How to Sell My Dental Practice: A Comprehensive Guide

dentist chair

Selling your dental practice is a major decision that requires careful planning, preparation, and strategy. Whether you’re transitioning to retirement, pursuing other career opportunities or seeking a lifestyle change, this guide provides everything you need to know about selling your dental practice successfully.

What To Do When Selling a Practice

The process of selling your dental practice begins with understanding your goals and creating a clear roadmap. Here’s what you need to do:

Plan Your Exit Strategy:

  • Decide when you want to sell and what you’d like to achieve from the sale
  • Identify personal and financial goals to guide your decision

Assemble a Team of Professionals:

  • Work with a dental practice broker, attorney and accountant – all of whom specialize in dental transitions
  • This team will help with valuation, legal compliance and negotiations

Conduct a Practice Valuation:

  • Obtain an accurate valuation to determine your practice’s fair market value
  • Factors influencing valuation include type of dentistry, revenue, profit margins, location and patient base

Ways To Increase Practice Value ASAP

Maximizing the value of your dental practice can lead to better offers. Consider these steps:

  • Upgrade Equipment: Modern technology can enhance your practice’s appeal to buyers
  • Streamline Operations: Reduce inefficiencies and ensure your systems are well-documented
  • Boost Online Presence: Positive online reviews and a strong website can attract more interest
  • Secure Your Patient Base: Demonstrate consistent patient retention and growth

Determine the Type of Dental Practice Transition You Want

There are several transition options to consider:

  • Individual Dentists: Often associates or local dentists are interested in purchasing a practice to establish or expand their own
  • Partner with a Dental Support Organization (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
  • Partner with Private Equity Group: For larger practices with high revenue and a robust footprint, private equity groups may see your business as a strategic investment

Each option comes with unique benefits and challenges, so choose one that aligns with your goals.

Market the Sale and Identify a Buyer

Seasoned dental practice brokers will handle all the marketing. While less experienced brokers will often post the opportunity online and then wait for the phone to ring, industry leading brokers will implement proactive marketing strategies that help expand the reach of your practice and form a competitive marketplace for your practice to leverage up offers.

What’s more, discretion is essential when selling your practice. Expert dental practice brokers will ensure that they’ll incorporate the right amount of information within listing to be appealing to buyers without them being able to decipher which practice is marketing. NDAs are also an important component of maintaining discretion throughout the transaction process.

Final Negotiations and Asset Purchase Agreement

Negotiating the sale involves:

  • Evaluating Offers: Work with your broker to carefully review and consider price, deal structure, payment term and non-financial aspects like patient care and future opportunities for your existing employees
  • Drafting an Asset Purchase Agreement: Work with your attorney and broker to outline all terms of the sale and a stock purchase agreement, when applicable, to outline the terms and conditions for buying and selling equity within the practice and/or holding company
  • Addressing Transition Periods: Agree on a timeline for handing over responsibilities

Closing Tasks Before the Closing Date

Before finalizing the sale, complete these tasks:

  • Transfer legal documents, including lease agreements and licenses
  • Ensure a seamless handover of patient records in compliance with HIPAA regulations

Transitioning After the Sale

Post-sale transitions are crucial for maintaining the practice’s success:

  • Notify staff and patients about the transition; we recommend doing this after the paperwork has been signed to help ensure a smoother transition
  • Offer support during the transition period to help the new owner adjust
  • Communicate with patients to ensure they feel confident in the new leadership

Bottom Line

Selling your dental practice doesn’t have to be overwhelming. By following these steps and working with experienced professionals, you can achieve a smooth and successful transition while securing the best possible outcome for your future.

If you’re curious about taking your practice to market, contact the pros at Professional Transition Strategies today.

How to Negotiate the Best Deal on a Dental Practice Sale

Selling your dental practice can be a complex and emotional process. To ensure you negotiate the best deal, it’s essential to prepare thoroughly, understand your practice’s value and approach negotiations strategically. Here’s a comprehensive guide to help you secure the best possible outcome when selling your dental practice.

Understand the Market Value of Your Dental Practice

Before you begin negotiations, determine the fair market value of your dental practice. This involves assessing factors such as:

  • Annual revenue and profitability
  • Patient demographics and retention rates
  • Location and office condition
  • Specialty

Engaging a professional broker who specializes in dental practices can provide you with an accurate valuation. This knowledge is critical for setting realistic expectations during negotiations.

Setting Realistic Expectations: What to Aim for in Negotiations

It’s important to establish clear goals for the sale. Consider:

  • The minimum acceptable offer you’re willing to accept, as it’s important to know your financial needs when you choose to take your practice to market
  • Non-financial priorities, such as retaining staff or maintaining patient care standards, to ensure your legacy is preserved
  • Your timeline for the sale and any post-sale involvement you’re willing to commit to

Preparing Financials and Documentation for a Strong Negotiation Position

Organized and transparent documentation builds trust with potential buyers. Ensure you have the following ready:

  • Up-to-date financial statements
  • Patient records (de-identified to protect privacy)
  • Lease agreements and equipment inventories
  • Any outstanding debts or liabilities

Providing a clear financial picture reduces uncertainty and strengthens your position during negotiations.

Identifying Key Negotiation Points: What Matters Most in the Deal

Focus on these critical elements when negotiating:

  • Purchase Price: Ensure the offer aligns with your practice’s value
  • Deal Structure: Provide you with opportunities to receive cash up front and equity options, if you choose to sell to a DSO
  • Payment Terms: Decide whether you prefer an upfront payment or installment structure
  • Transition Period: Discuss your role post-sale, if any, to ensure a smooth handover
  • Non-Compete Clauses: Be clear on restrictions regarding future practice locations

Choosing the Right Buyer: Assessing Offers Beyond Just Price

The highest offer isn’t always the best. Evaluate potential buyers on:

  • Financial stability and ability to complete the purchase
  • Plans for your practice’s future, including patient care and staff retention
  • Alignment with your practice’s values and reputation

The Role of a Broker in Negotiating the Sale of Your Practice

A dental practice broker can:

  • Market your practice to a broad network of qualified buyers
  • Handle complex negotiations and ensure you receive the best deal
  • Provide invaluable industry insights and guidance throughout the process

Partnering with an experienced broker can save you time and stress, while maximizing the value of your sale.

Navigating Common Negotiating Pitfalls and How to Avoid Them

Avoid these mistakes to ensure successful negotiations:

  • Overpricing: Unrealistic expectations can deter buyers and even banks will refuse to lend if the price for the practice is not justifiable; an experienced dental practice broker can help prevent overpricing from occurring
  • Lack of Preparation: Incomplete documentation or unclear goals can weaken your position
  • Emotional Decision-Making: Rely on professional advice rather than letting emotions guide the process

How to Handle Multiple Offers and Create a Bidding War

If you work with a seasoned practice broker, you can expect to receive multiple offers. To manage this effectively:

  • Clearly communicate deadlines and expectations to all buyers
  • Leverage competition to negotiate better terms
  • Prioritize offers that align with your financial and non-financial goals

Closing the Deal: Ensuring a Smooth Final Negotiation Process

The final stages of negotiation require attention to detail. Work closely with your attorney and broker to:

  • Review and finalize the purchase agreement
  • Ensure all legal and financial obligations are met
  • Plan for a seamless transition for patients and staff

Conclusion

Negotiating the best deal for your dental practice requires preparation, strategy, and the right support team. By understanding your practice’s value, setting clear goals, and working with experienced professionals, you can secure a successful sale that benefits all parties involved. For more expert advice on dental practice transitions, contact our team of experts today.

Sell to a DSO? What Dentists Need to Consider

The dental industry is rapidly evolving, with dental service organizations (DSOs) becoming an increasingly attractive option for dentists looking to sell their practices. While selling to a DSO can offer significant benefits, it’s essential to carefully weigh the pros and cons to make an informed decision. This guide provides an in-depth look at the factors dentists should consider when evaluating a DSO sale.

What Is a DSO?

A DSO is an entity that provides management and administrative support to dental practices. DSOs often handle non-clinical tasks such as billing, marketing, purchasing supplies and equipment, human resources and regulatory compliance, taking back-office burgers off dentists and allowing them to focus on patient care. In return, DSOs typically acquire partial or full ownership of the practice.

Why Sell to a DSO?

The decision to sell to a DSO can be driven by various factors, primarily including financial incentives, reduced administrative burdens, and access to professional support. Here are some key advantages:

  • Financial Benefits
    • Because many DSOs are private equity-backed, they offer competitive purchase prices and are willing to explore deal structures that can enable doctors to leverage their practice as an investment vehicle
    • Dentists may receive cash upfront and opportunities for long-term equity at the practice or DSO level
  • Reduced Administrative Work
    • By offloading non-clinical responsibilities, dentists can dedicate more time to patient care and regain a better work-life balance
  • Professional Support:
    • DSOs provide resources and expertise in areas like marketing, staffing and compliance, enhancing operational efficiency
    • DSOs also leverage economies of scale to negotiate better pricing for labs and supplies, helping make your practice more profitable

Potential Drawbacks of Selling to a DSO

We always recommend working with a seasoned dental practice broker who is well versed and experienced with DSOs because they are uniquely positioned to help doctors receive offers from qualified DSOs and help evaluate these buyers to find the one most aligned with the doctor-owner’s needs.

Without the help of an experienced broker, dental entrepreneurs might accidentally partner with a DSO that could impose any of the following drawbacks:

  • Loss of Autonomy: Dentists may lose control over decision-making, including clinical and operational aspects of the practice
  • Impact of Practice Identity: Joining the wrong DSO could alter the practice’s brand and reputation, potentially affecting patient trust and loyalty
  • Reduced Income: In rare cases, some dentists report lower compensation after transitioning with a DSO if performance metrics are not met; however, this is not a common occurrence
  • Uncertainty About the Future: DSOs may impose growth targets or operational changes that conflict with the dentist’s vision

Questions to Ask Before Selling to a DSO

To make the best decision, dentists should work with their broker and ask critical questions before committing to a DSO:

  • Expansion or additional servicesWhat are the terms of the purchase agreement, including upfront payments and earn-outs?
  • How will my role and responsibilities change post-sale?
  • What performance metrics will impact my compensation?
  • How does the DSO handle branding and patient relations?
  • Are there non-compete clauses or other restrictions?

Top Mistakes Dentists Make When Selling to a DSO

Avoid these common pitfalls:

  • Lack of Representation: Working without an experienced broker dentist might miss out on building a competitive environment around their practice to leverage up offers and even take an offer that doesn’t benefit them and only benefits the DSO
  • Choosing the Wrong DSO: Not all DSOs are created equal. That’s why it’s essential to put your practice in a competitive environment to find one that aligns with your goals and values
  • Neglecting Due Diligence: Failing to thoroughly review the DSO’s financial health and operational practices can result in future complications

Navigating the Sale Process

Selling to a DSO involves several steps:

  • ValuationDetermine the fair market value of your practice based on metrics including EBITDA – not SDE or a percentage of collections –, revenue, patient base, location, and other factors
  • Finding the Right DSO: Partner with a broker to identify DSOs that align with your practice’s goals and values
  • Negotiation: Work with legal and financial advisors to negotiate favorable terms, including compensation, equity options and post-sale roles
  • Transition Planning: Develop a plan for a seamless transition, addressing staff, patient communication and operational changes

Bottom Line

Selling to a DSO can be a transformative decision for your dental practice, offering financial rewards and operational support. However, it’s crucial to weigh the potential drawbacks, ask the right questions, and seek professional guidance to ensure a successful transition. For personalized advice on navigating the complexities of selling to a DSO, contact the experts at Professional Transition Strategies.

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.

The Options and Legalities of Dental Practice Partnerships: What You Need to Know

In today’s evolving dental landscape, partnerships have become an increasingly popular way for dentists to grow and sustain their practices. However, navigating these opportunities requires a deep understanding of both the various types of dental practice partnerships available and the legal complexities that accompany them. This article explores the different types of dental partnerships, highlights the importance of well-structured agreements, and provides insights into potential challenges and solutions.

 

To make informed decisions about partnerships, it’s important to first address some fundamental questions about how they function and what factors can impact their success:

What is a dental practice partnership?

A dental practice partnership traditionally involves two or more dentists sharing ownership, responsibilities, and profits. However, practices can also explore partnerships with dental service organizations (DSOs) and other entities, which offer various deal structures and operational support.

How do professional partnerships work?

In professional partnerships, ownership, responsibilities, and profits are shared, with decisions made collaboratively and finances managed together. Partnerships with DSOs offer enhanced operational support and efficiency, providing comprehensive management services and opportunities for financial growth through equity and recapitalization.

What is a partnership practice?

A partnership practice is owned and operated by multiple dentists under a formal agreement. It offers shared resources and responsibilities, allowing for greater operational efficiency and enhanced patient care. Partnerships with DSOs or other entities can also provide additional resources and management support, enhancing the practice’s growth and operational capabilities.

Why do dental partnerships fail?

Common reasons for failure include misaligned visions, unequal contributions, poor financial management and unclear agreements. These challenges are particularly pronounced in doctor-to-doctor partnerships, where differing goals and commitment levels can lead to friction and conflict.

While private partnerships face specific challenges, partnerships with organizations like DSOs may fail if expectations about support and autonomy are not clearly defined. Missteps in affiliating with DSOs can lead to issues like misunderstandings about operational control and financial expectations, as highlighted in Dental Economics. (1)

Additionally, some partnerships fail due to unattainable earn-up targets — performance-based compensation goals tied to metrics like revenue or profitability (2). These targets can be set so high that practice owners find it nearly impossible to reach them, especially when not given enough operational support. 

Invisible Dental Service Organizations (IDSOs) are a subset of DSOs that operate in a more “hands-off” manner. They may leave the practice’s branding and clinical operations largely unchanged but still expect significant growth. This approach can create a challenging dynamic for practice owners, however, a knowledgeable broker can help you navigate these complexities, advising on what is truly achievable and protecting you from agreements designed to benefit the organization at your expense.

Decoding DSOs, DPOs and IDSOs

Navigating the legal aspects of dental partnerships starts with understanding the types of organizations you might partner with. Private equity-backed groups have developed various strategic branding terms to position themselves as the ideal partners for dental practices. Terms like dental service organizations (DSOs), dental partnership organizations (DPOs) and invisible DSOs (IDSOs) are often used interchangeably, creating confusion among dental entrepreneurs. It’s helpful to understand these terms when considering partnership opportunities.

  • DSOs: Dental service organizations provide comprehensive management services like HR, billing and marketing, centralizing business functions to boost efficiency and profitability. They also offer opportunities for financial growth through equity and recapitalization
  • IDSOs: Invisible DSOs claim to offer minimal interference and maintain the practice’s brand identity. However, this “invisibility” is often just a marketing tactic. IDSOs may set ambitious growth targets without providing sufficient support, making it challenging for practices to meet these goals
  • DPOs: Dental partnership organizations emphasize equity sharing but often function similarly to DSOs in their operations and financial opportunities

When considering these options, look beyond branding to understand what each group truly offers. Whether prioritizing clinical control, brand autonomy or maximizing practice value, understanding the real implications of partnering with a DSO, DPO, or IDSO will guide you in making the best decision for your practice.

Types of dental practice partnerships

Dentists should have a grasp of the various models available to them, each with its unique structure and implications. The landscape of dental practice partnerships is diverse, offering various models to suit different goals:

External investment and expertise models

  • Joint venture model: In this collaborative setup, a dental practice partners with a DSO or private equity firm to share ownership and operations. This model combines external expertise with retained operational control
  • Equity roll: Dentists sell a portion of their practice in exchange for equity in a larger organization, benefiting from the resources and growth potential of a more extensive network
  • Sub-DSO: A practice forms its own DSO, partnering with a larger DSO or private equity group, allowing for brand autonomy while leveraging external support
  • Direct investment with private equity: Private equity firms directly invest in a practice, providing capital and business acumen to drive growth and expansion

Structuring a partnership agreement

The foundation of any successful dental practice partnership is a well-structured agreement. This legal document outlines the terms of the partnership, including the roles and responsibilities of each partner, profit-sharing arrangements, and the process for resolving disputes. Key elements to consider when drafting a partnership agreement include:

  • Clear roles and responsibilities: Define each partner’s role within the practice, including clinical duties, administrative tasks, and decision-making authority
  • Profit and loss sharing: Outline how profits and losses will be distributed among the partners. This could be based on ownership percentages, contributions to the practice or other agreed-upon factors
  • Decision-making processes: Establish clear procedures for making major decisions, such as expanding the practice, taking on debt or selling the business
  • Dispute resolution mechanisms: Include provisions for resolving disputes between partners, such as mediation or arbitration, to avoid costly legal battles
  • Exit strategy: Specify terms for a partner’s exit, valuation of their stake and buyout conditions

Financial planning and management

Effective financial planning is essential for the success of any dental practice partnership. This involves budgeting, forecasting and managing cash flow to ensure that the practice remains profitable. Key areas to focus on include:

  • Budgeting: Develop a detailed budget that includes all expected expenses and revenues. Regularly review and adjust the budget as needed
  • Cash flow management: Monitor cash flow closely to ensure that the practice has enough liquidity to meet its obligations
  • Investment planning: Consider how the partnership will fund future growth, such as expanding the practice, acquiring new equipment, or hiring additional staff

Compliance with state and federal laws

Ensure your practice complies with licensing, labor laws and tax obligations. Stay informed about legal requirements to avoid penalties and legal issues.

Partnership agreements for multiple locations

Expanding to multiple locations requires additional considerations in your agreement, such as resource management, profit distribution, and adding new partners.

Choosing the right partner

Selecting the right partner involves matching your transition goals with the partner’s characteristics, including their professional background, business acumen and alignment with your vision, as emphasized by PTS Consultant Kim McCleskey in DrBicuspid.com (3).

When evaluating potential partners, consider the following:

  • Professional background: Ensure that the partner has a solid track record and expertise relevant to your practice’s needs
  • Vision alignment: Your partner’s goals and values should align with yours to prevent conflicts and ensure a harmonious working relationship
  • Business acumen: Look for partners with proven success in managing and growing dental practices, as their expertise will be invaluable in achieving your transition goals

Effective partnerships are built on shared goals and a mutual understanding of each other’s expectations. It is not just about finding a partner but about finding one whose approach complements and enhances your practice’s vision and operations.

Exiting a partnership smoothly

Breaking up a dental practice partnership can be challenging, but with proper preparation, the process can be smoother. As discussed earlier, creating a well-documented partnership agreement in the early stages is key — it clarifies roles, simplifies valuation and ensures a fair appraisal of the practice, helping partners focus on their end goals rather than getting bogged down in details.

  • Timing: Align the exit with financial and operational milestones to minimize disruption.
  • Valuation: A well-documented partnership agreement simplifies the valuation process. It clarifies each partner’s contributions and stake, facilitating an accurate appraisal of the practice. This helps in setting a fair purchase price and deciding on the next steps.
  • Options: Once the valuation is determined, partners can choose to sell to an associate, buy out the partnership, or sell to a DSO. Each option has implications, such as potential success rates or managerial responsibilities, which should be considered based on the retiring partner’s and remaining partner’s goals.
  • Communication: Clearly inform all stakeholders, including staff and patients, to manage expectations and maintain trust.
  • Legal and Financial: Ensure the partnership agreement is updated to address exit terms and comply with legal requirements. 

A well-planned exit strategy ensures a smooth transition and protects the interests of all parties.

Bottom Line

Dental practice partnerships offer numerous benefits but come with legal and financial complexities. Understanding partnership types, structuring agreements carefully, and planning for potential issues can protect your interests and set your practice up for long-term success.

For help navigating the complexities of dental practice partnerships, contact the experts at Professional Transition Strategies for personalized guidance and support.

References

  1. Dental Economics. 5 mistakes dentists make when affiliating with a DSO, https://www.dentaleconomics.com/money/article/14304885/5-mistakes-dentists-make-when-affiliating-with-a-dso
  2. Dental Review News. Kyle Francis on DSO, DPO, and IDSO, https://www.dentalreview.news/practice-management/53-dental-practice-business/11191-kyle-francis-dso-dpo-idso
  3. DrBicuspid. Choosing the right DSO: Matching your transition goals with the ideal partner, https://www.drbicuspid.com/dental-business/dso/article/15669414/choosing-the-right-dso-matching-your-transition-goals-with-the-ideal-partner

How DSOs Are Changing the Dental Industry

dentist in office

Exciting changes are sweeping through the dental industry, thanks to the rise of dental service organizations (DSOs). With over 375 DSOs now operating in the U.S., this transformative era is creating new opportunities for dentists and elevating the standards of patient care (1). DSOs are not just reshaping practice ownership; they’re transforming the landscape entirely by fostering a culture of innovation and forward-thinking strategies and opportunities for practice growth and development.

 

The Rise of DSOs: A New Era in Dental Care

Fueled by private equity investments, dental service organizations (DSOs) are rapidly acquiring individual practices, leading to a trend of consolidation that’s allowing dentists to sell their practices for better financial returns and less administrative burdens (2). 

Factors like the skills gap among baby boomers and changing demographics have created a favorable environment for DSOs. As many baby boomer dentists approach retirement, there’s a growing demand for successors to take over their practices. However, younger dentists face challenges such as high student loan debt and limited resources, making solo practice ownership less appealing. DSOs are an attractive option, offering established support systems and financial backing that ease the burdens of practice ownership.

The demographic shift in the dental workforce also means that a new generation of practitioners is looking for flexibility and work-life balance, which DSOs can provide through centralized management and operational support. 

In addition, private practitioners are struggling to navigate macroeconomic challenges that affect many industries today, especially workforce stability. Traditionally, dentists followed a predictable career path, but many are now prioritizing the job security and structured benefits that DSOs offer over the autonomy of owning a private practice. 

This alignment between the needs of new dentists and the resources and stability that DSOs offer is fueling the trend of consolidation. According to the ADA, 13% of U.S. dentists are now affiliated with DSOs, with the number rising to 27% among younger practitioners who graduated five or less years ago (3). 

This trend will continue as DSOs acquire more practices. Our experts predict that the dental industry could see up to 70% consolidation in the next five years, permanently and significantly altering how dental care is delivered (4).

Why More Dentists Are Choosing to Partner With DSOs

New Opportunities and Options

Dentists now have a wealth of new options and flexible paths that were previously unavailable. Today, they can choose from a variety of partnership models when they work with DSOs, which allow them to maintain a level of control while benefiting from the extensive resources these organizations provide. 

For example, two great deal structures for dentists contemplating a sale are equity rolls and joint ventures. Equity rolls involve dental entrepreneurs exchanging a portion of their practice equity for a financial stake in the DSO. This arrangement allows them to participate in the DSO’s growth and success while still retaining some ownership in their practice. It not only provides immediate financial benefits but also aligns the doctor’s interests with those of the DSO, creating a partnership that fosters mutual success.

Joint ventures (JVs) allow dentists to retain a stake in their practice while also receiving a substantial lump sum at the time of the sale. This structure enables them to benefit from the ongoing success of their practice while having immediate access to capital, which they can use for personal investments, such as funding their children’s education or pursuing other financial endeavors.

An increasingly attractive model is the sub-DSO. In this arrangement, practice owners exit debt-free with a significant upfront payment and typically retain a 40% ownership stake and profit share in the sub-DSO portfolio. Unlike traditional models, sub-DSOs allow for equity to be held separately, facilitating growth and expansion. This approach offers multiple return avenues, including equity gains and profit sharing, making it a lucrative option for dentists looking to enhance their overall wealth.

Options like these provide dentists with flexibility in structuring their financial future, whether they want to scale their practices or transition smoothly into retirement.

Benefits of Partnering with a DSO

By joining a DSO, dentists gain access to centralized support in areas like marketing, billing and human resources, allowing them to focus on clinical care rather than the complexities of practice management. 

Many dentists are drawn to DSOs for the opportunity to offload these managerial responsibilities and concentrate on what they do best: patient care. DSOs relieve dentists from the burdens of running a business, including managing payroll, hiring staff and navigating regulatory issues. In addition to operational support, DSOs often provide higher financial returns when selling practices compared to individual buyers, mainly due to their private equity backing.

For some dentists, the decision to partner with a DSO is driven by the flexibility and growth opportunities they provide. Rather than shouldering the financial and operational risks of owning a practice, they can enter a DSO partnership that enables them to focus on clinical work and even pursue executive leadership roles within the organization if they choose (5).

Evolution of Patient Care

One of the most significant changes DSOs have brought is in the area of patient care. Traditionally, solo practitioners managed every aspect of their practice, and it can be difficult to keep up with technological advancements. DSOs, however, have the resources to invest in cutting-edge technology, improving diagnostic tools, treatment options and overall patient experience.

This means better care through more accurate diagnoses, less invasive treatments and faster, more efficient procedures. Additionally, DSOs can offer extended office hours, flexible payment plans and a wider range of services under one roof, making dental care more accessible and convenient.

Moreover, DSOs are increasingly fostering “whole-person” care by integrating dental and medical services. This holistic approach benefits patients, ensuring that their oral health is not treated in isolation but as part of their overall well-being (6). By partnering with medical professionals and leveraging their scale, DSOs can help lead the charge in transforming how dental care is delivered.

The Role of Technology in the Growth of DSOs

Technology plays a critical role in the success and expansion of DSOs. These organizations are often quick to adopt innovative technologies, ranging from digital X-rays and electronic health records to teledentistry platforms. This ability to invest in cutting-edge innovations gives DSOs a significant advantage over independent practices, many of which struggle to keep pace with the high costs of technology upgrades.

In addition to foundational tools, DSOs can advance practices with new technologies such as artificial intelligence (AI) to support dentists and front-office staff (7). AI enhances workflow efficiency, improves patient communication and optimizes appointment scheduling. 3D printing is revolutionizing restorative dentistry with the rapid production of crowns, bridges and other dental appliances, significantly reducing turnaround times and improving fit (8). In cosmetic dentistry and orthodontics, augmented reality (AR) is emerging as a powerful tool for treatment planning and patient education, helping patients to visualize potential outcomes and understand their procedures better (9).

Finally, by centralizing data management and integrating electronic systems, DSOs can ensure consistent quality of care across all affiliated practices. It’s a technological edge that not only differentiates DSOs from independent practices but also enhances their ability to provide high-quality, patient-centered treatment. Overall, the strategic use of technology is pivotal to the ongoing growth and success of DSOs in the evolving dental landscape.

How DSOs are Refining the Business of Dentistry

DSOs are refining the “business side” of dentistry. By consolidating administrative functions and optimizing cost structures, DSOs have made dental practices more profitable. Their financial success allows them to reinvest in their practices, further enhancing the services they offer to patients.

These organizations streamline operations by centralizing administrative tasks, resulting in more efficient, standardized workflows across their affiliated practices. This model not only enhances operational efficiency but also improves profitability for dentists, since DSOs can leverage economies of scale.

For example, DSOs negotiate better rates on supplies and services, reducing operational costs. They also offer marketing support, helping practices attract more patients through targeted advertising and online presence management. By refining business practices and offering comprehensive management solutions, DSOs allow dentists to maximize their earnings while maintaining clinical autonomy.

The Cultural Shift: How DSOs Are Transforming Dental Practice Environments

Traditionally, dental practices were small, family-owned businesses that operated independently. Increasingly, DSOs are recognizing the importance of maintaining the unique culture of each practice they acquire to help both staff and patients feel comfortable with the transition.

As more practices join DSOs, a culture of collaboration and growth is also emerging. For example, some DSOs provide various opportunities for professional development beyond clinical work, such as pathways into executive leadership roles and participation in clinical advisory boards (5). These roles may come with performance-based bonuses and the chance to mentor new dentists, creating a rewarding environment where experienced practitioners can share their knowledge and skills. Certain DSOs may offer training, and career development pathways, making them an attractive option for the next generation of dental professionals.
By focusing on growth and development opportunities, DSOs can foster a sense of community within their organizations. This collaborative environment helps dentists achieve professional fulfillment, personal satisfaction and meaningful connection to their work.

Common Questions

Are DSOs leading to the consolidation of the dental industry?

Yes, DSOs are at the forefront of the consolidation trend in the dental industry. This wave of consolidation is not merely a shift in ownership; it reflects a broader transformation in how dental care is structured, managed and delivered. With their capacity for scalability and resource allocation, DSOs are redefining the competitive landscape, ensuring that practices can thrive in a rapidly evolving environment.

What regulatory changes are being driven by the rise of DSOs?

The rise of DSOs has prompted regulatory changes across the dental industry. As these organizations continue to expand, they attract increased scrutiny from regulatory bodies to ensure quality of care, patient safety and fair competition. 

In Becker’s Dental Review, Ronald Perry, DDS, emphasizes that, “regulatory scrutiny may increase to ensure quality of care and patient safety within the dental industry” (10). This heightened oversight is intended to address concerns about the corporate practice of dentistry and its implications on patient-provider relationships.

Scott Pope, DDS, notes in Becker’s Dental Review that DSOs face regulatory challenges related to “patient privacy and billing practices,” highlighting the complexities of navigating compliance standards across various jurisdictions (10). The evolving regulatory landscape means that DSOs must continuously adapt to meet the requirements of the regions in which they operate. 

DSOs are also subject to scrutiny regarding their impact on clinical autonomy. To address concerns, many DSOs have adopted policies that preserve dentists’ decision-making authority when it comes to patient care. This balance between clinical independence and operational support has become a key factor in their success.

Ultimately, the influence of DSOs on the dental industry will be shaped by ongoing healthcare policy developments, patient preferences and the ability to uphold high standards of care amidst these regulatory changes.

How do DSOs affect the way dental practices are managed?

DSOs have shifted towards more collaborative management structures, offering growth opportunities beyond clinical work. Dentists can focus on patient care while DSOs handle administrative tasks, allowing for more efficient and profitable practice management.

When considering a partnership, it’s important to evaluate the DSO’s support systems and their dedication to maintaining clinical autonomy. While some older DSOs gained a reputation for enforcing strict policies, like treatment quotas, many newer organizations recognize the importance of preserving the unique qualities and successful practices of their affiliates. They understand that the satisfaction of dental providers is one of the most important elements for the success of their investment.

However, some less reputable DSOs still operate. A knowledgeable broker can help you spot potential red flags and direct you toward more reputable DSOs that focus on clinical independence and shared success.

Bottom Line

The dental industry is undergoing a significant transformation as DSOs reshape practice operations and patient care. By providing centralized support and access to advanced technology, DSOs enable dentists to focus on high-quality care while alleviating the burdens of practice management. This shift fosters a culture of innovation and forward-thinking strategies among dental professionals, making it an exciting time to be in the field.

With DSOs rapidly acquiring practices, the current wave of consolidation is predicted to result in up to 70% of the industry being consolidated within the next five years. Now is the time to act; the window for the most lucrative partnership opportunities is closing fast. 

Contact the experts at Professional Transition Strategies today to discover how partnering with a DSO can enhance your practice and support your future plans in this evolving landscape.

References

  1. DrBicuspid. Mythbusters: Separating DSO fact from fiction, https://www.drbicuspid.com/dental-business/dso/article/15664821/mythbusters-separating-dso-fact-from-fiction
  2. Inc. Private equity and the dental industry’s consolidation curveball, https://www.inc.com/inc-masters/private-equity-and-the-dental-industrys-consolidation-curveball.html
  3. American Dental Association. Practice modality by the numbers, https://adanews.ada.org/new-dentist/2024/web-exclusives/practice-modality-by-the-numbers/
  4. DrBicuspid. Halfway through the dental consolidation wave: Here’s what entrepreneurs need to know, https://www.drbicuspid.com/dental-business/dso/article/15667122/halfway-through-the-dental-consolidation-wave-heres-what-entrepreneurs-need-to-know.
  5. DrBicuspid. 4 key financial considerations when selling to a DSO, https://www.drbicuspid.com/dental-business/practice-sales/article/15678019/4-key-financial-considerations-when-selling-to-a-dso
  6. American Dental Association. Practice modality by the numbers, https://adanews.ada.org/new-dentist/2024/web-exclusives/practice-modality-by-the-numbers/

The Emotional Side of Transitioning Your Dental Practice

dentist with hands folded and looking at the floor

Transitioning a dental practice, whether you’re selling or merging, is a significant milestone in any dentist’s career. This journey, while full of opportunities, is also full of emotional challenges. Understanding and addressing these often overlooked emotional aspects is key to a smooth and successful transition. This article explores the various emotional facets of transitioning your dental practice and provides strategies to manage them effectively.

Coping With the Stress of Selling or Merging

The process of selling or merging a dental practice can be overwhelming. It involves many decisions, from financial considerations to logistical details. And, it isn’t just a professional change; it’s a significant life event that can impact your mental health. On top of that, dentistry is already a stressful job, with more than half of dentists experiencing high job stress according to a study from Nature (1). Recognizing this and taking proactive steps to manage your emotional well-being is essential for a successful transition.

Identifying Common Stressors

  • Uncertainty: The unknowns associated with the transition can create anxiety about the future direction of the practice and personal career path.
  • Workload: Balancing current practice demands while planning for the transition can lead to burnout. Selling a practice typically requires about 150 hours, spreading dentists thin between clinical care, business management and transition planning.
  • Financial Pressure: Large investments or holding a significant amount of debt can be scary and overwhelming. When investing in a dental practice, enlist experts to provide critical support, such as knowledge of medical or dental competition, patient demographics and expertise in practice appraisals to determine fair market value. For potential sellers, partnering with a dental service organization (DSO) often includes “cash at close,” providing immediate financial relief to clear debts and enhance financial stability for future endeavors.
  • Concerns With Exiting a Partnership: Transitioning out of a dental practice partnership is often complex, especially when one partner plans to retire while the other intends to continue practicing. This scenario often leads to divergent paths and requires careful planning to ensure a smooth transition for both parties. DSOs can offer structured solutions and support in navigating these transitions, facilitating agreements that accommodate different career aspirations and personal goals.
  • Worries About Clinical Autonomy in a DSO Transition: Modern DSOs offer varying levels of involvement, so finding one with your clinical and cultural values is crucial to preserving professional independence and patient care standards. To find the best fit, evaluate their support infrastructure and commitment to clinical autonomy. With over 375 DSOs available, an experienced broker can help identify those that align with your values and avoid those that might impose unwelcome changes.
  • Navigating Industry Shifts: The dental industry is currently undergoing significant consolidation, with approximately 35% of practices already consolidated (3) into DSO groups. This ongoing consolidation adds stress as practitioners must act soon amidst changing market dynamics to capitalize on the current opportunity before it’s too late.
  • Choosing the Best Option: It’s stressful when weighing multiple options before deciding on the best path forward for both personal and professional goals. When considering options for transitioning your practice, especially as a potential seller, it’s essential to weigh various deal structures available with DSOs, which include options such as an equity roll, joint venture model or outright sale to a DSO. Each structure offers different benefits and considerations, such as the financial incentives discussed in DrBicuspid.com (2), operational autonomy and future growth potential.

Strategies for Managing Stress

  • Plan Ahead: Create a detailed transition plan to minimize last-minute surprises. We always recommend starting the planning process at least five years before you want to transition your practice.
  • Delegate Tasks: Delegate responsibilities to trusted staff or consider hiring temporary assistance for help running the business during peak workload periods. Clearing non-essential tasks from your plate allows you to focus more on patient care and strategic planning.
  • Prepare To Sell: Effectively prepare by conducting a practice appraisal, which identifies opportunities to maximize profitability and enhance your practice’s overall value before listing it for sale. By optimizing financial and operational efficiency, you not only enhance your practice’s appeal but also navigate the selling process with greater confidence and reduced stress.
  • Seek Professional Help: Engaging with expert brokers like Professional Transition Strategies provides strategic guidance tailored to your goals and can support you in navigating negotiations, ensuring financial transparency and devising long-term growth strategies. This personalized counsel empowers dental entrepreneurs to make informed decisions that align with their personal vision for practice ownership, alleviating stress by knowing they have the best expertise guiding them every step of the way.

Managing Staff Emotions During Transitions

Your staff plays a critical role in your practice, and their emotions and reactions during a transition can significantly impact the process. It’s essential to avoid prematurely notifying staff about potential changes before the sale is finalized. Doing so could lead to significant disruptions and uncertainties among the team. Here’s how to approach communication effectively once the sale is complete:

Transparent Communication With Staff

  • Timing of Communication: Wait until the sale is complete before informing your staff about any impending transitions or changes. Premature communication can create unnecessary anxiety and speculation. Once the sale is finalized, it becomes appropriate to inform your staff about the upcoming changes to help mitigate uncertainties and alleviate fears.
  • Keep Them Informed: Regular updates about the transition can help alleviate fears and uncertainties. Clearly explain the steps involved in the transition and what it means for the staff.
  • Highlight Benefits: Discuss the potential benefits that come with the transition, whether it’s new career growth opportunities, enhanced benefits or improved working conditions.
  • Showcase Improvements: Inform staff about any improvements that will come with the transition, such as new technology, better facilities or expanded services.
  • Provide Support: Offer resources and support to help staff cope with the changes. This might include workshops or one-on-one meetings to address individual concerns.

Staff Benefits from DSO Transitions

Transitioning to a DSO can provide your staff with numerous benefits that enhance their professional and personal lives. DSOs are structured to offer comprehensive benefits, including health care and a 401K plan, from the outset. For hygienists and other dental professionals, DSOs present a well-defined career path with clear job opportunities. This structured approach allows staff to understand and plan their potential career progression. Moreover, DSOs invest in the latest technology, which not only improves the clinical experience for staff but also keeps them engaged and motivated. Overall, DSOs provide a supportive and structured environment that can greatly enhance job satisfaction and career growth for dental practice employees.

Dealing With Uncertainty

Change, even when positive, can trigger feelings of uncertainty and fear. Recognizing and addressing these emotions is essential for a smooth transition.

Coping Mechanisms

  • Acknowledge Your Feelings: Accepting and understanding your emotions can help you manage them better.
  • Stay Positive: Focus on the benefits and opportunities that the transition will bring.
  • Seek Support: Talk to colleagues, friends or a trained professional to help process your feelings. Connecting with other dentists who have undergone a similar practice transition can provide valuable insights and alleviate fears, or help identify DSO groups that may be a good fit if you’re considering selling your practice. Understanding their experiences with different DSOs can guide your decision-making process and ease concerns about the transition. Additionally, partnering with a seasoned dental practice broker can assist in identifying your ideal buyer, easing any worries you might have.

Balancing Personal and Professional Life

A transition can disrupt the delicate balance between your personal and professional life. It’s important to find ways to maintain this balance to ensure overall well-being.

Ensuring Self-Care During the Transition

  • Set Boundaries: Allocate specific times for work and personal activities.
  • Trust Your Team: Entrust responsibilities to your team to avoid overburdening yourself.
  • Take Breaks: Regular breaks and time off can help prevent burnout.

Financial Considerations and Emotional Well-Being

Financial aspects of a transition can significantly impact your emotional well-being. Proper financial planning and management can alleviate stress and ensure a smoother transition. These steps ensure that financial considerations are carefully managed throughout the transition process, providing financial stability and peace of mind.

Financial Planning Tips

  • Merging Dental Practices: When merging practices, it’s crucial to budget for integration costs, potential redundancies and any legal or regulatory expenses involved. An experienced dental broker can help navigate the complexities of combining financial systems and aligning revenue streams to ensure a seamless transition.
  • Selling a Dental Practice: Planning for a successful sale involves conducting a thorough practice appraisal to determine its fair market value and identifying and vetting potential buyers – both groups and individuals. Seeking guidance from an expert broker can streamline negotiations and maximize financial benefits from the sale.

Creating a Transition Timeline and Checklist

DSOs fit the dentist who craves a work-life balance and don’t want the added stress of the managerial responsibilities that come along with owning a business. Working 32 clinical hours (instead of six days a week with early mornings) is appealing to both the younger and older generation, especially leading up to retirement and to avoid burnout. For those looking to ease into retirement, working for a DSO can offer an abbreviated schedule rather than the added stress of a transition to another dentist. What’s more, you have the chance to expand and move toward a one-stop-shop model, all while increasing the value of your dental practice.

Developing a Transition Plan

  – Set clear goals: Start by defining what you want to achieve with the transition. This includes your personal and professional goals, financial objectives and career aspirations.

  • Create a timeline: Outline the steps and deadlines for each phase of the transition. Begin planning early to give yourself ample time to address potential challenges and make informed decisions. When selling your practice, you should start the transition process early to allow for strategic positioning of your practice in a competitive environment to source attractive offers.
  • Track progress: Regularly review and adjust your plan as needed to stay on track. Keeping a close eye on your timeline ensures that you remain focused on your goals and can address any issues promptly.
  • Consult an expert: Engaging a dental practice broker can provide numerous benefits, such as enhanced negotiating capabilities, strategic positioning and navigating legal and financial complexities. Brokers can help craft advantageous deal structures and secure more competitive offers, ultimately maximizing the value of your practice transition.

Common Questions

What stresses do dentists face? Why is dentistry the most stressful job?

Dentists face a multitude of stressors that contribute to high levels of anxiety, burnout, and emotional health concerns. According to the ADA’s 2021 Dentist Health and Well-Being Survey, anxiety levels among dentists have more than tripled since 2003, with 16% of respondents reporting anxiety and 13% reporting depression (4). The COVID-19 pandemic has significantly exacerbated these issues, adding unique stressors related to safety, patient management, and operational challenges.

Dentistry is widely recognized as one of the most stressful professions due to factors such as patient anxiety, the demanding precision required, and the physical rigors of the work. The profession’s high standards for accuracy, coupled with the consequences of mistakes, alongside the long hours and physical strain, collectively intensify the stress experienced by dentists.

Why is emotional intelligence important in dentistry?

Emotional intelligence is important in dentistry because it builds patient rapport, enhances team collaboration and improves decision-making. Understanding and addressing patient needs and concerns helps create a positive patient experience. Promoting better communication and cooperation among staff leads to a more harmonious work environment. Additionally, emotional intelligence enables more empathetic and effective decision-making.

How do you make dentistry less stressful?

To make dentistry less stressful, practice self-care, seek support, delegate tasks and stay organized. To alleviate the stress of owning and managing a dental practice, especially without formal business training, many dentists find transitioning to a DSO to be a beneficial option. This transition allows dentists to refocus on clinical care by offloading managerial responsibilities such as marketing, payroll, human resources and recruiting to dedicated professionals within the DSO.

This shift is significant as it enables dentists to return to their passion for clinical work, spending more time chairside with patients.

Bottom Line

The dental industry is currently undergoing significant change, with approximately 35% of practices already consolidated. This ongoing consolidation adds urgency as practitioners must act soon to capitalize on the current opportunity before it’s too late. Delaying your decision could result in missed opportunities, reduced practice value and increased competition.

Begin planning your transition early, seek professional guidance, maintain open communication, and take care of your mental and emotional well-being. Acting promptly and decisively will not only maximize your financial returns but also provide peace of mind as you navigate this significant milestone in your career.

To ensure a smooth and successful transition that addresses both financial and emotional factors, contact the experts at Professional Transition Strategies.

References

  1. Nature, “Dentistry and the stress of practice,” https://www.nature.com/articles/sj.bdj.2019.18
  2. DrBicuspid.com, “4 key financial considerations when selling to a DSO,” https://www.drbicuspid.com/dental-business/practice-sales/article/15678019/4-key-financial-considerations-when-selling-to-a-dso 
  3. DrBicuspid.com, “Halfway Through the Dental Consolidation Wave: What Entrepreneurs Need to Know,” https://www.drbicuspid.com/dental-business/dso/article/15667122/halfway-through-the-dental-consolidation-wave-heres-what-entrepreneurs-need-to-know
  4. ADA, “Survey: Younger Dentists Report Higher Level of Stress, Emotional Health Concerns,” https://adanews.ada.org/new-dentist/2022/february/survey-younger-dentist-report-higher-level-of-stress-emotional-health-concerns/

More Reasons To Sell Your Dental Practice to a DSO

dentist with hands folded and looking at the floor

Transitioning a dental practice, whether you’re selling or merging, is a significant milestone in any dentist’s career. This journey, while full of opportunities, is also full of emotional challenges. Understanding and addressing these often overlooked emotional aspects is key to a smooth and successful transition. This article explores the various emotional facets of transitioning your dental practice and provides strategies to manage them effectively.

Coping With the Stress of Selling or Merging

The process of selling or merging a dental practice can be overwhelming. It involves many decisions, from financial considerations to logistical details. And, it isn’t just a professional change; it’s a significant life event that can impact your mental health. On top of that, dentistry is already a stressful job, with more than half of dentists experiencing high job stress according to a study from Nature (1). Recognizing this and taking proactive steps to manage your emotional well-being is essential for a successful transition.

Identifying Common Stressors

  • Uncertainty: The unknowns associated with the transition can create anxiety about the future direction of the practice and personal career path.
  • Workload: Balancing current practice demands while planning for the transition can lead to burnout. Selling a practice typically requires about 150 hours, spreading dentists thin between clinical care, business management and transition planning.
  • Financial Pressure: Large investments or holding a significant amount of debt can be scary and overwhelming. When investing in a dental practice, enlist experts to provide critical support, such as knowledge of medical or dental competition, patient demographics and expertise in practice appraisals to determine fair market value. For potential sellers, partnering with a dental service organization (DSO) often includes “cash at close,” providing immediate financial relief to clear debts and enhance financial stability for future endeavors.
  • Concerns With Exiting a Partnership: Transitioning out of a dental practice partnership is often complex, especially when one partner plans to retire while the other intends to continue practicing. This scenario often leads to divergent paths and requires careful planning to ensure a smooth transition for both parties. DSOs can offer structured solutions and support in navigating these transitions, facilitating agreements that accommodate different career aspirations and personal goals.
  • Worries About Clinical Autonomy in a DSO Transition: Modern DSOs offer varying levels of involvement, so finding one with your clinical and cultural values is crucial to preserving professional independence and patient care standards. To find the best fit, evaluate their support infrastructure and commitment to clinical autonomy. With over 375 DSOs available, an experienced broker can help identify those that align with your values and avoid those that might impose unwelcome changes.
  • Navigating Industry Shifts: The dental industry is currently undergoing significant consolidation, with approximately 35% of practices already consolidated (3) into DSO groups. This ongoing consolidation adds stress as practitioners must act soon amidst changing market dynamics to capitalize on the current opportunity before it’s too late.
  • Choosing the Best Option: It’s stressful when weighing multiple options before deciding on the best path forward for both personal and professional goals. When considering options for transitioning your practice, especially as a potential seller, it’s essential to weigh various deal structures available with DSOs, which include options such as an equity roll, joint venture model or outright sale to a DSO. Each structure offers different benefits and considerations, such as the financial incentives discussed in DrBicuspid.com (2), operational autonomy and future growth potential.

Strategies for Managing Stress

  • Plan Ahead: Create a detailed transition plan to minimize last-minute surprises. We always recommend starting the planning process at least five years before you want to transition your practice.
  • Delegate Tasks: Delegate responsibilities to trusted staff or consider hiring temporary assistance for help running the business during peak workload periods. Clearing non-essential tasks from your plate allows you to focus more on patient care and strategic planning.
  • Prepare To Sell: Effectively prepare by conducting a practice appraisal, which identifies opportunities to maximize profitability and enhance your practice’s overall value before listing it for sale. By optimizing financial and operational efficiency, you not only enhance your practice’s appeal but also navigate the selling process with greater confidence and reduced stress.
  • Seek Professional Help: Engaging with expert brokers like Professional Transition Strategies provides strategic guidance tailored to your goals and can support you in navigating negotiations, ensuring financial transparency and devising long-term growth strategies. This personalized counsel empowers dental entrepreneurs to make informed decisions that align with their personal vision for practice ownership, alleviating stress by knowing they have the best expertise guiding them every step of the way.

Managing Staff Emotions During Transitions

Your staff plays a critical role in your practice, and their emotions and reactions during a transition can significantly impact the process. It’s essential to avoid prematurely notifying staff about potential changes before the sale is finalized. Doing so could lead to significant disruptions and uncertainties among the team. Here’s how to approach communication effectively once the sale is complete:

Transparent Communication With Staff

  • Timing of Communication: Wait until the sale is complete before informing your staff about any impending transitions or changes. Premature communication can create unnecessary anxiety and speculation. Once the sale is finalized, it becomes appropriate to inform your staff about the upcoming changes to help mitigate uncertainties and alleviate fears.
  • Keep Them Informed: Regular updates about the transition can help alleviate fears and uncertainties. Clearly explain the steps involved in the transition and what it means for the staff.
  • Highlight Benefits: Discuss the potential benefits that come with the transition, whether it’s new career growth opportunities, enhanced benefits or improved working conditions.
  • Showcase Improvements: Inform staff about any improvements that will come with the transition, such as new technology, better facilities or expanded services.
  • Provide Support: Offer resources and support to help staff cope with the changes. This might include workshops or one-on-one meetings to address individual concerns.

Staff Benefits from DSO Transitions

Transitioning to a DSO can provide your staff with numerous benefits that enhance their professional and personal lives. DSOs are structured to offer comprehensive benefits, including health care and a 401K plan, from the outset. For hygienists and other dental professionals, DSOs present a well-defined career path with clear job opportunities. This structured approach allows staff to understand and plan their potential career progression. Moreover, DSOs invest in the latest technology, which not only improves the clinical experience for staff but also keeps them engaged and motivated. Overall, DSOs provide a supportive and structured environment that can greatly enhance job satisfaction and career growth for dental practice employees.

Dealing With Uncertainty

Change, even when positive, can trigger feelings of uncertainty and fear. Recognizing and addressing these emotions is essential for a smooth transition.

Coping Mechanisms

  • Acknowledge Your Feelings: Accepting and understanding your emotions can help you manage them better.
  • Stay Positive: Focus on the benefits and opportunities that the transition will bring.
  • Seek Support: Talk to colleagues, friends or a trained professional to help process your feelings. Connecting with other dentists who have undergone a similar practice transition can provide valuable insights and alleviate fears, or help identify DSO groups that may be a good fit if you’re considering selling your practice. Understanding their experiences with different DSOs can guide your decision-making process and ease concerns about the transition. Additionally, partnering with a seasoned dental practice broker can assist in identifying your ideal buyer, easing any worries you might have.

Balancing Personal and Professional Life

A transition can disrupt the delicate balance between your personal and professional life. It’s important to find ways to maintain this balance to ensure overall well-being.

Ensuring Self-Care During the Transition

  • Set Boundaries: Allocate specific times for work and personal activities.
  • Trust Your Team: Entrust responsibilities to your team to avoid overburdening yourself.
  • Take Breaks: Regular breaks and time off can help prevent burnout.

Financial Considerations and Emotional Well-Being

Financial aspects of a transition can significantly impact your emotional well-being. Proper financial planning and management can alleviate stress and ensure a smoother transition. These steps ensure that financial considerations are carefully managed throughout the transition process, providing financial stability and peace of mind.

Financial Planning Tips

  • Merging Dental Practices: When merging practices, it’s crucial to budget for integration costs, potential redundancies and any legal or regulatory expenses involved. An experienced dental broker can help navigate the complexities of combining financial systems and aligning revenue streams to ensure a seamless transition.
  • Selling a Dental Practice: Planning for a successful sale involves conducting a thorough practice appraisal to determine its fair market value and identifying and vetting potential buyers – both groups and individuals. Seeking guidance from an expert broker can streamline negotiations and maximize financial benefits from the sale.

Creating a Transition Timeline and Checklist

DSOs fit the dentist who craves a work-life balance and don’t want the added stress of the managerial responsibilities that come along with owning a business. Working 32 clinical hours (instead of six days a week with early mornings) is appealing to both the younger and older generation, especially leading up to retirement and to avoid burnout. For those looking to ease into retirement, working for a DSO can offer an abbreviated schedule rather than the added stress of a transition to another dentist. What’s more, you have the chance to expand and move toward a one-stop-shop model, all while increasing the value of your dental practice.

Developing a Transition Plan

  – Set clear goals: Start by defining what you want to achieve with the transition. This includes your personal and professional goals, financial objectives and career aspirations.

  • Create a timeline: Outline the steps and deadlines for each phase of the transition. Begin planning early to give yourself ample time to address potential challenges and make informed decisions. When selling your practice, you should start the transition process early to allow for strategic positioning of your practice in a competitive environment to source attractive offers.
  • Track progress: Regularly review and adjust your plan as needed to stay on track. Keeping a close eye on your timeline ensures that you remain focused on your goals and can address any issues promptly.
  • Consult an expert: Engaging a dental practice broker can provide numerous benefits, such as enhanced negotiating capabilities, strategic positioning and navigating legal and financial complexities. Brokers can help craft advantageous deal structures and secure more competitive offers, ultimately maximizing the value of your practice transition.

Common Questions

What stresses do dentists face? Why is dentistry the most stressful job?

Dentists face a multitude of stressors that contribute to high levels of anxiety, burnout, and emotional health concerns. According to the ADA’s 2021 Dentist Health and Well-Being Survey, anxiety levels among dentists have more than tripled since 2003, with 16% of respondents reporting anxiety and 13% reporting depression (4). The COVID-19 pandemic has significantly exacerbated these issues, adding unique stressors related to safety, patient management, and operational challenges.

Dentistry is widely recognized as one of the most stressful professions due to factors such as patient anxiety, the demanding precision required, and the physical rigors of the work. The profession’s high standards for accuracy, coupled with the consequences of mistakes, alongside the long hours and physical strain, collectively intensify the stress experienced by dentists.

Why is emotional intelligence important in dentistry?

Emotional intelligence is important in dentistry because it builds patient rapport, enhances team collaboration and improves decision-making. Understanding and addressing patient needs and concerns helps create a positive patient experience. Promoting better communication and cooperation among staff leads to a more harmonious work environment. Additionally, emotional intelligence enables more empathetic and effective decision-making.

How do you make dentistry less stressful?

To make dentistry less stressful, practice self-care, seek support, delegate tasks and stay organized. To alleviate the stress of owning and managing a dental practice, especially without formal business training, many dentists find transitioning to a DSO to be a beneficial option. This transition allows dentists to refocus on clinical care by offloading managerial responsibilities such as marketing, payroll, human resources and recruiting to dedicated professionals within the DSO.

This shift is significant as it enables dentists to return to their passion for clinical work, spending more time chairside with patients.

Bottom Line

The dental industry is currently undergoing significant change, with approximately 35% of practices already consolidated. This ongoing consolidation adds urgency as practitioners must act soon to capitalize on the current opportunity before it’s too late. Delaying your decision could result in missed opportunities, reduced practice value and increased competition.

Begin planning your transition early, seek professional guidance, maintain open communication, and take care of your mental and emotional well-being. Acting promptly and decisively will not only maximize your financial returns but also provide peace of mind as you navigate this significant milestone in your career.

To ensure a smooth and successful transition that addresses both financial and emotional factors, contact the experts at Professional Transition Strategies.

References

  1. Nature, “Dentistry and the stress of practice,” https://www.nature.com/articles/sj.bdj.2019.18
  2. DrBicuspid.com, “4 key financial considerations when selling to a DSO,” https://www.drbicuspid.com/dental-business/practice-sales/article/15678019/4-key-financial-considerations-when-selling-to-a-dso 
  3. DrBicuspid.com, “Halfway Through the Dental Consolidation Wave: What Entrepreneurs Need to Know,” https://www.drbicuspid.com/dental-business/dso/article/15667122/halfway-through-the-dental-consolidation-wave-heres-what-entrepreneurs-need-to-know
  4. ADA, “Survey: Younger Dentists Report Higher Level of Stress, Emotional Health Concerns,” https://adanews.ada.org/new-dentist/2022/february/survey-younger-dentist-report-higher-level-of-stress-emotional-health-concerns/

Is Now the Time to Sell Your Dental Practice? Insights from Kim McCleskey on The DrBicuspid.com Podcast

Professional Transition Strategies Consultant Kim McCleskey recently joined The DrBicuspid.com Podcast to discuss the current economic climate and its implications for dentists interested in selling their practices now or in the future. With 30 years of experience in the industry, McCleskey provided valuable insights into the evolving landscape of dental practice ownership. Here’s a summary of the podcast conversation.

 

Understanding the Current Economic Climate

McCleskey highlighted the current state of the dental industry, noting that it is approximately 35% consolidated, which is about halfway through the consolidation wave taking place. Consolidation is projected to reach the full 60-70% within the next 5-7 years, signifying a paradigm shift in the industry’s investment dynamics. With a growing number of practices falling under private-equity backed DSOs, the influx of investor capital will eventually slow. McCleskey emphasized the significance of this shift, as it will fundamentally alter the ownership landscape of dental practices.

Urgency in Decision-Making

With the impending wave of dental consolidation, there is a sense of urgency for dentists to consider their options. McCleskey discussed the pressure on dentists to sell now versus potentially waiting. Your options in the next three to four years following the peak of consolidation are going to decrease and change, she noted. She also stressed the importance of dentists understanding their options and making informed decisions to navigate this evolving landscape effectively.

Treating Dental Practices as Businesses

McCleskey underscored the importance of treating dental practices as businesses and understanding their profitability and value. The first step down this path is to get dialed into conversations about profitability. Working with experts like PTS to create a prospectus can help you understand your business and options, whether you’re selling to an individual or a DSO. This business-oriented approach ensures dentists make informed decisions that enhance the financial health and marketability of their practice.

Preparing Your Practice for Sale

The dental industry consolidation wave is nearing its peak, with only one to two rounds of recapitalization events likely remaining. Translated for your practice: This is a limited-time opportunity to maximize your wealth through a sale. For instance, for a practice valued at $2 million with $500,000 EBITDA (earnings before interest, taxes, depreciation and amortization), it can be a difference between selling for $2.75 million vs. $3.25 million for the same deal with two recapitalization events. Don’t miss out on the chance to capitalize on a strong seller’s market.

In preparation to sell, it’s imperative to build the profitability of your practice and its infrastructure now. McClesky advises that if you want to use your practice as an investment vehicle, now is the time to make sure your practice has the kind of value that will help with your personal and professional goals. She advises that it’s never too early to have an understanding of where your business is and to have a valuation done to understand what you can do differently to move the needle in your favor for when it comes time to sell.

Exploring Alternative Options

Selling to a DSO is a great option for many dentists, especially for those with practices that aren’t currently profitable and are considering retirement. Instead of closing up shop and walking away with nothing, DSOs offer an alternative that can help improve profitability and secure a better outcome for your practice.

McCleskey emphasized the importance of understanding the range of deal options DSOs provide. DSOs provide various deal structures tailored to meet different needs and goals. These include outright sales, equity rollovers, joint ventures, 100% buyouts and hybrid options. Each type of deal offers unique benefits, such as maintaining some level of ownership, receiving ongoing income or benefiting from the DSO’s resources and support to enhance practice profitability.

DSOs can help transform an unprofitable practice into a more valuable asset, offering a practical and profitable exit strategy for dentists close or ready to retire. By leveraging these options, dentists can find a deal structure that aligns with their personal and professional objectives.

What’s Next?

McCleskey’s insights shed light on the current economic climate of the dental industry and its implications for dentists. With the industry poised for significant consolidation in the coming years, dentists must understand their options and make strategic decisions now to secure their future success. 

Listen to the recent episode of The DrBicuspid.com Podcast featuring McCleskey to gain insights on the pressing market dynamics and understand if now is the right time to consider selling.

Contact the experts at Professional Transition Strategies for guidance on practice valuations, profitability consulting, and exploring the best transition options for your unique goals.

Navigating Dental Practice Transitions: Insights from Kim McCleskey on The DrBicuspid.com Podcast

Professional Transition Strategies Consultant Kim McCleskey recently joined The DrBicuspid.com Podcast to discuss the current economic climate and its implications for dentists interested in selling their practices now or in the future. With 30 years of experience in the industry, McCleskey provided valuable insights into the evolving landscape of dental practice ownership. Here’s a summary of the podcast conversation.

 

Understanding the Current Economic Climate

McCleskey highlighted the current state of the dental industry, noting that it is approximately 35% consolidated, which is about halfway through the consolidation wave taking place. Consolidation is projected to reach the full 60-70% within the next 5-7 years, signifying a paradigm shift in the industry’s investment dynamics. With a growing number of practices falling under private-equity backed DSOs, the influx of investor capital will eventually slow. McCleskey emphasized the significance of this shift, as it will fundamentally alter the ownership landscape of dental practices.

Urgency in Decision-Making

With the impending wave of dental consolidation, there is a sense of urgency for dentists to consider their options. McCleskey discussed the pressure on dentists to sell now versus potentially waiting. Your options in the next three to four years following the peak of consolidation are going to decrease and change, she noted. She also stressed the importance of dentists understanding their options and making informed decisions to navigate this evolving landscape effectively.

Treating Dental Practices as Businesses

McCleskey underscored the importance of treating dental practices as businesses and understanding their profitability and value. The first step down this path is to get dialed into conversations about profitability. Working with experts like PTS to create a prospectus can help you understand your business and options, whether you’re selling to an individual or a DSO. This business-oriented approach ensures dentists make informed decisions that enhance the financial health and marketability of their practice.

Preparing Your Practice for Sale

The dental industry consolidation wave is nearing its peak, with only one to two rounds of recapitalization events likely remaining. Translated for your practice: This is a limited-time opportunity to maximize your wealth through a sale. For instance, for a practice valued at $2 million with $500,000 EBITDA (earnings before interest, taxes, depreciation and amortization), it can be a difference between selling for $2.75 million vs. $3.25 million for the same deal with two recapitalization events. Don’t miss out on the chance to capitalize on a strong seller’s market.

In preparation to sell, it’s imperative to build the profitability of your practice and its infrastructure now. McClesky advises that if you want to use your practice as an investment vehicle, now is the time to make sure your practice has the kind of value that will help with your personal and professional goals. She advises that it’s never too early to have an understanding of where your business is and to have a valuation done to understand what you can do differently to move the needle in your favor for when it comes time to sell.

Exploring Alternative Options

Selling to a DSO is a great option for many dentists, especially for those with practices that aren’t currently profitable and are considering retirement. Instead of closing up shop and walking away with nothing, DSOs offer an alternative that can help improve profitability and secure a better outcome for your practice.

McCleskey emphasized the importance of understanding the range of deal options DSOs provide. DSOs provide various deal structures tailored to meet different needs and goals. These include outright sales, equity rollovers, joint ventures, 100% buyouts and hybrid options. Each type of deal offers unique benefits, such as maintaining some level of ownership, receiving ongoing income or benefiting from the DSO’s resources and support to enhance practice profitability.

DSOs can help transform an unprofitable practice into a more valuable asset, offering a practical and profitable exit strategy for dentists close or ready to retire. By leveraging these options, dentists can find a deal structure that aligns with their personal and professional objectives.

What’s Next?

McCleskey’s insights shed light on the current economic climate of the dental industry and its implications for dentists. With the industry poised for significant consolidation in the coming years, dentists must understand their options and make strategic decisions now to secure their future success. 

Listen to the recent episode of The DrBicuspid.com Podcast featuring McCleskey to gain insights on the pressing market dynamics and understand if now is the right time to consider selling.

Contact the experts at Professional Transition Strategies for guidance on practice valuations, profitability consulting, and exploring the best transition options for your unique goals.