Should I Sell My Dental Practice by Myself?

man in front of computer

You survived dental school, opened the practice of your dreams, but now are ready to start the transition process. You’ve worked so hard for so many years, it may only seem natural to want to take the sale of your business in your own hands. Whether you’re gearing up for retirement or just want to release managerial responsibilities, you won’t want to go it alone. After all, your time is money, and you’ll want to focus on keeping your staff and patient attrition rates up during this time. Here’s one example of how hiring Professional Transition Strategies (PTS) can make a difference in the long run.

The backstory

A single practice in a suburb of Portland, Oregon, was doing $2.5 million in collections. The doctor-owner had been approached in the past by dental service organizations (DSOs) about undergoing an affiliation. One DSO offered the owner $4 million for a joint venture model only.

The process

The dentist came to PTS to see how we could help lever up the deal and show him more options. Together we explored potential partnerships, associateships and more transition options to ensure the doctor was making the best decision for his transition goals. By hiring an experienced dental practice broker, he was also afforded more marketing opportunities for his practice in front of more qualified buyers than he could have on his own.

The outcome

We worked with the dentist to secure a joint venture/holding company deal for an enterprise value of close to $8.2 million from the exact same group that offered $4 million initially. By working with us, he received six other offers that not only leveraged up the various offers, but it also gave him the ease of mind to understand market comparables and be more excited and comfortable about his decision.

What’s next?

Contact the experts at PTS to learn more reasons why you should hire a dental practice broker for the transition of your business.

How to Get the Most Out of Your Dental Practice Transition

man in front of computer

You survived dental school, opened the practice of your dreams, but now are ready to start the transition process. You’ve worked so hard for so many years, it may only seem natural to want to take the sale of your business in your own hands. Whether you’re gearing up for retirement or just want to release managerial responsibilities, you won’t want to go it alone. After all, your time is money, and you’ll want to focus on keeping your staff and patient attrition rates up during this time. Here’s one example of how hiring Professional Transition Strategies (PTS) can make a difference in the long run.

The backstory

A single practice in a suburb of Portland, Oregon, was doing $2.5 million in collections. The doctor-owner had been approached in the past by dental service organizations (DSOs) about undergoing an affiliation. One DSO offered the owner $4 million for a joint venture model only.

The process

The dentist came to PTS to see how we could help lever up the deal and show him more options. Together we explored potential partnerships, associateships and more transition options to ensure the doctor was making the best decision for his transition goals. By hiring an experienced dental practice broker, he was also afforded more marketing opportunities for his practice in front of more qualified buyers than he could have on his own.

The outcome

We worked with the dentist to secure a joint venture/holding company deal for an enterprise value of close to $8.2 million from the exact same group that offered $4 million initially. By working with us, he received six other offers that not only leveraged up the various offers, but it also gave him the ease of mind to understand market comparables and be more excited and comfortable about his decision.

What’s next?

Contact the experts at PTS to learn more reasons why you should hire a dental practice broker for the transition of your business.

How to Remain Profitable in Your Dental Practice

man in front of computer

You survived dental school, opened the practice of your dreams, but now are ready to start the transition process. You’ve worked so hard for so many years, it may only seem natural to want to take the sale of your business in your own hands. Whether you’re gearing up for retirement or just want to release managerial responsibilities, you won’t want to go it alone. After all, your time is money, and you’ll want to focus on keeping your staff and patient attrition rates up during this time. Here’s one example of how hiring Professional Transition Strategies (PTS) can make a difference in the long run.

The backstory

A single practice in a suburb of Portland, Oregon, was doing $2.5 million in collections. The doctor-owner had been approached in the past by dental service organizations (DSOs) about undergoing an affiliation. One DSO offered the owner $4 million for a joint venture model only.

The process

The dentist came to PTS to see how we could help lever up the deal and show him more options. Together we explored potential partnerships, associateships and more transition options to ensure the doctor was making the best decision for his transition goals. By hiring an experienced dental practice broker, he was also afforded more marketing opportunities for his practice in front of more qualified buyers than he could have on his own.

The outcome

We worked with the dentist to secure a joint venture/holding company deal for an enterprise value of close to $8.2 million from the exact same group that offered $4 million initially. By working with us, he received six other offers that not only leveraged up the various offers, but it also gave him the ease of mind to understand market comparables and be more excited and comfortable about his decision.

What’s next?

Contact the experts at PTS to learn more reasons why you should hire a dental practice broker for the transition of your business.

How to Prepare for the Breakup of a Dental Practice Partnership

man in front of computer

You survived dental school, opened the practice of your dreams, but now are ready to start the transition process. You’ve worked so hard for so many years, it may only seem natural to want to take the sale of your business in your own hands. Whether you’re gearing up for retirement or just want to release managerial responsibilities, you won’t want to go it alone. After all, your time is money, and you’ll want to focus on keeping your staff and patient attrition rates up during this time. Here’s one example of how hiring Professional Transition Strategies (PTS) can make a difference in the long run.

The backstory

A single practice in a suburb of Portland, Oregon, was doing $2.5 million in collections. The doctor-owner had been approached in the past by dental service organizations (DSOs) about undergoing an affiliation. One DSO offered the owner $4 million for a joint venture model only.

The process

The dentist came to PTS to see how we could help lever up the deal and show him more options. Together we explored potential partnerships, associateships and more transition options to ensure the doctor was making the best decision for his transition goals. By hiring an experienced dental practice broker, he was also afforded more marketing opportunities for his practice in front of more qualified buyers than he could have on his own.

The outcome

We worked with the dentist to secure a joint venture/holding company deal for an enterprise value of close to $8.2 million from the exact same group that offered $4 million initially. By working with us, he received six other offers that not only leveraged up the various offers, but it also gave him the ease of mind to understand market comparables and be more excited and comfortable about his decision.

What’s next?

Contact the experts at PTS to learn more reasons why you should hire a dental practice broker for the transition of your business.

3 Reasons to Start Your Dental Practice Transition Early

dentist working on patient

Dental practice transitions don’t happen overnight. In fact, a well-laid plan can take as long as five years if done properly. Even if you aren’t ready to hang up the proverbial hat, it doesn’t hurt to take a few steps in the right direction. Here are some suggestions to make sure your dental practice lands in the right hands. 

More transition options

Once upon a time, the only options for transitioning out of a dental practice were to sell to another dentist or close its doors. But today, the options are seemingly endless. You can choose to sell your practice in whole or a portion to a partner for a longer-term transition plan, sell your practice but continue to work as an associate, merge with another successful dental practice, affiliate with a dental service organization, among others.

More offers

Your options aren’t limited to the type of transition but also the offers you receive. If you wait until the last minute to transition out of your practice, you may be stuck in a situation where you have to take the first offer you receive. By starting early, you can be more discerning on offers that come in and truly only move forward with the one with which you feel most comfortable.

Increase value

The necessary step of valuating your dental practice not only helps determine which type of transition would be best, but also tells you what upgrades need to be made before selling your business. If the value of your practice isn’t enough to clear your debts, you can decide if you need a few more years to build up the value of your practice before taking that next step.

What’s next?

Learn more about your transition options with the e-book “Strategies for Transition,” then contact the experts at Professional Transition Strategies to begin the process.

Webinar: “10 Ways to Prep Your Practice for Transition”

Every so often, Professional Transition Strategies hosts a webinar for sellers to learn more about the transition process. In April, a webinar geared toward sellers detailed the steps and options when considering buying a dental practice. Here are the key takeaways.

Think about your strategy

A seller should begin with the end in mind. Think about your long-term needs, how much time is needed to implement the plan, and what your ideal strategy looks like, including a buy-out, partnership, or associateship, as well as whether or not you would consider selling to a dental service organization, private equity for extensive growth, or merger with another local practice.

Start or keep growing your practice

The biggest failure of owners is letting the practice start to decline when thinking of selling. In turn, the value of the practice drops significantly and can cause a bank to decide not to finance the acquisition. What’s more, it lowers the total options that a broker can deploy. It is worthwhile to market your practice right up until the point of transition to ensure the value won’t decline over the course of time.

Focus on core details

Other than financials, it’s important to take a wholesale look at your practice to assess what has made your practice successful. Do you provide certain treatments that set you apart? What niches do you work in? Do you serve a cetain community very well? Are you engrained in the business sector? Is your management style unique in that it allows you to keep employees for a long time?

Run an equipment evaluation

Most practices are valued using a weighted system that takes into account how old the equipment is. If time allows, it may make sense to purchase upgraded equipment, use that equipment, depreciate it over five years, and achieve a much higher sales price, even though you won’t get a 100 percent return on your investment. Consider going digital if you haven’t already, then upgrade cone beam computed tomography, digital impressions, computer-aided design and manufacturing system, and new chairs and units.

Consider the real estate

If you don’t own the building, notify your landlord that a transition will happen. If possible, sign a new lease or an addendum that allows the lease to be assignable to a dentist who qualifies for bank financing. If you do own the building, which can be sold as an asset to help pay for retirement, start paying yourself market rent. Alternatively, consider relocating your practice to a more desirable location, which can raise your practice valuation by as much as 5 percent.

Clean up your books

In addition to charging yourself market rent if you own the building, if you employ your spouse, consider replacing him or her or at least start paying him or her what market value for the position would be. What’s more, don’t stop writing off items through your practice; keep track of personal travel, depreciation, etcetera.

Know your “why”

One of the biggest worries for a buyer is that they will have to compete with you over time so it’s important to be able to articulate a real and communicable reason to a buyer at least a broker so that they can tell the story for you.

Build an advisory team

Assembling a team of advisors to help guide you through every step of the process will ensure the success of your business is established from the beginning. As with any team, you’re only as strong as your weakest link, so it’s important to choose advisors who have experience in the dental industry, such as a consultant, technology advisor, real estate broker, equipment and supply representatives, CPA, and attorney.

Know your practice’s worth

Creating a practice prospectus that breaks down the profitability of the practice helps to understand the value of the practice and can help determine the best strategy to use, as well as give you a road map for what you need to do before the sale occurs, which could alter your expectations in terms of horizons. Factors such as revenue, net income, seller’s discretionary earnings, and value of assets will all be taken into consideration.

Execute strategy

After determining which strategy to implement and how long it will take to get there, you can start getting the work done that needs to happen before the transition takes place. Now is the time to start working with an advisor to take the next steps toward implementing your strategy over the set period of time.

What’s next?

Learn more about the dental transition process in an upcoming webinar, then contact the experts at Professional Transition Strategies to learn about the next steps.

5 Considerations when Sharing a Dental Office Space

dentists working on patient

Transitions aside, an often-overlooked option is to share an office space. Renting out under- or unutilized office space can come with its financial advantages if done correctly. In locations that are more densely populated and with greater competitive saturation, just by joining forces, consolidating operations, minimizing facility costs, bundling overall expenses, and maximizing production, an additional 14 percent can be made on the bottom line. However, like with any leasing agreement, there are factors to consider to ensure you aren’t costing your dental practice money or goodwill. Here are some considerations to take into account before signing any agreements.

Share the load

A space may be underutilized if there are multiple unused operatories or the current doctor only works a few days a week, leaving the office closed for many days. Renting out space to another doctor will also provide emergency patient coverage while one doctor is away.

Save on costs

Taking on a tenant to help reduce overhead will only help increase income, not to mention the ability to upgrade equipment through a shared cost with the leesee, while also offering additional networking and business opportunities for both parties.

Provide a test-run

A lessee is afforded the opportunity to save on business expenses in terms of equipment and office space until they build up their own practice. Along the same lines, the leasing doctor is able to test out success rates in specific geographical areas before opening their own practice doors.

Draw the line

Just because you are sharing space, does not mean that you are also sharing patients. It is important to know the difference between a spaced share versus an associateship or partnership as it can be harder to sell your practice if you already have a space share in place.

Crunch the numbers

Have an attorney with health care law experience draw up a legal contract before the commitment is made, including duration of and terms of lease, termination and renewal terms, conflict resolution, insurances accepted, outline of equipment sharing and maintenance costs, any shared staff or office number, and schedule for the shared space.

What’s next?

Contact the experts at Professional Transition Strategies to learn more about different space-sharing opportunities to find out if this option makes sense for your dental practice.

The Kids Are in College; Now What?

Becoming an empty-nester is a natural time to start thinking about your next steps, as well. While there is still tuition to be paid, a well-laid dental practice transition takes years of planning, whether that means engaging in a partnership or preparing for retirement. Here are some steps to start taking now.

Contact a broker

It takes approximately 150 hours to transition a dental practice, which is one of the many reasons to hire a professional broker. In order to get the most of your sale, both financially and personally, a professional broker will help you focus on the bottom line and create an accurate appraisal of your dental practice while vetting potential buyers and removing any emotion from the transaction.

Crunch the numbers

Determine how much you need for retirement, how much debt you have left, and how much you need to get out of the practice when you ultimately decide to sell it. The most important point is to plan for your transition while production is still high to ensure you gain a higher valuation. Because the most recent years’ collections are weighed heavier than past years, you’ll want to go out on a high note if a sale will take place in the next two or three years.

Know your options

With all the transition options available, you’ll want to have an understanding of your ideal transition and discuss with a broker what is currently possible and what you need to do to get to your ideal transition plan. Planning early will allow you the option to affiliate with a dental service organization, bring on a partner who will eventually buy the remaining share of the practice when you are ready to retire, or simply understand where the practice needs to be financially and strategize how to increase the value of the practice if needed.

What’s next?

Read up on sellers’ options in the e-book “Strategies for Transition,” then contact the experts at Professional Transition Strategies to get the proverbial ball rolling.

How to Manage Multiple Locations

You’ve been bitten by the entrepreneurship bug and have started to wonder if purchasing additional dental practices is your next move. But first, you’ll need to understand what’s involved in owning multiple locations. Here’s how to get your gears moving.

Ask the right questions

Start thinking: Do you have an admin who will oversee and manage the business aspects of each location? Will you work at both locations? If so, how will your time be split up? Are you going to bring on an associate or partner (understanding that associateships are only successful 20 percent of the time, while partnerships see a 60-percent success rate)? What are the costs associated with improvements to keep both locations upgraded?

Crunch the numbers

The first consideration that should be made is the amount of operating capital you would need and to make sure you have a good banking partner. From there, you’ll need to clarify options about keeping the two practices completely separate versus centralizing the front office functions, including billing, accounting, and scheduling. Determine how you will increase effective cash flow, by focusing on new patients, efficient equipment, better technology and software, and minimize outflow. Additionally, don’t forget the additional cost of advertising and having an online presence.

Assess the location

The success of a second location hinges on just that: its location. Assess the area growth and population, as well as the competition around you. By placing an additional location in a separate socioeconomic area other than that of your primary practice, you may see that while one practice is slow, the other is booming.

Staff accordingly

Simply put, you can’t run two or more offices by yourself, even if you plan to practice at multiple locations. The staff can travel with you, but depending on your growth plan, it may make more sense to have certain staff members exclusively at the different locations, such as admin personnel, other dentists, hygienists, and dental assistants.

Count your inventory

Creating an inventory system that keeps all office supplies in one location and extra medical supplies in another will only make everyone’s lives easier. What’s more, investing in technology at the same time will ensure you can manage multiple locations from a central location or database. Consider automating your billing and digital staff scheduling systems at the same time so everyone is on the same page.

Consider all options

Starting from scratch isn’t the only way to grow your practice. Consider strategies that involve either an acquisition or de novo startup, both of which have their perks, but understanding the consequences of either will ensure more pros than cons. Alternatively, consider merging your practice with an existing practice to get an influx of patients without the overhead of another office.

What’s next?

Ready to take the next steps? Contact the experts at Professional Transition Strategies to figure out which path is right for you.

Dental Practice Transitions, by the Numbers

balloons with smiley faces

You’ve kept up with the Insights blog; you’ve taken the dental practice transition quiz. Now it’s time to learn even more about the process by way of a cheat sheet broken down by the numbers.

1,500

Number of active patients considered full capacity for a single dentist. Any more, and it may be time to consider taking on an associate or partner.

680 

Credit score that is favorable to getting a better business loan.

80

Percent of goodwill that contributes toward the overall value of your practice.

150 

Hours it takes to sell a dental practice, which is one of many reasons to hire a professional broker.

15

Minimum number of days patients and staff should be notified about the sale of a dental practice.

30

Percent of dental practices that will belong to a dental service organization by 2021, as predicted by the American Dental Association.

5

Years out you should start thinking about a retirement plan.

20

Pages that make up a prospectus, broken down into different categories of interest to the buyer identifying the areas that potentially need attention.

99

Percentage success rate of a buy-out, versus 60 percent for a partnership and 20 percent for an associateship.

What’s next?

Read the e-book “Strategies for Transition” to learn more about the different dental practice transition options, then contact the experts at Professional Transition Strategies to learn more.