April 13, 2018

Choosing Your Path: Dental Associateship, Partnership or Buyout

There comes a time in the life of a dentist’s practice when a second set of hands would be helpful to grow or pass the torch to another professional. A natural first thought is to bring on an associate with plans to buy out at a later date, but the numbers prove otherwise. Here, we break down the nuances of an associateship, partnership and buy-out to help point you in the right direction.

Associateship

When selling to a partner with whom you’ve never worked with an arrangement to buy in at a later date, the results are predictable—a 20% success rate, in fact. Not to mention, after the cost of acquiring a practice and the overhead of running a business, taking on an associate is typically not an affordable option. If going this route, make sure there’s a contractual “out” should the match not be a good fit so no time or money is wasted.

Partnership

With a 60% success rate, a partnership offers flexibility in transitioning for a seller who is not ready to retire. Increasing costs of regulations and decreasing reimbursements from PPO plans make financial sense for taking on a partner. Planned well, and a partner could expand the offerings of your practice, adding to its value when the time comes to sell. For those working toward retirement, selling a fraction upfront could help to reduce hours and shift responsibility, eventually leading to a 100% buy-out. And with the growing number of dental graduates every year in an ever-stable industry, a compatible partner is likely easy to come by.

Buy-out

A full sale or purchase is the most common way to transition in or out of a practice, and for good reason—a 99% success rate is a good bet for both the buyer and the seller. The transition is quick, with one buyer and one transaction, so a good option for a retiree. However, most dentists struggle with the thought of quitting so abruptly and opt to ease the transition when given the choice. The emotional investment in the company is hard to deny, no matter your age.

What’s next?

Read more about associateships, partnerships and buy-outs in our e-book “Strategies for Transition,” then talk to the experts at Professional Transition Strategies to figure out which option is best for you.

April 6, 2018

The 7 Essential Dental Practice Transitions Explained

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

A buy-in is 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, a professional dental practice broker 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 by 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% 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 option hands over the majority of the practice to a larger entity, typically a dental service organization (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.

January 19, 2018

Step-by-Step Guide to Dental Practice Transitions in Texas

If you are thinking about selling your Texas dental practice, you are probably feeling a little overwhelmed by where to start. After all, this is arguably one of the biggest financial decisions of your life. Here is a step-by-step guide to dental practice transitions in Texas.

Be ready to transition

Your first step is to determine your goals for the sale and what is most important to you. Start by answering the following questions: Why are you considering selling your dental practice? Would it be enough money to retire? Do you need to sell by a specific date? Is it important to maximize your financial return? Or is the most important thing to find a buyer who will keep your staff? Ultimately, your transition goal(s) will steer the transition plan, so identifying the goals of the future sale will help you structure a clearly defined transition path.

Find a consultant

A considerable amount of time and thought needs to be put into dental practice transactions. We have talked to numerous dentists who “read a couple of articles and have a good understanding of the process” and want to do the sale on their own to save money. It is important to get advice from experienced transition brokers and loop them in all of your decisions and discussions pertaining to the sale. Not only can they help you increase the probability of a lucrative transaction, but it’s just nice to have experts on your side to guide you through the process.

Obtain a professional practice valuation

Now that you have transition experts to work with and a goal and transition plan, it is time to determine what your practice is worth. The valuation you obtain should be completed by a broker that understands dentistry and the current marketplace for dental practice sales. At Professional Transition Strategies (PTS), we use the most effective way of calculating the value of your practice by looking at factors like location, growth potential and long-term growth trends.

Structure your ideal transaction

By obtaining the valuation of your practice, you can now determine if you are happy with the value placed on your office. If you are unhappy with it, one option is to work a couple more years to make up the difference. If you are happy with the value, you need to figure out if you want to leave as soon as the practice is sold or if you would like to work as an associate post-sale. But these aren’t your only options. We recommend talking with your transaction broker to find the best fit for your situation.

Market the practice

Once you have your valuation, plan and structure in place, you need to get people looking at your practice. Just like anything, the more people hear about your practice, the better chance you have at selling it. This is where your broker comes in. Practice brokers usually have a great pipeline to sell.

Show the practice to potential buyers

Once you have people interested in buying your practice, you need to get those potential buyers to the bank to see if they qualify for a loan. This way, you aren’t wasting your time and effort showing your office to individuals who can’t get a loan.

Receive offers and negotiations

Once you get an offer, you can accept the terms, counteroffer and begin negotiations, or decline the offer. Each option has different consequences and messages you and your transaction team will have to think through before making any quick decisions.

What’s next?

If you still have questions on dental practice transitions in Texas, contact us.

July 11, 2017

5 Benefits of Partnering with a Dental Practice Broker

At first glance, selling or transitioning a practice may not seem financially or physically taxing, but the process of selling or merging a dental or medical practice is actually a very intricate process. It includes not only financial and physical challenges, but emotional ones as well. Having a dental practice broker that can help guide you through the many steps of transitioning your practice is invaluable because your broker has been there and knows the components needed for a smooth transition. Continue reading “5 Benefits of Partnering with a Dental Practice Broker”

July 10, 2017

Is Now the Right Time to Sell Your Dental Practice? Key Signs

“Should I sell my dental practice?” This is a question most practice owners come across at some point in their careers. Considering selling your practice can be stressful, especially if you don’t have all of the information you need. At Professional Transition Strategies (PTS), we are here to provide you with that information and guide you through your transition. Here are some common questions asked and answered. Continue reading “Is Now the Right Time to Sell Your Dental Practice? Key Signs”

June 20, 2017

The 7 Essential Dental Practice Transitions Explained

If you’ve decided you are ready for the next step of your life and dental practice, it may be time to consider retirement. There are many different kinds of transitions, so regardless of whether you are ready to completely stop working, we can help you find a transition that works best for you and your dental practice. Here are a few different transition options.
Continue reading “The 7 Essential Dental Practice Transitions Explained”

June 20, 2017

What You Need to Know About Dental Practice Transitions

Transitioning a dental practice is an intricate process and can seem overwhelming if you are approaching or going through the process. Not only does transitioning a dental practice include financial challenges, but emotional and relational ones, as well. We at Professional Transition Strategies (PTS) can help you navigate this process because we have been through it before. We realize every situation is unique, but we also recognize there are many steps to go through to successfully transition a practice. Here’s an outline to get you started. Continue reading “What You Need to Know About Dental Practice Transitions”

June 7, 2017

How Do I Know the Value of My Dental Practice?

Understanding the value of your dental practice can be an asset, regardless of whether you are in the process of selling your practice. At Professional Transition Strategies (PTS), we understand that selling or merging a dental practice is an intricate process, and we are here to guide you through it. The first step is understanding and maximizing the value of your practice. Here’s how. Continue reading “How Do I Know the Value of My Dental Practice?”

May 31, 2017

When Is the Best Time to Sell a Dental Practice?

Thinking about selling your practice can be overwhelming. We at Professional Transition Strategies (PTS) realize every situation is unique, and we are here to walk you through it. We can help you navigate through this process because we have been there and we know the components needed for a smooth transition. Regardless of what stage you’re at in selling your practice, here are some questions to consider. Continue reading “When Is the Best Time to Sell a Dental Practice?”