How to Find the Right Buyer for Your Dental Practice

Selling your dental practice is one of the most significant decisions you will make in your professional career. Finding the right buyer can ease this transition and ensure the legacy of your practice remains intact. Here’s a comprehensive guide to help you navigate this process and identify the best buyer for your dental practice.

 

Determine Your Goals for Selling

Before beginning the search for a buyer, define your goals. Ask yourself:

  • Are you looking for a quick sale, or are you willing to wait for the perfect match?
  • Do you want to stay involved in the practice for a transition period, or are you seeking a clean break?
  • Are you prioritizing financial value, cultural fit or a combination of both?

Clear goals will guide your decision-making process and help you communicate effectively with potential buyers.

Identify Potential Buyers

There are several types of buyers for dental practices, including:

  • Individual dentists: Often associates or local dentists are interested in purchasing a practice to establish or expand their own
  • Dental Support Organizations (DSOs): DSOs provide administrative support and resources while allowing dentists to focus on patient care. Selling to a DSO can offer financial stability and access to growth opportunities
  • Private equity groups: For larger practices with high revenue and a robust footprint, private equity groups may see your business as a strategic investment

Each type of buyer has unique motivations, and understanding these can help you tailor your approach.

Evaluate the Buyer’s Financial Stability

One of the key considerations when selling your dental practice is ensuring the buyer has the financial capacity to complete the purchase. Request detailed financial documentation, including:

  • Proof of funds or pre-approved financing
  • Credit history and debt-to-income ratios.
  • A business plan outlining their strategy post-acquisition

What’s more, you should understand where the buyer’s financing is coming from. For example, a significant number of individuals rely on bank financing, which is notorious for capping many of these loans and can result in borrowers being unable to make competitive offers on attractive practices. 

DSOs and PE groups are private equity-backed, meaning they have significantly more cash – which allows them to be much more competitive with their offers. DSOs and PE-back groups are also willing to explore deal structures outside of 100% sell that enable dental entrepreneurs to receive cash upfront and future equity.

Working with a professional broker can simplify this evaluation.

Assess Their Plans for Your Practice

A buyer’s vision for your practice is crucial. Discuss their plans for:

  • Retaining existing staff
  • Growth opportunities for existing staff
  • Maintaining the level of care your patients expect
  • Branding and marketing changes
  • Expansion or additional services

This alignment ensures your practice continues to thrive and that patients and employees experience a smooth transition.

Work With a Transition Expert

Partnering with a broker who understands the dental industry can make all the difference. Brokers can:

  • Market your practice effectively to a pool of qualified buyers to help level up your offers
  • Negotiate on your behalf to secure the best deal
  • Provide a realistic valuation of your practice
  • Knowledgeable about the different types of relevant, reputable and qualified buyers – ranging from individuals to DSOs and even private equity groups
  • Understand the doctor’s needs and goals for their transition to help guide them to the best possible outcome

Interview Potential Buyers

Meeting with potential buyers is your opportunity to evaluate their fit. Ask questions about:

  • Their experience in managing or owning dental practices
  • Their approach to patient care and staff management
  • Their timeline for the acquisition and transition
  • For DSOs, a list of previous dentists who have transacted with them that can be contacted to learn a doctor’s perspective of their management and leadership style

This step ensures you’re making an informed decision about the future of your practice.

Conclusion

Finding the right buyer for your dental practice requires careful planning, thorough research and a clear understanding of your goals. By following these steps, you can ensure a successful transition that benefits you, your staff and your patients.