How do you know when is the right time for selling or buying a dental practice? Many dentists ask us this question and, in the current economic climate, we are seeing it even more. Though it sounds counterintuitive, now is actually a good time for dental practice transitions. Older dentists are increasingly interested in selling their dental practices in order to retire. Younger dentists are also recognizing that the time is right to take their career into their own hands by buying their own dental practice.
For both buyers and sellers, there may be concern about whether the industry will survive the current economic uncertainty. However, according to founder and president of ddsmatch Thad Miller, “most of our clients have had an incredible June and beyond and it looks good going on . . . We’re seeing really good results.”
One reason that the dental industry has been able to weather the current crisis is that they are an essential business. As offices have reopened, patients are returning for their regular treatments. Sterilization and PPE have always been part of regular operating procedures, and dentists offices are known as safe and clean places to receive care. While patients may be hesitant to go into a restaurant at the moment, they will likely see their dentist as both safe and essential.
Buying a Dental Practice: The Time is Right
Of course, dentistry has been impacted by the current crisis. In a recent interview with Dr. Howard Farran, founder of Dentaltown, the number of practices for sale and job postings at dental offices have changed drastically since 2019. Dr. Farran explains between 1999 and 2019, “there [were] usually about 1,000 classified ads of a dentist selling their practice and about 5,000 ads of dentists looking for an associate” on the Dentaltown site. However, Dr. Farran continues, “now it’s 2,000 dentists selling their practice with only 1,000 jobs.”
What does this mean for dentists wanting to transition their practice, or those looking to buy? There are two major impacts. First, many offices were forced to shut down at least partially for several months, stopping cash flow and making it difficult to pay employees. When dental offices reopened, they were often forced to reduce the number of visits per day to accommodate social distancing and new sterilization requirements. All of these factors mean less work per dentist, so practices that had planned on adding a new associate in 2020 held back. In addition, some associates who couldn’t wait several months to go back to work sought other opportunities.
Second, and important for those buying a dental practice, dentists who were within a few years of retirement have decided to retire now rather than deal with the current crisis. New sterilization procedures, special equipment, and changing practice methods take time and money that may not be worthwhile so late in one’s career. Rather than deal with adjusting their practice to a post-COVID19 world, many dentists are moving up their retirement and putting their practices for sale.
Looking at these factors, Thad Miller notes that dentists looking to buy a practice right now are in a unique situation. “There’s going to be opportunities out there.” Miller states, “We all know that the baby boomers in our society are retiring in all different sectors. In accounting, in legal, in appraisers, whatever it may be. There’s a large group of our population that are retiring and there’s fewer buyers because there’s just the mass number of dentists that are transitioning over the next 10 years. I think there’s opportunity out there.” Even dentists who previously thought buying a dental practice was a few years off are realizing that now is the time to take charge of their career.
In addition to these two factors, dentists who are considering buying a practice should know there may be hidden opportunities available in the practices currently coming up for sale. At ddsmatch Southwest, part of our transition services includes Dr. Charlie Blair’s Clinical Treatment Analyzer. Using this tool we can determine what hidden revenue builders may exist in a practice. For example, as Miller explains, for example, “the dentist who’s selling, they stopped doing root canals 15, 20 years ago, and they stopped doing oral surgery.” The Clinical Treatment Analyzer will show opportunities like this, and other revenue builders, without increasing the sale price.
Selling a Dental Practice? Why Now is a Good Time
If you are looking to sell your practice, you may be wondering if now is really a good time to put it on the market. The answer is related to the above discussion on buying a dental practice. The pandemic caused professionals in many areas to reconsider their career paths. For dental associates working for an employer, this meant finally deciding to go into business for themselves. Owning a dental practice means doing things on your own terms rather than being subject to the decisions of your employer. Dentists who were waiting until the “right time” to buy are starting to realize they don’t want to wait to take control of their careers. As dental practice transition specialists, we can confirm there has been growing interest from buyers recently.
Before you think about placing your dental practice for sale, there are a few things you should do to make it more attractive for buyers and boost your practice’s value. First, focus on low-cost, high-impact cosmetic upgrades. Your office should make a good first impression on buyers so if your carpet or paint are looking worn it may be time to update them. If your practice is experiencing a lighter than usual patient load due to the transition back from closure it is a good time to jump on these types of projects.
Second, up to date equipment will attract more individuals buying a dental practice. If you are hoping for a certain selling price but haven’t switched to digital systems, it may be hard to reach that price. Newer dentists are trained primarily on digital systems and are less likely to be interested in upgrading out of date equipment after buying a dental practice.
Third, if you do not have an updated website, now is the time to make one. Many established practices don’t need websites for marketing purposes, but, when it comes time to sell your practice, a website is the first thing buyers will look at. Your website does not need to be flashy or fancy, but if it doesn’t exist with basic information potential buyers will move on quickly. If you’re setting up a website for the first time you should include pictures of your office, information about yourself and your staff, and details about your sterilization processes. ddsmatch Southwest can refer you to a professional website builder who will create a basic website at a reasonable price.
Why Dentists Choose ddsmatch Southwest for Selling and Buying a Dental Practice
Expectations and Transparency
If you are in the process of buying or selling a dental practice, ddsmatch Southwest has the transition experts you need to reach your goals. Our team of specialists has in-depth knowledge of the industry, making us more than just business brokers. We pride ourselves on staying up to date with the latest market conditions, so each client has a successful dental practice transition.
Beyond our knowledge of the industry, we take pride in our dedication to transparency and finding the right match between buyers and sellers. Selling a dental practice is much more than money and titles changing hands. The selling doctor has poured their life’s work into building a successful practice. They want to make sure that legacy is preserved, and the patients they have come to know are taken care of. Our transition specialists work hard to ensure those selling and buying a dental practice are satisfied with the deal that is made. We accomplish this in several ways.
First, we offer transparency about every aspect of the deal by issuing a comprehensive letter of intent. This letter helps clients know exactly what to expect as the transition progresses. “We have about a five page letter of intent,” explains Thad Miller, “which was unique to the industry nine years ago, where they usually just got a price and then they kind of fought about everything until closing.”
In the letter of intent “we address every single thing that’s going to go on in the transaction,” Miller continues. “From the price, to the asset allocation for taxes. What are we doing for real estate, the lease, the breakdown of what they’re buying and what they’re not buying, noncompete . . . all in writing, ahead of time. Even though a letter of intent is a nonbinding agreement, we want that expectation set for our buyer.”
Second, we offer transparency to those selling and buying a dental practice through our Trusted Transition Process. This process provides a clear and consistent path which remains the same from seller to seller. In addition, we add a reliable business valuation from the team of certified valuation analysts at Blue & Co.. The analysts at Blue & Co. are experts in their field, having received training specifically focused on business valuations. Each detailed, 70-page report provided by their analysts includes details about production, collections, overhead, taxes, and other financial aspects a buyer needs to know. The report gives buyers much needed information about why the practice is worth the asking price.
What We Do For Buyers
Although we do not represent buyers during dental practice transitions, we still offer important services to them. The ddsmatch Southwest website is free to use, and is a great resource for dentists looking to buy, or even ones who simply want to keep an eye on the market. After creating a profile individuals can search a wide range of available practices. After searching for practices our algorithm keeps users up to date with opportunities in the area they were searching.
So, whether you are planning on buying a dental practice this year, or you are still in your second year of dental school, creating an online profile is a good way to stay up to date with current opportunities and trends in your area. We are always updating our website with new resources and opportunities, which is why even dental students benefit from registering and creating an online profile with ddsmatch Southwest.
What if you aren’t looking for a practice to buy? Our website allows you to search numerous opportunities including partnerships, associateships, and practices available for merger. Our search engine allows users to filter by location and size of practice. When you are logged in to your profile practice information such as revenue, number of operatories, size of staff, local area information, and details about equipment such as digital radiography and cone beam imaging, are available to help you decide if a practice meets your needs.
We are also committed to protecting our clients’ privacy and interests. To ensure the integrity of our transitions our website does not include doctor’s names.
Transitions are a big step for anyone selling or buying a dental practice. Our team of transition specialists is committed to making sure both sides are satisfied with the transaction. Our goal is to find the best fit so our clients can be confident with their choice to sell, and the buyer can take over the practice knowing they will find success. As Thad Miller puts it, “if [our clients] see a patient in the grocery a month after transition, they want to feel good that they don’t have to hide behind a stack of things because they didn’t have a good transition.”
Search available practices in your area by creating a profile on our website. If you are considering transitioning your dental practice contact us today. Our dental practice transition experts are ready to help you achieve your goals.