May 16, 2018
Partnerships versus Mergers: Which Is Right For You?
When looking to combine practices, the million-dollar question (literally) is whether to go with a partnership or merger. The answer lies in what you’re working toward: retirement or expansion. Here, we break down the two options.
While partnerships have a 60% success rate, it only makes financial sense if the practice is collecting $1.2 million annually. If the practice is collecting less, each doctor wouldn’t bring home enough at the end of the day to make a stable living. A partnership could eventually lead toward retirement, but a more lucrative option is to take on a partner who could expand the offerings of the practice, adding to its value and client base.
Though not as common, combining two existing practices into one proves to be successful in terms of equality of responsibilities and income, especially when combining a general practice with a specialty partner. The next step when working toward retirement is to then sell after five years or so to a dental service organization (DSO). Though staying on to work a reduced schedule is an option, selling a merged practice to a DSO will yield higher profits. And ultimately, the process to sell is more seamless since DSOs already have financial backing.