How to Start a Dental Practice Roll-Up

dentist working on patient

When it comes to dental practice transitions, the end game should always be the most lucrative option your timeframe allows. In a roll-up, multiple dental practices are combined under one entity in a group to maximize the economies of scale. A well-laid roll-up plan will then receive a higher valuation when the practice is purchased. Here’s how to start a dental practice roll-up plan.

Determine size

Dental practices can be combined by a central group taking over all the business processes while the practices have a management service contract back in the case of a dental service organization. But smaller roll-ups can also occur by taking underperforming practices, purchasing them at a lower price, and putting in best practices. Those practices may then remain their current location or move to a central location, depending on the owner’s strategy.

Take your time

With a roll-up, it typically takes more than five years for the transition period to occur, including time to centralize services, move practices to a central location, and/or optimize the operations of the practice, as well as find enough practices that fit the roll-up. With enough time and capital, the owner can optimize nearly every expense line item that a dental practice spends money on.

Grow accordingly

As the practice grows, it’s important to keep tabs on growth from all aspects. Can the practice operate in the original space if large enough, will additional offices need to remain in place, or will all practices move to a larger space? What’s more, will the combined practice require additional staff? If so, all can either be fulfilled by normal hiring practices or from the acquired practices, such as associates, partners, and/or hygienists.

Consider investments

The most in vogue way of starting a roll-up is to set up a DSO that will allow for outside investments beyond what a bank can provide. However, a roll-up can be accomplished without a DSO and just be a group practice. This will just limit growth potential, so it’s worth considering both options before starting the dental practice transition process.

What’s next?

Read more about the roll-up dental practice transition process in the e-book “Strategies for Transition,” then contact the experts at Professional Transition Strategies to put your steps in place.

7 Types of Dental Practice Transitions

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

Buy-out

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

Buy-in

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

Associate to buy-in

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

Associateship

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

Merger

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

Roll-up

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

Affiliation

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

What’s next?

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

Should I Sell My Dental Practice?

dental practice chairs

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

What You Need to Know About Dental Practice Transitions

dentist chair

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