Tag: associateship

June 3, 2025

Expert Tips to Sell Your Orthodontic Practice Successfully

dental mold

The decision to sell your orthodontic practice represents a pivotal moment in your career. Whether you’re planning for retirement or seeking new opportunities, selling an orthodontic practice requires careful planning and strategic execution. Unlike general dental practice sales, orthodontic practices present unique challenges and opportunities that demand specialized knowledge and expertise.

Successful orthodontic practice transitions don’t happen overnight. Most practice owners begin planning their exit strategy three to five years before they actually sell. This extended timeline allows you to optimize your practice value while ensuring continuity of patient care during the transition process.

Understanding Market Demand and Your Dental Practice’s True Worth

The orthodontic specialty enjoys exceptionally strong market demand compared to other dental fields. Buyers actively seek orthodontic practices due to their predictable revenue streams, high patient retention rates, and specialized nature that creates barriers to entry for competitors.

Current market conditions show that orthodontic practices typically command higher multiples than general dental practices. The recurring revenue from multi-year treatment plans provides buyers with revenue predictability that’s attractive in today’s uncertain economic climate. Additionally, the limited number of orthodontists compared to general dentists creates a supply-demand imbalance that works in sellers’ favor.

Your practice’s location significantly impacts its market value. Practices in underserved areas or growing suburban markets often attract premium offers from multiple potential buyers. Demographics play a crucial role – areas with young families and higher household incomes typically support higher practice valuations.

Insurance participation rates and fee-for-service percentages also influence market demand. Practices with a healthy mix of insurance and private-pay patients often receive more competitive offers than those heavily dependent on lower-reimbursing insurance plans.

How Professional Appraisals Determine Market Value

Professional practice valuation goes far beyond simple revenue multiples. Qualified appraisers examine dozens of factors specific to orthodontic practices when determining fair market value.

Patient demographics and case mix analysis form the foundation of orthodontic practice valuation. Active treatment numbers, average case values, and treatment completion rates all factor into the final valuation. Practices with consistent new patient flow and high treatment acceptance rates command premium valuations.

Financial performance metrics extend beyond gross revenue to include profit margins, overhead percentages, and EBITDA calculations. The way your practice manages accounts receivable and collection rates significantly impacts valuation outcomes.

Physical assets receive careful evaluation during the appraisal process. Modern imaging equipment, updated treatment rooms, and efficient office layouts add considerable value. However, outdated equipment or deferred maintenance can negatively impact your practice’s worth.

Preparing Your Orthodontic Practice for Maximum Sale Value

Strategic preparation can significantly increase your practice’s sale price. Most successful sellers begin optimization efforts years before listing their practice for sale.

Financial record organization represents the first step in practice preparation. Clean, well-documented financial statements spanning at least three years provide buyers with the information they need to make confident offers. Your practice should demonstrate consistent profitability and efficient operations management.

Staffing stability plays a crucial role in practice valuation. Experienced, well-trained staff members who plan to stay through the transition add significant value. High staff turnover or key personnel planning to leave can negatively impact buyer interest and final sale prices.

Technology upgrades and facility improvements should be made strategically. While updating outdated equipment can increase practice value, timing these investments correctly ensures you’ll recoup the costs in your sale price.

Patient communication systems and recall programs deserve special attention during the preparation phase. Well-organized patient records and efficient scheduling systems demonstrate operational excellence to prospective buyers.

Essential Information Buyers Want to See

Today’s buyers conduct thorough due diligence before making purchase decisions. Having comprehensive documentation readily available can expedite the selling process and justify higher offers.

Financial Documentation should include:

  • Profit and loss statements for the past 3-5 years
  • Business and personal tax returns
  • Accounts receivable aging reports
  • Detailed overhead breakdowns by category
  • Cash flow statements and collection rates

Buyers want to understand exactly how your practice generates income and where expenses occur.

Patient Information provides insights into practice stability and growth potential:

  • Active patient counts and treatment phases
  • New patient acquisition trends
  • Treatment completion statistics
  • Patient retention and referral rates
  • Average case values and treatment duration

Staff Documentation helps buyers understand operational expenses:

  • Employment agreements and job descriptions
  • Compensation structures and benefit costs
  • Staff training records and certifications
  • Employee tenure and performance history

Equipment and Facility Records provide clarity about physical assets:

  • Complete equipment inventories with purchase dates
  • Maintenance records and service agreements
  • Lease agreements for equipment and facility
  • Up-to-date equipment appraisals

Well-organized documentation demonstrates professionalism and can justify higher practice valuations.

Managing Active Treatment Plans During Your Practice Sale

Active orthodontic treatment plans present unique challenges during practice transitions. Unlike general dentistry, orthodontic patients typically remain in treatment for 18-24 months, creating ongoing obligations that must be carefully managed.

Patient communication becomes critical when managing active cases during a sale. Patients and parents need reassurance that their treatment will continue without interruption. Early, transparent communication helps maintain patient confidence and reduces the risk of treatment abandonment.

Treatment plan transfers require detailed documentation and clear protocols. New owners need complete records of treatment goals, progress notes, and remaining treatment phases for each active patient. Well-documented cases facilitate smoother transitions and better patient outcomes.

Financial arrangements for active cases need careful attention. Payment plans, insurance authorizations, and outstanding balances must be clearly transferred to new ownership. Patients should experience no disruption in their financial arrangements or payment schedules.

The timing of ownership transfer relative to active treatment phases can impact patient satisfaction and treatment outcomes. Coordinating transitions during natural treatment breaks, such as between active treatment and retention phases, often works best for all parties involved.

DSO vs. Individual Buyer: Which Option Maximizes Your Return?

The choice between DSO and individual buyer sale significantly impacts both your financial return and post-sale experience. Each option offers distinct advantages and considerations that must be carefully evaluated.

Individual buyers often provide more personalized attention to practice culture and staff retention. Many individual buyers are practicing orthodontists who understand the specialty’s unique requirements and patient care standards. These buyers may offer more flexibility in transition timing and post-sale arrangements.

However, individual buyers may have financing limitations that could affect offer amounts or sale terms. The due diligence process with individual buyers can sometimes take longer due to financing approval requirements and personal decision-making timelines.

DSOs typically offer faster closing timelines and more certainty of sale completion due to their established financing sources and acquisition experience. Many DSOs can close transactions within 60-90 days compared to 120-180 days for individual buyers.

Financial terms often favor DSO sales in today’s market. DSOs frequently offer higher multiples and may include additional compensation through equity participation or earnout arrangements. However, post-sale employment requirements and operational changes may be more significant with DSO buyers.

Why DSOs Target Orthodontic Practices

DSOs view orthodontic practices as particularly attractive acquisition targets for several strategic reasons. The specialty’s predictable revenue streams and high patient retention rates align well with DSO business models focused on steady cash flow generation.

Orthodontic practices require less ongoing clinical oversight compared to general dental practices. Once treatment plans are established, much of the routine care can be delegated to trained staff, making these practices easier to manage within DSO systems.

The limited supply of orthodontists creates natural barriers to competition that DSOs find appealing. Unlike general dentistry, where new practices can easily enter markets, orthodontic practices face higher barriers to entry due to specialty training requirements.

Brand recognition and marketing efficiency make orthodontic practices valuable to DSOs building regional presence. Established orthodontic practices often have strong community recognition that supports continued patient attraction and retention.

Legal Requirements and Tax Planning for Orthodontic Sales

Here’s what most practice owners don’t realize: the legal structure of your sale can make or break your financial outcome. We’ve seen sellers lose tens of thousands of dollars simply because they didn’t understand a few key issues.

Sale Structure and Tax Impact Most orthodontic sales are asset purchases where you sell the equipment, patient records, and goodwill. You’ll pay ordinary income tax on equipment recapture, but buyers get a clean slate without inheriting corporate liabilities. Stock sales offer better tax treatment (capital gains rates), but buyers rarely choose them due to liability concerns.

Licensing and Timing Out-of-state buyers need 3-6 months for licensing. We’ve seen deals collapse when sellers don’t factor this timeline into negotiations. Always verify licensing status early.

Sale timing dramatically impacts taxes. High-income year? Push closing to January. Down year? Close before December 31st. For S-corps, avoid large distributions in your sale year to prevent higher tax brackets.

Non-Compete and Confidentiality Courts throw out broad geographic restrictions regularly. Patient-specific language works better: “seller cannot treat patients active in the practice within 24 months of closing.”

Require signed NDAs before sharing financials, and use virtual data rooms instead of email. Limit simultaneous buyers reviewing sensitive information – competitors sometimes pose as buyers to gather intelligence.

Managing the Sale Process and Planning Your Next Chapter

Timeline Reality: 6-12 Months Start to Finish Most sellers underestimate the time required. Start transition planning early – staff communication and patient notification protocols can’t be rushed without risking practice value.

Due Diligence Speed Matters Well-organized sellers who respond quickly to buyer requests receive higher offers and faster closings. Have your documentation ready before you need it.

Your Post-Sale Plans Drive Deal Structure Planning immediate retirement? Expect different terms than if you’re staying on as an associate. Buyers structure deals differently based on your transition timeline and involvement level.

Choose Your Team Wisely Your broker, attorney, and accountant should have specific orthodontic practice sale experience. General business advisors often miss specialty-specific issues that can cost you money.

June 3, 2025

Proven Path to Practice Transition: Steps to Selling a Dental Practice

man holding up glasses

The decision to sell your dental practice represents one of the most significant professional and financial transitions of your career. Understanding the essential steps to selling a dental practice is crucial for maximizing value and ensuring a smooth transition that protects both you and your patients.

Selling a dental practice involves numerous complex considerations that extend far beyond simply finding a buyer. From proper valuation to seamless patient care continuity, every element of the sale requires careful planning and expert guidance. At Professional Transition Strategies, we understand that your practice represents decades of dedicated work, and our comprehensive approach ensures you receive maximum value while maintaining the highest standards of patient care throughout the transition process.

Determining Your Dental Practice’s Value & Financial Preparation

Financial documentation and dental valuation methodologies

The foundation of any successful practice sale begins with obtaining an accurate valuation. A comprehensive practice valuation considers multiple factors including historical revenue patterns, patient demographics, equipment condition, and market positioning. Professional appraisers utilize various methodologies, including asset-based approaches, income capitalization methods, and market comparison analyses to determine fair market value.

Understanding these valuation methodologies helps you prepare more effectively for the selling process. The asset-based approach evaluates tangible assets such as dental equipment, furniture, and supplies, while also considering intangible assets like patient records, goodwill, and established referral relationships. The income capitalization method focuses on your practice’s ability to generate future cash flows, examining factors such as collection rates, overhead percentages, and profit margins. Market comparison analysis benchmarks your practice against similar recent sales in your geographic area and specialty focus.

Preparing your financial documentation represents a critical step in the selling process. Prospective buyers will scrutinize three to five years of profit and loss statements, tax returns, and detailed production reports. Your documentation should clearly demonstrate consistent revenue streams, efficient overhead management, and growth potential. Additionally, maintaining detailed records of insurance participation, patient retention rates, and treatment acceptance percentages provides buyers with comprehensive information about practice performance.

Beyond basic financial statements, sophisticated buyers expect detailed operational metrics that demonstrate practice efficiency and growth potential. This includes average production per patient visit, new patient acquisition costs, treatment plan acceptance rates, and recall appointment compliance percentages. Practices that can demonstrate consistent improvement in these key performance indicators typically command premium valuations and attract more qualified buyers.

Working with qualified accounting professionals ensures your financial records accurately reflect practice performance while identifying opportunities for tax optimization strategies. Proper planning can significantly impact your net proceeds from the sale, making professional guidance essential for maximizing your retirement security.

Pre-Sale Enhancement Steps

Timeline and strategic improvements (3-5 years planning)

Successful practice transitions require long-term planning, ideally beginning three to five years before your intended retirement date. This extended timeline allows for strategic improvements that can substantially increase your sale price while ensuring operational stability throughout the transition.

Early planning enables you to identify and address potential challenges that could impact practice value. Whether addressing deferred maintenance, updating aging systems, or strengthening your patient base, advance preparation creates opportunities for value enhancement that may not be available in rushed sale scenarios.

Technology updates and patient base optimization

Modern dental practices require current technology and equipment to remain competitive in today’s market. Buyers increasingly expect digital radiography, practice management software, and modern treatment equipment. Strategic technology investments made during the pre-sale period often yield excellent returns by making your practice more attractive to potential buyers.

When evaluating technology upgrades, focus on improvements that enhance both patient experience and operational efficiency. Digital imaging systems not only improve diagnostic capabilities but also streamline workflows and reduce film processing costs. Intraoral cameras help patients understand treatment recommendations, typically improving case acceptance rates. Practice management systems with integrated scheduling, billing, and patient communication features demonstrate operational sophistication that appeals to tech-savvy buyers.

The timing of equipment upgrades requires careful consideration. While outdated equipment can significantly reduce practice value, purchasing expensive new equipment immediately before selling may not provide adequate return on investment. Generally, equipment purchases made 18-24 months before selling allow sufficient time to realize benefits while demonstrating the practice’s commitment to modern standards.

Equally important is maintaining a stable and growing patient base. Focus on treatment plan acceptance, preventive care protocols, and patient satisfaction initiatives. A strong patient base with diverse demographics and consistent appointment schedules represents significant value to prospective buyers, as it provides predictable revenue streams and growth potential.

Patient retention strategies should emphasize relationship building and consistent quality care delivery. Implementing patient feedback systems, maintaining regular recall schedules, and ensuring consistent treatment protocols across all providers demonstrates practice stability. Buyers particularly value practices with strong preventive programs, as these generate predictable recurring revenue while maintaining long-term patient relationships.

More Information on Buyer Identification & Marketing

Buyer types and creating compelling practice profiles

Today’s dental practice market includes various buyer categories, each with distinct motivations and financial capabilities. Recent dental school graduates often seek established practices with strong cash flow and growth potential. Experienced dentists may pursue acquisition opportunities to expand their existing operations or transition to more desirable locations. Additionally, dental service organizations and group practices represent increasingly common buyers, particularly for larger or multiple-location practices.

Creating compelling practice profiles requires highlighting your practice’s unique strengths while presenting comprehensive operational data. Effective marketing materials showcase patient loyalty, treatment diversity, staff stability, and growth opportunities. Professional presentation of your practice’s value proposition significantly impacts buyer interest and ultimate sale terms.

Understanding buyer motivations enables you to position your practice appropriately and negotiate effectively. Working with experienced brokers who understand various buyer segments can dramatically improve your marketing success and final sale terms.

The due diligence process represents a critical phase where buyers thoroughly examine your practice operations, financials, and legal compliance. Preparing for due diligence involves organizing comprehensive documentation packages that address common buyer concerns. This includes regulatory compliance records, employee documentation, equipment maintenance histories, and detailed patient demographic analyses. Practices that demonstrate thorough record-keeping and regulatory compliance typically experience smoother due diligence processes and faster closing timelines.

Marketing timing also significantly impacts sale success. Practices entering the market during peak buying seasons (typically spring and early fall) often receive more buyer attention and competitive offers. However, market timing should be balanced against your personal readiness and practice optimization completion.

Legal & Contractual Considerations When Selling

Essential agreements and lease transfers with specialized attorneys

The legal framework surrounding dental practice sales involves numerous complex agreements that require specialized expertise. The purchase agreement serves as the foundation document, outlining sale terms, asset transfers, liability allocations, and closing conditions. These agreements must address unique aspects of dental practice operations, including patient record transfers, licensing requirements, and regulatory compliance.

Lease negotiations often represent one of the most challenging aspects of practice sales. Many dental practices operate in specialized spaces with specific requirements for plumbing, electrical systems, and equipment installations. Ensuring lease transferability or negotiating favorable terms for new leases requires careful attention to timing, particularly regarding your closing date.

Non-compete agreements protect the value of your practice sale while allowing reasonable opportunities for your continued professional activity. These agreements must balance buyer protection with seller flexibility, requiring careful drafting to ensure enforceability while preserving your options for future professional engagement.

Staff Transition Planning & Implementation

Staff retention and patient transition strategies

Your team represents a valuable asset that significantly impacts practice continuity and patient satisfaction. Developing staff retention strategies early in the selling process helps maintain operational stability while demonstrating practice value to potential buyers. Key staff members often influence patient loyalty and operational efficiency, making their retention crucial for successful transitions.

Effective staff communication during the sale process requires balancing transparency with confidentiality. While you cannot share all sale details, keeping key employees informed about timeline expectations and their role in the transition helps maintain morale and reduces turnover anxiety. Consider implementing retention bonuses or transition incentives for critical team members whose departure could negatively impact the sale process.

Training documentation becomes particularly important when preparing for ownership transition. Comprehensive procedure manuals, patient care protocols, and administrative systems documentation help new owners understand established workflows while ensuring continuity of care standards. This documentation also demonstrates practice sophistication and operational maturity to prospective buyers.

Patient communication requires delicate handling to maintain confidence while introducing practice changes. Effective transition planning includes graduated introduction of new ownership, maintained appointment scheduling, and preserved treatment protocols. Patients value consistency in their dental care, and successful transitions prioritize maintaining established relationships while introducing positive changes.

Developing patient communication strategies should address common concerns about care continuity, insurance acceptance, and treatment plan completion. Most patients adapt well to ownership changes when they experience consistent care quality and maintained provider relationships. Consider introducing new owners gradually through shadowing appointments and joint patient consultations before the official transition date.

The way you manage these relationships during the transition directly impacts long-term practice success and your professional reputation within the community. Professional Transition Strategies specializes in developing customized transition plans that preserve patient relationships while facilitating smooth ownership transfers.

How to Successfully Sell Your Practice: Post-Sale Planning

Financial planning and retirement transition strategies

Successfully completing your practice sale marks the beginning of a new life chapter that requires careful financial and personal planning. Working with qualified financial advisors ensures your sale proceeds support your long-term retirement goals while providing appropriate risk management and tax efficiency.

Many practice owners discover that retirement requires significant lifestyle adjustments after decades of active practice management. Developing new interests, volunteer opportunities, or consulting roles can provide fulfilling ways to utilize your professional expertise while maintaining personal satisfaction.

Consider your ongoing relationship with the dental community and opportunities for mentoring younger practitioners. Your experience and knowledge represent valuable resources that can benefit the profession while providing personal fulfillment during your retirement years.

The process of selling your dental practice involves numerous complex decisions that can significantly impact your financial security and professional legacy. Professional Transition Strategies provides comprehensive guidance throughout every phase of the selling process, ensuring you receive maximum value while maintaining the highest standards of patient care and professional integrity.

Whether you’re beginning to consider future sale plans or actively pursuing practice transitions, our experienced team provides the expertise and support necessary for successful outcomes. Contact Professional Transition Strategies today to begin planning your practice sale and secure your professional legacy.

The PTS difference

Industry knowledge

Just like your patients come to you for your experience, dentists come to PTS for our expertise.

We are experts in the industry and have extensive market knowledge that will lead to a more seamless and possibly faster sale. When representing yourself, it can be hard to get to the bottom of each interested party while also negotiating the terms and running a successful practice at the same time.

For the buyer, our knowledge expands to medical or dental competition and patient demographics in your location of interest, along with expertise in practice appraisals to determine a fair market value. Our real estate, legal, accounting and strategic knowledge rounds out a complete transition service all in one place.

Industry experience

Along with industry knowledge comes experience. As with any team, you’re only as strong as your weakest link, so it’s important to choose advisors who have experience in the dental industry. The easiest route to a smooth transition is to hire PTS that is familiar with practices like yours. While we may not be in your geographic area, we have experience with the size and type of transition you are working toward.

PTS takes a proactive approach to finding the right fit for dental practices, ensuring fewer days on the market. Additionally, PTS has personal experience with the DSOs, making it easy to predict which way the transaction is heading and negotiate accordingly, whether simple or complex.

Leave the dental practice details to us

Appraisal process

Arguably, one of the most important steps during the beginning of a dental practice transition is to have a practice appraisal to determine where you are most valuable and where there is room for improvement in areas that are not as highly profitable. This includes the practice’s location, visibility, and population of city or town; type of medicine or dentistry, revenue sources and active patient base; growth potential; patient attrition and retention rates; reason for sale of practice; long-term trends of the practice’s revenue and profit margin; condition and age of medical and dental equipment based on wear and tear, as well as technical advancement; and even office decor and condition.

The extensive practice appraisal offered by PTS breaks down the current value of the practice and where the practice needs to go before the sale. The appraisal uses the most effective method of calculating your practice’s worth by looking at both attributes and challenges and how they have impacted the success of the practice. Best of all, PTS can perform these services at no charge with no commitment obligation.

Prospectus process

Whether you’re planning to put your investments toward retirement or another investment, you’ll want to ensure a smooth and lucrative transition. A prospectus breaks down the facts to ensure business owners are making an educated decision on their largest asset, which is when the work has just begun.

PTS offers a complimentary prospectus to assess the true value of your practice and which options are available. While many brokers say practice value is as simple as 70% of collections, it also includes applying a multiplier (including location of the practice, type of building practice is in, office itself, longevity of doctor and staff, and procedures performed) to a three-year weighted average of collections, seller’s discretionary earnings (SDE), and earnings before interest, taxes, depreciation, and amortization (EBITDA). And unlike other dental practice brokers, PTS doesn’t just sign with dentists to get the necessary information for you to make the right decision.

Contracts in place

PTS already has the contracts in place rather than hiring an attorney to draft documents for you, saving thousands of dollars, whether you’re planning a location, new startup, quarterly performance review or legal services. Our complete counseling starts from evaluating your practice to implementing the necessary changes through evaluation, strategic planning, implementation and consulting. PTS will be by your side through the entire real estate transaction process, managing the process with landlords, banks, general contractors, architects, city building and planning departments.

And speaking of contracts, don’t hire someone with a long-term contract, allowing the broker to be passive and wait for leads to come to them and limiting the number of offers you receive. Six months to one year is standard, but PTS has a 30-day contract with no penalty to cancel. Add this to the list of questions you’ll want to ask your broker before hiring.

Enlist the professionals at PTS

Dream team

Consider PTS part of your transition dream team, making sure all the agreements are in place and identifying ahead of time any issues that may arise. Avoiding a direct negotiation, PTS removes any emotions from the situation by providing a buffer between the two parties, ensuring the buyer-seller relationship doesn’t become strained during the process.

The rest of your dream team consists of an attorney who specializes in dental practices, a certified public accountant (CPA), investment and insurance advisors, and practice consultant to identify your current assets and perform a gap analysis before the sale goes through.

While many CPAs, real estate agents, and attorneys think they can sell a practice, only trust a professional transition broker, such as PTS, just like you won’t ask your chiropractor to perform a full arch fixed dental implant bridge.

Focus on your bottom line

Your primary focus during the selling process is to maintain the success of your practice. Both you and your buyer will suffer consequences if the value of your practice decreases with a decrease in production. Your time is better spent focusing on the well-being of your practice and its employees and patients before hanging up your proverbial hat.

Don’t go it alone!

February 28, 2023

What It’s Like to Work With a Dental Practice Broker

dental mold

There are countless reasons why you should work with a dental practice broker when transitioning ownership of your business, but what steps go into working with a dental practice broker once you’ve decided with whom you trust your life’s work? Professional Transition Strategies Founder and President Kyle Francis recently sat down with Dr. Paul Goodman of the “Dental Nachos” podcast to talk about all the things that go into buying and selling dental practices. Here are the key takeaways from their conversation.

Understanding the goals

Back in the day, if you had a dental practice that you built up over time with a strong cash flow, your only exit strategies were to bring on a partner to eventually sell 100% of the practice to or sell to an individual. But not every dentist dreams of being a business owner, as well, and respectfully only has an associateship mindset. That’s where private equity comes into play, leveraging the market to work in such capacities, and the goal of any good dental practice broker should be to help a doctor understand the equity they have in their business and how to leverage it.

Laying out options

It’s perfectly acceptable and understandable for a dentist working toward retirement age to begin the process without knowing all the ins and outs of what goes into a practice transition. It’s the job of the dental practice broker to explain everything from the difference between EBITDA and SDE to all the data that goes into calculating the true market value of your business. “It’s like a choose-your-own-adventure book with no one-size-fits-all solution,” Francis describes.

Finding a good fit

The buyer for your dental practice has to be a good fit on more levels than just the obvious bottom line. Above all, they should be someone with whom you want to do business and trust to carry on your business goals with your patients’ and staff’s best interests in mind. However, that doesn’t always mean selling to an individual. Sometimes, that means affiliating with a dental service organization (DSO), which comes in many forms such as a joint venture or an equity roll-up. “Just like a dentist offers the right treatment plan for the right person at the right time, there’s the right decision for the right [dentist] at the right time,” Dr. Goodman explains.

Finding another good fit

Just like you’ll want to find the right person or dentist to take over your practice, you’ll first want to work with a dental practice broker who has your best interest in mind. A good dental practice broker will present all the options to you and connect you with a team of advisors to get you over the finish line. “It’s like having a caddie in golf, someone to lean on and get advice from along the way to the biggest decision of your life,” Dr. Goodman explains.

What’s next?

The experts at Professional Transition Strategies perform more than 700 prospectuses a year and have helped more than 500 dentists transition ownership of their dental practices. Contact them today to get the process started.

December 14, 2022

Corporate Dentistry vs. Private Practice: What Are the Differences

laser dentistry

All dentists who own their practice will eventually reach a point when they’re ready to make a career transition. The circumstances vary by individual dentist. A dentist may decide to sell because they want to retire or move to a new career path altogether. A dentist may assume their only options are to take on an associate — often with an eye toward partnering and an eventual buy-out — or a straight buy-out of their practice. Little do they know, there are more options out there.

Selling a practice to a dental corporation is another option, but if you are a dentist who has thoughtfully built a practice over a number of years, creating a patient-centered business and cultivating a caring team, you might have misgivings about that idea. You may worry that a corporation won’t ensure patients are treated with the same level of care or your staff might be asked to cut corners and short-change patients in the name of profit.

It’s not an unreasonable concern. Committed, highly trained health care providers, like dentists, act in the best interests of their patients, and they don’t like the idea of a bean-counter who doesn’t have the appropriate clinical training weighing in on care plans. That said, it’s important to know there’s a wide range of operating models used by dental corporations. Dental service organizations (DSOs) are an increasingly popular choice for dentists.

DSOs aren’t a monolith — there are many types of DSO arrangements, as they can provide staff and patients with more opportunities while offering financial benefits for doctors. So, it pays to keep an open mind and not write DSOs off as “corporate dentistry.” It’s a good idea for dentists who are planning a career transition to get a better understanding of what DSOs are, why they are gaining marketplace traction, and the pros and cons of working with a DSO. Here’s a closer look at DSOs that can help you make a more informed decision about private practice versus corporate dentistry.

Why more dentists are choosing DSOs

The American Dental Association (ADA) defines a DSO as “entities that dental practice owners contract with to manage the administrative, marketing and/or business sides of that dental practice.” Put another way, they are organizations that handle the non-clinical aspects of a practice. For many dentists, the non-clinical portions of managing the practice are exactly the part they’d willingly hand off to someone else so that they can focus more of their attention on patient care.

DSOs come in all shapes and sizes, ranging from teams that manage a handful of practices to large DSOs that manage more than 1,600 offices. The fact is that fewer dental practices are selling to individuals now than ever before. One reason behind the shift is the high debt load new dentists carry: The average dental school graduate owes more than $290,000 in student loans today, so they are less likely to be in a position to buy a practice.

In addition to the debt load, dental practices have historically been undervalued by banks and an individual dentist is typically beholden to what a bank is willing to lend.

So, why the move toward DSOs? For one, there are simply more DSOs operating today than in the past and their more differentiated than ever, which makes it more likely that a dentist who wants to make a transition will choose a DSO. Also, because DSOs offer a variety of arrangements, dentists are more likely to find a DSO offering terms that help them meet their objectives, such as an arrangement where the dentist stays with the practice to provide patient care but relinquishes management responsibilities. That option could be a good fit for dentists in a variety of scenarios, including those who are planning for retirement in a few years and those who are seeking a better work-life balance.

Another factor that is contributing to the rise of DSOs is that they have a funding advantage. Individual buyers typically rely on bank financing, which can be hard to obtain for some would-be purchasers, particularly in an uncertain economy when banks are tightening standards. DSOs are usually funded by private equity groups, so they can pay more to purchase a practice.

Available DSOs models

Although some dentists may put DSOs under the “corporate dentistry” heading and conclude that selling to a DSO is tantamount to selling out to a corporation, the truth is there are many different types of DSOs. Here’s a brief look at DSO models and how they affect the dentists who sell their practices under each type of DSO investment arrangement.

  • Joint venture: In the joint venture model, the dentist who is selling and the DSO investor both contribute capital in the form of money, equipment and other types of assets into a joint venture, and they share in the growth of the practice proportionally, according to the terms of the joint venture agreement. In this arrangement, the dentist maintains day-to-day clinical control of the practice, and a doctor will often sell between 60% and 70% equity in their practice.
  • Equity roll: This type of arrangement is a group affiliation as opposed to a partnership with a group. In an equity roll, the practice owner sells 100% of the practice and then trades in a portion of their equity into the DSO as a whole.
  • Sub-DSO: In this type of practice transition, the dentist who owns the practice exits the transition debt-free with a substantial upfront payment and typically retains 40% ownership and profit shares in a holding space outside the DSO or practice level. Returns can be made on a variety of levels, including equity, profit sharing and exit after parent DSO recapitalization.
  • Direct investment with private equity: In this model, your practice may be large enough that you don’t need a DSO. You can circumvent the DSO and go directly to private equity. That way, you become a founding member of a DSO.

The key point to keep in mind is that DSOs are not one-size-fits-all. That’s why it’s important for any dentist who is considering a practice transition to be aware of their options, preferably by discussing them with an objective party, like a dental practice broker. It’s not a matter of “corporate dentistry versus private practice” — the terms of the arrangement and the value the selling dentist realizes are the most significant factors.

DSO pros and cons

Dentists who are planning a career transition should think outside the “corporate dentistry versus private practice” box, and it starts by better understanding what a DSO offers. In some situations, DSOs can offer the most value and still enable you to maintain high standards of patient care. But not all DSOs are alike, and neither are dental practice transitions, so it makes sense to review the pros and cons of selling to a DSO, as well as pros and cons of selling to an individual.

For a dentist who is not yet ready to retire but is nearing the end of their career and wants to offload some of the hassles associated with running a practice, a DSO can be a great option. The right DSO can make daily operations easier by handling the business side while the dentist manages clinical decisions. The DSO can handle collections, supplies, marketing and more, increasing profits without the dentist having to focus on business operations.

DSOs typically pay more than individual buyers for a practice because of private equity investment rather than having to use traditional bank financing and can offer other advantages to dentists who are nearing retirement age, including the ability to cash out with a higher valuation. In some scenarios, the dentist works the same or fewer hours after the sale. This approach can accelerate the transition timeline and reduce uncertainty in the retirement planning process.

DSOs can also be a great option for mid-career dentists. Not every dentist enjoys the business side of running a practice, so they may opt for a DSO arrangement to offload the aspects of the operation they don’t want to handle, like human resources and marketing, and focus on what they do best — patient care.

Younger doctors can oftentimes make out better when working with a DSO, especially with a joint venture deal structure. A DSO should help make the practice more profitable; therefore, when the doctor sells the rest of their equity, the value should have increased significantly over the years.

Working with a DSO can help dentists achieve a better balance in their lives, so it may be a good option for doctors who want to spend more time with their families and friends but aren’t yet ready to hang up their white coat just yet.

That said, not all DSOs are a fit for everyone. Like any other category of organization, some are run well, and some are managed poorly. In addition, poorly run DSOs will only focus on the bottom line and not on patient care. They can push unnecessary procedures to benefit their own interests. It’s a good idea to ask a DSO for references, i.e., the names and contact information for dentists who have recently transitioned their practice to the DSO, so you can get an insider’s view of what it’s like working with them.

Exploring options and taking the next step

DSOs aren’t the only practice transition option — fewer practice sales between individual dentists are happening now than in years past, but it’s still an effective and fulfilling route dentists who are planning a practice transition can pursue. Bringing in an associate is still an option, though it has about a 20% success rate. A dentist who is planning to retire can also choose to see fewer patients and eventually just close their doors. It’s important to note that transition plan leaves hundreds of thousands — if not millions — of dollars on the table.

It’s all about finding the right option for the doctor’s transition goals,  whether it be selling to an individual or going the group route. Because finding the right option is important, it’s also imperative to know that the process takes time, and we recommend beginning the planning process up to five years in advance.

The corporate dentistry versus private practice conundrum can be complicated, so the best bet if you are thinking about a practice transition is to find a dental practice broker with the experience and expertise to help you explore the many options available to you. A dental practice broker like Professional Transition Services can help you achieve the best outcome, so don’t go it alone.

December 12, 2022

Why Most Dental Practice Associateships Fail

dental mold

There are countless reasons why you should work with a dental practice broker when transitioning ownership of your business, but what steps go into working with a dental practice broker once you’ve decided with whom you trust your life’s work? Professional Transition Strategies Founder and President Kyle Francis recently sat down with Dr. Paul Goodman of the “Dental Nachos” podcast to talk about all the things that go into buying and selling dental practices. Here are the key takeaways from their conversation.

Understanding the goals

Back in the day, if you had a dental practice that you built up over time with a strong cash flow, your only exit strategies were to bring on a partner to eventually sell 100% of the practice to or sell to an individual. But not every dentist dreams of being a business owner, as well, and respectfully only has an associateship mindset. That’s where private equity comes into play, leveraging the market to work in such capacities, and the goal of any good dental practice broker should be to help a doctor understand the equity they have in their business and how to leverage it.

Laying out options

It’s perfectly acceptable and understandable for a dentist working toward retirement age to begin the process without knowing all the ins and outs of what goes into a practice transition. It’s the job of the dental practice broker to explain everything from the difference between EBITDA and SDE to all the data that goes into calculating the true market value of your business. “It’s like a choose-your-own-adventure book with no one-size-fits-all solution,” Francis describes.

Finding a good fit

The buyer for your dental practice has to be a good fit on more levels than just the obvious bottom line. Above all, they should be someone with whom you want to do business and trust to carry on your business goals with your patients’ and staff’s best interests in mind. However, that doesn’t always mean selling to an individual. Sometimes, that means affiliating with a dental service organization (DSO), which comes in many forms such as a joint venture or an equity roll-up. “Just like a dentist offers the right treatment plan for the right person at the right time, there’s the right decision for the right [dentist] at the right time,” Dr. Goodman explains.

Finding another good fit

Just like you’ll want to find the right person or dentist to take over your practice, you’ll first want to work with a dental practice broker who has your best interest in mind. A good dental practice broker will present all the options to you and connect you with a team of advisors to get you over the finish line. “It’s like having a caddie in golf, someone to lean on and get advice from along the way to the biggest decision of your life,” Dr. Goodman explains.

What’s next?

The experts at Professional Transition Strategies perform more than 700 prospectuses a year and have helped more than 500 dentists transition ownership of their dental practices. Contact them today to get the process started.

October 24, 2022

How Dental School Debt Compares to Medical School Debt

dental mold

There are countless reasons why you should work with a dental practice broker when transitioning ownership of your business, but what steps go into working with a dental practice broker once you’ve decided with whom you trust your life’s work? Professional Transition Strategies Founder and President Kyle Francis recently sat down with Dr. Paul Goodman of the “Dental Nachos” podcast to talk about all the things that go into buying and selling dental practices. Here are the key takeaways from their conversation.

Understanding the goals

Back in the day, if you had a dental practice that you built up over time with a strong cash flow, your only exit strategies were to bring on a partner to eventually sell 100% of the practice to or sell to an individual. But not every dentist dreams of being a business owner, as well, and respectfully only has an associateship mindset. That’s where private equity comes into play, leveraging the market to work in such capacities, and the goal of any good dental practice broker should be to help a doctor understand the equity they have in their business and how to leverage it.

Laying out options

It’s perfectly acceptable and understandable for a dentist working toward retirement age to begin the process without knowing all the ins and outs of what goes into a practice transition. It’s the job of the dental practice broker to explain everything from the difference between EBITDA and SDE to all the data that goes into calculating the true market value of your business. “It’s like a choose-your-own-adventure book with no one-size-fits-all solution,” Francis describes.

Finding a good fit

The buyer for your dental practice has to be a good fit on more levels than just the obvious bottom line. Above all, they should be someone with whom you want to do business and trust to carry on your business goals with your patients’ and staff’s best interests in mind. However, that doesn’t always mean selling to an individual. Sometimes, that means affiliating with a dental service organization (DSO), which comes in many forms such as a joint venture or an equity roll-up. “Just like a dentist offers the right treatment plan for the right person at the right time, there’s the right decision for the right [dentist] at the right time,” Dr. Goodman explains.

Finding another good fit

Just like you’ll want to find the right person or dentist to take over your practice, you’ll first want to work with a dental practice broker who has your best interest in mind. A good dental practice broker will present all the options to you and connect you with a team of advisors to get you over the finish line. “It’s like having a caddie in golf, someone to lean on and get advice from along the way to the biggest decision of your life,” Dr. Goodman explains.

What’s next?

The experts at Professional Transition Strategies perform more than 700 prospectuses a year and have helped more than 500 dentists transition ownership of their dental practices. Contact them today to get the process started.

August 9, 2022

Should I Sell My Dental Practice by Myself?

dental mold

There are countless reasons why you should work with a dental practice broker when transitioning ownership of your business, but what steps go into working with a dental practice broker once you’ve decided with whom you trust your life’s work? Professional Transition Strategies Founder and President Kyle Francis recently sat down with Dr. Paul Goodman of the “Dental Nachos” podcast to talk about all the things that go into buying and selling dental practices. Here are the key takeaways from their conversation.

Understanding the goals

Back in the day, if you had a dental practice that you built up over time with a strong cash flow, your only exit strategies were to bring on a partner to eventually sell 100% of the practice to or sell to an individual. But not every dentist dreams of being a business owner, as well, and respectfully only has an associateship mindset. That’s where private equity comes into play, leveraging the market to work in such capacities, and the goal of any good dental practice broker should be to help a doctor understand the equity they have in their business and how to leverage it.

Laying out options

It’s perfectly acceptable and understandable for a dentist working toward retirement age to begin the process without knowing all the ins and outs of what goes into a practice transition. It’s the job of the dental practice broker to explain everything from the difference between EBITDA and SDE to all the data that goes into calculating the true market value of your business. “It’s like a choose-your-own-adventure book with no one-size-fits-all solution,” Francis describes.

Finding a good fit

The buyer for your dental practice has to be a good fit on more levels than just the obvious bottom line. Above all, they should be someone with whom you want to do business and trust to carry on your business goals with your patients’ and staff’s best interests in mind. However, that doesn’t always mean selling to an individual. Sometimes, that means affiliating with a dental service organization (DSO), which comes in many forms such as a joint venture or an equity roll-up. “Just like a dentist offers the right treatment plan for the right person at the right time, there’s the right decision for the right [dentist] at the right time,” Dr. Goodman explains.

Finding another good fit

Just like you’ll want to find the right person or dentist to take over your practice, you’ll first want to work with a dental practice broker who has your best interest in mind. A good dental practice broker will present all the options to you and connect you with a team of advisors to get you over the finish line. “It’s like having a caddie in golf, someone to lean on and get advice from along the way to the biggest decision of your life,” Dr. Goodman explains.

What’s next?

The experts at Professional Transition Strategies perform more than 700 prospectuses a year and have helped more than 500 dentists transition ownership of their dental practices. Contact them today to get the process started.

May 26, 2022

What to Consider Before Selling Your Dental Practice

Deciding to sell your dental practice can arguably be the most challenging step in the transition process. With the right team of advisors in place, it can be a financially and emotionally fulfilling experience. But where do you start, and how is the value of your dental practice determined? Whether you’re ready to begin planning your transition strategy or you want to learn more about your options, it’s important to understand what impacts the sale of your dental practice. Here are the top five considerations before selling your dental practice.

Know the facts

It’s easy to talk in hypotheticals when thinking of selling your dental practice, but there are a lot of considerations to get on your radar sooner rather than later. You’ll want all the information available to make the best decision for your dental practice. 

Before entertaining offers, you’ll need to have a prospectus in place for both an individual buyer and a group to assess the fair market value of your dental practice as this can vary based on a range of factors. A prospectus includes practice and patient demographics, practice location, staff, insurance, facility, equipment, production summary by category, financial analysis, practice valuation and return on investment. 

This will help determine if your practice is healthy enough to bring on a partner, whether you should consider affiliating with a dental service organization (DSO), or if you need to make some drastic changes so your practice is more appealing to potential buyers. The most common transitions include:

  • Buy-out: Purchasers buy a practice within a relatively short time period. On average, this takes about three to six months and is the quickest transition route.
  • Buy-in: A specific buyer purchases a defined portion of the dental practice. This is a longer-term approach that can expand the value of your practice over time.
  • Affiliation: You sell a percentage of your business to another entity, typically a DSO, with the intent to slowly transition out of the practice and give up clinical control to the group. This is an excellent way to maximize the practice’s value.
  • Associate to buy-in: A group of associates will court a potential buyer to purchase over a period of time. This process ensures compatibility and a smooth transition to map out the future of the practice. Division of power is the biggest decision that needs to be made with this method. While this is the longest approach — taking at least five years — it’s also the most flexible.
  • Associateship: Yes, you can sell to associates while maintaining full control, but in this method, not everything is agreed upon upfront, leading to a mere 20% success rate.  
  • Merger: Two existing dental practices combine into one entity, and owners often stay on as equal partners after merging. Mergers offer great benefits, like the net income remaining constant or even increasing because there is no loss of business.
  • Roll-up: You purchase multiple dental practices and combine them under one entity to maximize economies of scale. This can boost the value of your practice when it’s time to sell. A roll-up transition is the most lucrative if you have the time and capital to dedicate to this plan.

Make a plan

No matter the reason for your transition, starting the process as early as five years out will give you ample time to identify and make changes to your dental practice to improve the valuation. A good broker will make suggestions on how to amplify your marketing efforts, increase production, and streamline costs and efficiency, including dental supplies, lab costs and even payroll in an effort to increase profitability. 

Starting the transition process early also gives you the flexibility to be more discerning with the offers you receive. If you’re in a pinch to sell your practice, you may be forced to take one of the first offers and leave money on the table. Being in the driver’s seat of the sale affords you the time to evaluate offers and choose the best one for you, your staff, and your practice, as well as making your practice more attractive to DSOs looking for an affiliation.  

Stay the course

Maintaining your production is one of the best things you can do to obtain the highest valuation possible for your practice because the financials from the most recent years will weigh the heaviest when determining the practice’s value. Slowing down your production can have a massive impact on the price you can get for the practice.

The same holds true for your practice’s specialty. Gearing up for a transition is not the time to focus on a new niche specialty or even make the move toward a multispecialty practice. By opening the practice up to a new specialty — like going from a general practice to a periodontics practice — you decrease the potential buyer pool, which can negatively impact your sale options.

Keep an open mind

Thirty years ago, one of the only transition options was taking on an associate who would hopefully buy your dental practice one day, but today, there are so many more possibilities. Working with a qualified broker will only open your eyes to a dental practice transition you might not have otherwise considered. 

Your options are really only limited by your imagination. Do you want to start the process early so you can affiliate with a DSO before you retire? Or are you ready to get out of the business with a buy-out option so you can move into the next phase of your life? Asking yourself these questions and more will help you narrow down your choices so you can better prepare for the next steps. 

What’s next?

Contact the experts at Professional Transition Strategies to get the ball rolling on the sale of your dental practice.

November 9, 2021

Strategic Approaches to Navigating the Dental Hiring Challenge

dental mold

There are countless reasons why you should work with a dental practice broker when transitioning ownership of your business, but what steps go into working with a dental practice broker once you’ve decided with whom you trust your life’s work? Professional Transition Strategies Founder and President Kyle Francis recently sat down with Dr. Paul Goodman of the “Dental Nachos” podcast to talk about all the things that go into buying and selling dental practices. Here are the key takeaways from their conversation.

Understanding the goals

Back in the day, if you had a dental practice that you built up over time with a strong cash flow, your only exit strategies were to bring on a partner to eventually sell 100% of the practice to or sell to an individual. But not every dentist dreams of being a business owner, as well, and respectfully only has an associateship mindset. That’s where private equity comes into play, leveraging the market to work in such capacities, and the goal of any good dental practice broker should be to help a doctor understand the equity they have in their business and how to leverage it.

Laying out options

It’s perfectly acceptable and understandable for a dentist working toward retirement age to begin the process without knowing all the ins and outs of what goes into a practice transition. It’s the job of the dental practice broker to explain everything from the difference between EBITDA and SDE to all the data that goes into calculating the true market value of your business. “It’s like a choose-your-own-adventure book with no one-size-fits-all solution,” Francis describes.

Finding a good fit

The buyer for your dental practice has to be a good fit on more levels than just the obvious bottom line. Above all, they should be someone with whom you want to do business and trust to carry on your business goals with your patients’ and staff’s best interests in mind. However, that doesn’t always mean selling to an individual. Sometimes, that means affiliating with a dental service organization (DSO), which comes in many forms such as a joint venture or an equity roll-up. “Just like a dentist offers the right treatment plan for the right person at the right time, there’s the right decision for the right [dentist] at the right time,” Dr. Goodman explains.

Finding another good fit

Just like you’ll want to find the right person or dentist to take over your practice, you’ll first want to work with a dental practice broker who has your best interest in mind. A good dental practice broker will present all the options to you and connect you with a team of advisors to get you over the finish line. “It’s like having a caddie in golf, someone to lean on and get advice from along the way to the biggest decision of your life,” Dr. Goodman explains.

What’s next?

The experts at Professional Transition Strategies perform more than 700 prospectuses a year and have helped more than 500 dentists transition ownership of their dental practices. Contact them today to get the process started.

April 26, 2021

Start Now: Why Dental Retirement Planning Can’t Wait

dental mold

There are countless reasons why you should work with a dental practice broker when transitioning ownership of your business, but what steps go into working with a dental practice broker once you’ve decided with whom you trust your life’s work? Professional Transition Strategies Founder and President Kyle Francis recently sat down with Dr. Paul Goodman of the “Dental Nachos” podcast to talk about all the things that go into buying and selling dental practices. Here are the key takeaways from their conversation.

Understanding the goals

Back in the day, if you had a dental practice that you built up over time with a strong cash flow, your only exit strategies were to bring on a partner to eventually sell 100% of the practice to or sell to an individual. But not every dentist dreams of being a business owner, as well, and respectfully only has an associateship mindset. That’s where private equity comes into play, leveraging the market to work in such capacities, and the goal of any good dental practice broker should be to help a doctor understand the equity they have in their business and how to leverage it.

Laying out options

It’s perfectly acceptable and understandable for a dentist working toward retirement age to begin the process without knowing all the ins and outs of what goes into a practice transition. It’s the job of the dental practice broker to explain everything from the difference between EBITDA and SDE to all the data that goes into calculating the true market value of your business. “It’s like a choose-your-own-adventure book with no one-size-fits-all solution,” Francis describes.

Finding a good fit

The buyer for your dental practice has to be a good fit on more levels than just the obvious bottom line. Above all, they should be someone with whom you want to do business and trust to carry on your business goals with your patients’ and staff’s best interests in mind. However, that doesn’t always mean selling to an individual. Sometimes, that means affiliating with a dental service organization (DSO), which comes in many forms such as a joint venture or an equity roll-up. “Just like a dentist offers the right treatment plan for the right person at the right time, there’s the right decision for the right [dentist] at the right time,” Dr. Goodman explains.

Finding another good fit

Just like you’ll want to find the right person or dentist to take over your practice, you’ll first want to work with a dental practice broker who has your best interest in mind. A good dental practice broker will present all the options to you and connect you with a team of advisors to get you over the finish line. “It’s like having a caddie in golf, someone to lean on and get advice from along the way to the biggest decision of your life,” Dr. Goodman explains.

What’s next?

The experts at Professional Transition Strategies perform more than 700 prospectuses a year and have helped more than 500 dentists transition ownership of their dental practices. Contact them today to get the process started.