October 16, 2023
Top Questions from Dental Entrepreneurs Looking to Transition Their Practices
You’ve worked hard to establish a dental practice that reflects your personal and professional values. A transition, such as retirement might not be on your radar yet, but you know it takes a while to prepare. There are countless reasons why you haven’t thought about selling your dental practice right now, but you’ve received interest and want to know what the next steps are.
Professional Transition Strategies (PTS) Vice President of Strategic Partnerships Carrie Naroian fields these types of questions every day when dental entrepreneurs like yourself reach out to learn more about the transition process. In this blog, she shares the common concerns she receives from practice owners and provides answers to their top questions.
I have an offer from a DSO. Why shouldn’t I take it?
It’s great you have interest in your dental practice; it’s a testament to the hard work you’ve put in over the years to build a flourishing practice. While you may have received an enticing offer from a dental service organization (DSO), I always recommend working with a dental practice broker to help level up the offer. There are more than 375 DSOs across the country. By working with a broker who has relationships with a wide range of groups, they’re able to put your business in a more competitive environment where you can receive multiple offers on your practice and compare them to determine which is best for you and your financial future.
You may even decide to sell to the group who extended you the offer in the first place. But, we often find that you’re able to get more out of the partnership in terms of deal structure and cash in hand than the original offer because of the competitive situation the broker has created for the practice.
What kind of multiples will I get for my dental practice?
Simply put, multiples do not matter. Rather, it’s important to understand the enterprise value of your dental business. The best way to learn what your business is worth, what type of options are available and what type of enterprise value you can expect is to go through the valuation process before going to market. At PTS, it’s our job to bring all the parties together to figure out the true market value of your dental practice and get you a fair price for your life’s work.
I read somewhere how I can determine my dental practice’s value on my own. Why should I go through the steps to have a valuation done by a dental practice broker?
The value of your dental practice is not one-for-one based on what you’re collecting, not even 70% to 80% of collections, like a quick Google search would tell you. There is a lot that goes into your practice’s value aside from your annual collections, such as your SDE or EBITDA, the location of your practice, the types of procedures you do in house, your internal team and much more. This is why it is crucial to go through the process of having an accurate practice valuation created so you can truly understand your practice’s fair market value.
It’s important that you’re armed with the right and accurate information when you decide to explore your options. That’s why we offer free practice valuations without any obligation to work with us, unlike other brokers. Our dedicated team assigned to your practice will work with you to gather all the necessary information and develop an accurate valuation.
I don’t want to sell now. Why would I do a valuation?
Even if a transition is not part of your five-year plan, it’s always important to start with the end in mind and come from a place of facts to make the best business decisions going forward. As part of the valuation process, we review the data to show you where you could make adjustments that make a big difference in your bottom line, such as making changes to impact your overhead costs or payroll expenses. Working with a professional dental practice broker will save you time when your time is better spent keeping up production. You don’t want to wait until you are ready to sell and forced to make the quickest exit plan. Doing a valuation now will help shine a light on where you could make improvements now, so you are in the best position possible for the future.