March 30, 2020

Why Now Is a Good Time to Join a DSO

During these uncertain times, you may be hesitant to make a drastic change. But now more than ever, dental service organizations (DSOs) are looking for private practices to purchase in spite of economic standings. Banks are still lending, and DSOs are still buying. Here’s why you should consider selling your practice to a DSO in the foreseeable future. 

Buyer’s choice

New buyer groups have emerged in light of the recent changes. Fewer legacy DSOs will be buying practices at this point as they need to concentrate their efforts on managing the ones they have. Smaller DSOs, Small Business Investment Company-backed DSOs, new private investment-backed DSOs and family office-backed DSOs will emerge as frontrunners when it comes to buying. 

Act now

Deals now will receive 2019 values thanks to earn-outs in the next year, if not sooner, while those that wait will see a lesser value. Waiting puts at risk lesser values in 2021 since 2020 numbers will weigh heaviest during the valuation process. What’s more, tax rates are expected to double. It’s easy to forget that cash is kind in times of need. 

Benefits

Partnering with a DSO means support with operations, marketing, research, purchasing, recruiting and, above all, a guaranteed exit strategy, among other reasons — all of which are needed more now than ever. 

Targeted states

DSOs have identified the following states for possible purchases: Arizona, Colorado, Florida, Georgia, Indiana, Ohio, Rhode Island, Tennessee, and Virginia. Other states include Arkansas, Connecticut, Delaware, Illinois, Iowa, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, North Carolina, Pennsylvania, South Carolina, Utah and Wisconsin. 

What’s next?

Contact the experts at Professional Transition Strategies to get a prospectus done and figure out if selling to a DSO in these times is the right course of action.