What Do Dental Practice Brokers Do? A Definitive Guide

Congratulations! You’ve decided to transition the ownership of your dental practice. Maybe you’re retiring, considering expanding your dental empire with a financial or clinical partner, or just looking to unload the managerial responsibilities of owning a business. Whatever your reason, there are a lot of steps that need to fall into place before then, and sometimes the best-laid plan can take up to five years to get the most out of your transaction.

But how can you take on all this responsibility without letting the value of your dental practice drop or attrition rates increase? Enter the dental practice broker. Here we break down all you need to know about dental practice brokers before selling your business.

We’ll also help answer these questions along the way:

What is the role of a dental practice broker?
How do you price a dental practice to sell?
How does a dental service organization (DSO) work?
How do I make my dental practice profitable?
What is the typical profit margin for a dentist’s office?
What is my practice’s EBITDA, and why does it matter?

What is a dental practice broker?

Simply put, a dental practice broker is the intermediary that will handle every aspect of the transition of your dental practice, whether you’re selling or buying. Selling your business is likely one of the largest financial transactions of your life. So just like you would use a real estate agent to orchestrate the sale of your home, a dental practice broker will walk you through the process of getting your business ready to be sold and transitioning the power of ownership.

Whether you started your dental practice from scratch or built up a previously established business, when the time comes to move on, strong emotional ties to your practice can make it even more difficult to make business decisions. Hiring a broker can help make the transaction more efficient and smoother.

What do dental practice brokers do?

Each dental practice transition is different, which is why you’ll want a broker who treats your transaction like the unique situation it is. It’s important that your dental practice broker and you build a partnership with honesty and transparency as the foundation. After all, the broker is here to support you as you make the right decision by ensuring you know what is realistic and achievable.

Where our team is different from your run-of-the-mill broker, is through our all-encompassing approach. We keep you informed throughout the entire process rather than only calling you to tell you about a showing. We will be in touch on a regular basis to make you aware of the number of inquiries for your practice, the number of non-disclosures signed, the number of prospectuses sent and reviewed, the details of the conversations held and more.

As a qualified broker, we present every possible option to you so that you can look at and compare all sides. This not only means selling to an individual, bringing on a partner or affiliating with a DSO, but also considering all options within each vertical to maximize the value of the transaction.

Benefit 1: Dental practice valuation

Arguably, one of the most important steps during the beginning of a dental practice transition is to conduct a practice appraisal. The extensive practice appraisal breaks down the current value of the practice and where the practice needs to go before the sale. The appraisal uses the most effective method of calculating your practice’s worth by looking at both attributes and challenges, as well as how they have impacted the success of the practice. Best of all, we will perform these services at no charge with no commitment obligation from you.

Benefit 2: Negotiation and contracts

Contracts, negotiations and final sale take up 80% of the transaction. That’s up to 150 hours of your time. Thanks to more than 145 years of combined experience, we can easily predict which way a deal is headed and negotiate accordingly — whether it’s an individual sale, an affiliation with a DSO or going direct to private equity.

Benefit 3: Transitions

An experienced broker will guide the transition of ownership, from finding true fair market value to negotiating the sale to providing the asset purchase or stock agreement and assisting with the real estate needs and everything in between. Our complete counseling starts with evaluating your practice to implementing the necessary changes through strategic planning, implementation and consulting. It’s essential your dental practice broker is by your side through the entire real estate transaction, managing the process with landlords, banks, CPAs, attorneys and other personal advisors.

The job of a dental practice broker

Your job during this transition is to focus on maintaining the value of your practice and not letting it drop in order to get the most out of your sale. The job of a dental practice broker is to be proactive when it comes to marketing your practice and getting it in front of qualified buyers. We don’t post your listing on a handful of generic sites and wait for the phone to ring. We actively go out to find interested, qualified parties and present you with as many offers to consider as possible. In the end, hiring a professional dental practice broker to handle the sale of your business will help you get the most out of your transaction in terms of both time and money by putting you in a more competitive environment to increase the value of your practice.

Primary responsibilities of a practice broker

Qualified dental practice brokers focus on the bottom line and vet potential buyers while alleviating stress for you. We help you determine what your goal of the sale of your dental practice is. Are you looking for the most amount of money you can get for your practice? Are you looking for the best person for your practice, patients and staff? Are you looking for a DSO to affiliate with that has the same practice philosophy as you? Or do you simply want to just hang up your coat and move into the next chapter of your life?

At PTS, we understand the knowledge of a potential sale can impact your business and increase your attrition rate significantly. What’s more, your staff may take the opportunity to look for employment elsewhere. The right broker will instill confidence in your transition so as to not impact the value of your practice while maintaining confidentiality through ironclad non-disclosure agreements (NDAs).

What do dental practice brokers help with?

Brokers are much more than just the intermediary between the buyer and seller of a dental practice transition. There are so many other questions and needs that arise throughout the process that we can help with. That’s only scratching the surface of what we have to offer.

Why you should hire a dental practice broker

By having PTS act as your fiduciary, you can feel confident your best interests are being represented rather than just the interests of the other party. We aren’t compensated by any groups, so we have the ability (and obligation!) to bring your opportunity to several parties that share your values.

Having the money to purchase your practice does not mean it’s the right person or group for the job. Proficient brokers go through the due diligence process to find the best match for your practice, whether that’s an individual or a group, to help you, your staff and patients feel comfortable with the transition. By creating more demand, you have better negotiating power so that you can expect to receive higher offers and better terms by the end of the transaction.

What happens if you go it alone

Since no one knows your business better than you do, it may seem intuitive to want to take on the sale of your dental practice on your own. After all, adding another expense to a financially uncertain time may seem like the last thing you want to do; however, adding a broker to your transition team brings a breadth of experience in negotiating contracts and finding qualified buyers that you wouldn’t have otherwise come across. When representing yourself, it can be hard to get to the bottom of each interested party while also negotiating the terms and running a successful practice at the same time.

Don’t go it alone and leave potentially millions of dollars to chance.