in the community.

DSOs also favor practices with multiple providers, as this diversification minimizes the risk associated with any single practitioner’s departure. Moreover, a multi-provider practice – whether it be multiple doctor-owners or associates on staff – offers greater capacity to serve a broader patient base and expand services, increasing revenue potential.
An experienced broker can help you leverage the value of having multiple providers to negotiate favorable terms and secure a beneficial deal.

Highlighting the Benefits of a Well-Managed Practice

DSOs are attracted to practices that are already well-run and efficient. A practice with solid operational systems in place not only demonstrates stability but also presents an opportunity for increased profitability. Higher EBITDA (earnings before interest, taxes, depreciation and amortization) and margins are appealing to DSOs, as they signify the potential for continued growth and success post-acquisition.

As the dental industry consolidates, there is more competition than ever for DSOs to acquire the remaining well-managed and high-performing practices. As a result, practice owners are being presented with more appealing and individualized offers, such as joint ventures, equity rolls and other types of lucrative deal structures. Industry consolidation is only estimated to last another five years, so it’s imperative to act quickly if you’re interested in getting the highest value for the sale of your practice.

Exploring Deal Options With Remaining Partner(s)

When one partner decides to sell to a DSO while the other partner(s) remain, several deal structures can be explored to accommodate both parties’ interests. These may include scenarios such as:

 – Equity Retention: The remaining partner retains a percentage of equity in the practice, allowing them to continue benefiting from its success while partnering with the DSO.
 – Transition Period: A transitional period can be established where the remaining partner gradually reduces their involvement in the practice while integrating with the DSO’s management structure.
 – Income Sharing: The DSO and the remaining partner agree on a profit-sharing arrangement, ensuring ongoing financial participation and alignment of interests.

Bottom Line

As you explore the options for selling your dental practice with a partner staying onboard, remember that the right deal structure can shape the future of your legacy.

By leveraging factors such as partner presence, practice management efficiency, and multi-provider dynamics, an experienced broker can negotiate a favorable deal for you that ensures continuity of care for your patients and a promising future for your practice.

Contact the team at Professional Transition Strategies to explore the deal structures that can safeguard your legacy and propel your practice towards continued success.