February 8, 2019

How to Roadmap an Associate-to-Buy-In Dental Practice Transition

The roadmap to any dental practice transition can take many forms. In the case of an associate-to-buy-in strategy, a potential buyer is courted from a group of associates to buy-in over a period of time to ensure compatibility and allow time to figure out the future of the practice rather than deciding from the outset. Here’s how to get the ball rolling.

Get it in writing

If ownership is your goal when starting as an associate within a practice, a written plan or roadmap should be in place from the start of employment to limit the amount of gray area. By having everything outlined and in writing prior to the date of purchase, the process will be seamless and effortless when the time comes to officially buy-in. Likewise, the current owner should also have a written plan to limit their liability and chance that the associate leaves because their expectations are not being met.

Take your time

While this transition is the longest approach, lasting at least five years, it is the most flexible as long as division of power is taken into consideration. This allows time for all parties to figure out their compatibility and working relationships, as well as for both the seller and the potential buyer as all the contracts are agreed upon at the start as is the timeframe for the transition. Many times, the contracts can be signed before as well so that the deal is “essentially done” even though it may be a year or more before the transaction actually consummates.

Plan your timeline

Part of your outline should include when and how the buy-in will occur. With a roadmap, there can be a certain amount of years the doctor will be an associate before buying in or it can depend on predetermined growth benchmarks. Either way, exit strategies should also be included so that all doctors are able to exit gracefully and with little financial impact.

Know your worth

Completing a practice valuation from the start will only provide a better understanding of the amount of growth the associate is responsible for to ensure the associate is not paying for their contribution to the increased value of the practice. A second valuation is often then conducted on the day of the transition, and the two valuations are averaged so that the associate does not “double pay” for the work they have done and the seller is compensated for the risk of having a high priced employee on board.

What’s next?

Read more about the associate-to-buy-in roadmap in the e-book “Strategies for Transition,” then contact the experts at Professional Transition Strategies to put your steps in place.

January 25, 2019

6 Perks of Buying a Rural Dental Practice

When buying or starting a dental practice, it’s easy to be drawn toward big city or metropolitan areas. After all, more people equals more money, right? Not necessarily. One in ten dentists practices outside of a 30-minute radius from a large city, and for good reason. Here are some perks worth considering if you’re in the market.

More complex cases

For better or worse, rural towns tend to have more complex cases. That is, dentists trend toward seeing more restorative work versus preventative treatment, similar dental procedures to that of urban practices, such as dentures, crowns, bridges, onlays, inlays and dental implants.

More patient demand

Statistically, less competition as fewer dentists are gravitating toward major cities and suburban areas means more patient demand, which equates to a better financial outcome in the long run for the practicing dentist.

More economic and buy-in opportunities

Established practices in rural areas offer more economic and buy-in opportunities simply because existing clinicians are doing well financially and therefore don’t have to put off retirement. Similarly, while many young graduates are having a harder time finding associate-to-buy-in opportunities, less competition means more economic opportunities.

Accelerated loan forgiveness

In areas with dental shortages, some states offer accelerated loan forgiveness based on the number of years a doctor practices in a shortage area. What’s more, in reducing your debt, you’ll be able to purchase a practice in a less-competitive market at a competitive price, resulting in a better return on your investment.

Lower overhead, higher net profit

Lower cost of labor, lower occupancy costs, lower rent and office costs, lower housing, and comparable dentistry fees to urban areas all contribute to lower overhead costs, which, in turn, results in a higher net profit for the practicing dentist. And, contrary to popular belief, most rural or small-town practices have updated facilities and high-end equipment.

Better goodwill

It’s no surprise that smaller towns come with a slower pace, allowing you to build a stronger connection with your patients that then translates into goodwill for your practice in the community while also significantly increasing your level of job satisfaction.

What’s next?

Read more about the buying process in the e-book “Transitions: Your Next Adventure Awaits,” then contact the experts at Professional Transition Strategies to find a rural dental practice for sale in your area.

May 4, 2018

5 Types of Dental Practice Buyers

When looking to sell your practice, it’s helpful to know who your potential buyers are. In any case, Professional Transition Strategies recommends buying an established practice rather than starting from the ground up due to a higher return on investment. Read on to figure out who would be a good fit for your practice.

Dental school graduate

Though highly unlikely since the average dental school graduate leaves with $500,000 in student loan debt, it is not unheard of for an aspiring professional to look to purchase his or her own practice straight out of school. In this case, it is more likely that a graduate would look to purchase an established practice rather than starting from scratch because of the existing staff and client base, not to mention the average $500,000 in start-up costs.

Corporate dentist

More often than not, a dentist’s first job out of school will be working in a corporate environment, such as a dental service organization. These highly reputable establishments allow dentists to focus on patient care while contributing no ancillary costs toward the practice, therefore being able to save to buy his or her own practice in the future.

Dental service organization

A DSO is a likely buyer when the seller is looking to stay on with the practice but wants to release managerial responsibilities, such as in a retirement situation or anyone who is looking to maintain a work-life balance. Selling to a DSO allows you to focus on the clinical side and patient care without contributing time and money associated with running a business.

Associate

Who better to sell to than someone you’re already working with? Most dentists take on an associate in hopes of potentially selling the practice in the future, so keep that in mind when looking for an associateship, while also taking into account the cost of acquiring a practice and the overhead of running a business.

Previous practice owner

A buyer isn’t always necessarily going to be a first-time buyer. A dentist who once owned his or her own practice could have sold to change specialties, geographic regions, or was simply looking for a new opportunity and a fresh start, making this new owner one who is already versed in running a business.

What’s next?

Read more about the different types of buyers and the buying process in the e-book “Transitions: Your Next Adventure Awaits,” then contact the experts at Professional Transition Strategies to start the conversation.

April 6, 2018

7 Types of Dental Practice Transitions

By now, you’ve probably already decided that selling your practice is the best option, whether it’s for retirement or managerial purposes. But maybe you don’t know or haven’t started exploring all your options yet. Here, we break down the types of dental practice transitions in an effort to help you figure out which is best for you and your business.

Buy-out

A buy-out is exactly what it sounds like: when a purchaser buys your practice for a negotiated price. A relatively short transition period that typically only lasts three months is ideal for a prospective retiree. The seller may agree to stay on part-time to help ease the transition for the buyer, employees, and patients.

Buy-in

The opposite of a buy-out in which a specific buyer purchases a defined portion of the practice for a negotiated amount determined at the outset. In this case, PTS will also perform a personality profile to ensure compatibility, in addition to a practice analysis.

Associate to buy-in

Here, a potential buyer is courted from a group of associates to buy-in over a defined period of time, road-mapping the ease of transition. Rather than making decisions about the future of the practice upfront, this allows time to assess compatibility; however, the division of power is the biggest consideration to make.

Associateship

A good idea in theory because associates are easy to find, and this route allows you to maintain full control over the transition. However, associateships are typically only 20 percent effective due to not everything being agreed upon from the outset and different expectations not being met by both parties.

Merger

Combining two dental practices to become one entity with equal partnership remains a tried-and-true method as long as compatibility is established upfront and responsibilities and income are equally divided and agreed upon.

Roll-up

This option is one that pays off in the future under the economies-of-scale principle: Multiple dental practices are purchased over a period of time to combine into one entity, which will then sell for a higher value at a later date.

Affiliation

The slowest of the transition options, this hands over the majority of the practice to a larger entity, typically a DSO or a group, with the purpose of slowly transitioning out of your practice to and giving up clinical control to the buyer.

What’s next?

Read more about your options in our e-book “Strategies for Transition,” then reach out to the experts at Professional Transition Strategies to figure out which makes the most sense for you and the future of your practice.