Selling a Dental Practice

Buy, Sell, or Start a Dental Practice

RK: Randy Kinnison with ddsmatch Southwest, just wanted to thank you for being with us today and answering a few questions that we’d like to share with our potential clients and customers. If you would just please introduce yourself and kind of describe the relationship that ddsmatch has with Blue & Co. and the business valuations that you guys prepare for us.

MH: Good morning Randy, and thank you for the time. I’m Matt Howard with Blue & Co.  I lead our business valuation team. We do approximately over a hundred dental evaluations a year for ddsmatch and other dental needs. We’ve just really carved out a nice niche in it and have a lot of fun with it.  I am a dental CPA and also an accredited business valuator and a certified valuation analyst. So, I have certain credentials that are specific to valuation. Our relationship with ddsmatch Southwest is, we are the third-party, non-biased valuator that comes in and gives you a true market test for what your practice is worth at the date of our valuation.  We’ll be looking at the practice from an industry perspective trying to help both seller and buyer know what a true fair market value price is for the practice.

RK: Thank You, Matt. Just describe a little bit about the BV [business valuation] and what it entails. I know the first part of the business valuation always has the historical numbers of the practice as well as the performance. So, if you would just tell us a little bit more about the BV and what it entails.

MH: Certainly. With any small business or personal service company, the biggest noise in the practice would be the owner’s noise. What I mean by that is anything that’s inside the practice that is not necessarily operational or is basically something that the owner has decided to do at the practice that doesn’t exactly reflect the operations of the practice. A lot of times a seller will own the building, and in owning the building, they’ll pay themselves a lease rate for that building. Sometimes, that isn’t a market rate. And sometimes, it’s a little bit above; sometimes, it’s a little bit lower. Our job in this process is to really work through the practice to make sure it shows the historical financial statements. Basically, we help sanitize or normalize the numbers as we see them and as the true operations of the practice are reflected. So, our part in the valuation process is we will collect data. We’ll go through the data. We’ll enter it into our models. We’ll ask very specific questions about that data about maybe aberrations and the financial performance over time. Sometimes, a dental supply category jumps ten percent over a year. We want to really understand everything that’s going on inside the practice.  Then as we go through it, we would release a draft document for discussion with the seller. That document would be completely … a conversation piece to talk about the variables that we took into consideration, the market effects that impacted the valuation price to really just helped you understand exactly how we came up with that number. And then after that conversation, with any input from the seller, we’ll move it to a final, and then that will be the piece to share with any potential buyers as they consider the practice.

AE: That’s great, Matt. Hey Matt, Andy Edmister here jumping on the call with you. I have a few more questions. Thanks for joining us today. Matt, when would you recommend a dentist start preparing for a sale? And, why would you recommend him at that time?

MH: Yeah, a great question. I wish it’s a question that a lot more sellers kind of investigated not the year before they’re considering the sale. So, some things to take into consideration is knowing yourself and knowing what your aspirations or your goals are for the practice transition. What I mean by that is, a lot of dentists will wait until they’ve slowed down some, and we have something called a decreasing revenue stream, that’s where the collections slowly over time have started to decrease. That’s just basically reflective of the seller or the owner wanting to start to slow down. There’s nothing wrong with that if that’s an intentional decision you want to make. Unfortunately, when we see that in an evaluation, and even when banks see that in our evaluations as they consider financing this for a buyer, it does have to be taken into consideration. So, a decreasing revenue stream in the valuation world is not exactly ideal. More of what we like to see is if they’re an immature practice that’s either consistently growing by inflation or at least steady in the collection perspective. So, as you understand who you are and what your goals are, I do think it’s an important thing to consider when to sell and maybe selling before we start decreasing your output or decreasing your hours. That’s the first key. I would say anywhere from five, maybe even a little bit over five years, would be a good time to meet with your ddsmatch Southwest broker and start discussing what you want to do in the future and what does that look like in your mind from an ideal perspective taking all the different desires that you have into consideration. They’ll be able to help you walk through when may be a good time to even bring in an associate; or maybe when it’s a good time to think about something; maybe a couple of years before you thought you would; just so that we don’t run into that decreasing revenue stream which would impact the valuation price.

AE: Okay, that’s great advice. Basically, to sum it up, keep your foot on the gas until you get through the evaluation and the transition of the practice to maximize the value of the dentist’s practice.   

MH: Precisely, I couldn’t have said it better myself. Yes, trying not to minimize the fact that yes, you want to slow down; however, you also want a good price for your practice.  Obviously, those two things go hand in hand.

AE: Okay, well, thank you. I’m gonna move on to another question. The question pertains to purchasing in a practice or doing a de novo or startup practice on your own. What do you see is the benefits of each or the cons of each; and what would you recommend to a new dentist client of yours.

MH: A great question. And, a question that comes up quite often. As a person coming out of school, the ideal part of buying a practice is the fact that you’re walking into cash flow day-one.  What I mean by that is, you are paying a fair market value price for the practice; and then, you’re making money. You’re walking into, hopefully, a three hundred, four hundred, five hundred, and up thousand dollar collection practice which helps pay your bills day-one. That’s an obvious benefit of buying a practice. The problem with starting a practice is this: it’s a three to sometimes seven-year journey to maturity or average collections of a de novo. So basically, the first year you’re probably going to feed the business as in bring money to the table to keep it going as you build up that collection stream. The second year, you might break even or maybe pay yourself a little bit but definitely not up to industry standards. The third year, between the second and third years, during these startups is where we see you making some progress towards paying yourself a reasonable wage. Still probably not what you could get out being an associate at another practice. But you’re on your way. And then, that fourth, fifth, six, maybe up to seven years could get you, hopefully, up to average. An average is somewhere around nine hundred thousand dollars of collections, hopefully, dropping somewhere about to two hundred and fifty to three hundred thousand dollars bottom line. These are all guesses. Every marketplace is a little bit different. Every geography is a little bit different, but that’s just in general.

AE: Okay, well, good answer, thank you. I’m sure that will be useful for a lot of people watching. Next question. When would you recommend or what do you think is the best time for a dentist who is where he wants to be, but he’s not sure if he’s ready to bring on a new associate. What would a dentist do to say, “hey am I ready, or am I not ready to bring on the associate.”

MH: Again, a great question enough, and a complicated one sometimes. Every practice has a limited amount of resources, of ops, of time for the staff to not hit over time. So, there’s a lot of variables that play here. Typically, we like to see over a 1.2 million dollar collection practice, in general, that way there’s plenty of room for an associate to come in, inherit some of that revenue stream as the seller wants to back off a bit and transfer some of their patient-base over to the associate. Let’s just look at this from both angles. A seller wants to have an associate for the benefit of growing and continuing to serve the patient-base well. If you’re booked two to three months out, that’s not a very good patient-service quality for your patient. So, you need to come up with a constructive way to service them quicker and have a better overall experience for your patients. A lot of times that’s where an associate will come in. Therefore, you can help address the backlog and give to the associates.  From the other angle, the associate has the ability to make money day one, not build up a new business inside of a practice. They might get some sort of guarantee the first year, but you’re gonna move them to some sort of production or collection-based compensation after the first couple of months or even maybe after a year at the most. It’s important that it’s a formula that doesn’t only work for the seller, but it also makes economic sense to the buyer. Typically, buyers these days have quite a bit of student loans that they need to address, so they need to make a certain amount inside the practice. Associateships work great if there are enough collections and the seller wants to slow down a little bit and maybe back off a day, and open up some collections to the associate. And then obviously, there’s a lot of other variables, but those are just some general thoughts.

AE: Okay, well that’s great. What kind of tools could you offer as part of ddsmatch Southwest? What could you provide to help dentists decide if they are ready for an associate or not on an analytical side just on the numbers besides a gut feeling and wanting to slow down.

MH: Yeah, that’s also something that we’ve seen over and over again coming up is, “am I a good candidate for an associateship? Does it make sense for my practice to do this?” So, what we’ve come up with is an associate IQ or quotient that helps walk you systematically through the practice with about ten different areas that we look at to make sure that it makes sense for the practice to bring this on. Does it make sense from the owner side? Does it make sense from the associate side? Some things we’ll look at is if you only have three ops, and you want to bring in two dentists a day, that does not make a lot of sense. After looking at a bunch of these different variables and intricacies of the practice, we will come up with a quotient of how you rate on a scale of 0-100 for being a good candidate for how many associates. We’ll walk you through the entire process. Does that answer your question, Andy?

AE: Yeah, I think that’s great, in that way, they can make an educated decision on where they’re at currently and if their business can support another dentist. But also, it shows them what they would need to do to grow to get to that point.

MH: Exactly, the last thing that anybody wants, and we run into this occasionally as well because people jump into associateships, is after a year the associate goes away. We’re stuck holding the bag here–of all the attorney fees and the professional fees to get that to happen, and then have that asset, have that partner walk away. That’s really tough for a practice, especially, if you’ve grown it significantly and can’t keep up with all the work coming in the door. It’s very important that an owner of a practice considers all the variables in play as they consider this major decision that can affect the valuation of the practice and can affect your stress levels as well.

RK: Very good Matt, thank You. Randy again. We have another question. We get a lot from dentists that are preparing to sell their practice, and even if they are a few years out, they ask a question, “should I invest in any major equipment purchases? Or, what should I do to make the practice more attractive to a buyer?” What does that do, normally, to evaluation? Does that help evaluation or not?

MH: Yeah, you’re absolutely right. That question comes up quite often. I’ll use a house as an illustration here. There’s a couple of different types of upgrades for remodeling that we can take into consideration. When you’re buying a house, you fully expect the roof to be leak proof. That’s just part of the standard price of the house. It doesn’t add anything if you find out the roof has all sorts of problems that need to be replaced before I pay you the price that you quoted. So, with that kind of consideration inside of a dental practice, certain things like x-ray heads, chairs, and normal standard-of-care type assets at the practice, you absolutely need. If you redo them a year before selling the practice, it’s not really gonna make a significant difference in the value of the practice. Some things that would make a significant difference in the practice, let’s say two months before you sell your practice, is adding a cerec machine or something that’s not been in the practice previously that hasn’t affected the income or the collections of the practice. There’s a couple of different things to consider, to remodel the practice. If you still have shag carpet in the practice, it probably needs to go before you start marketing it. So, those types of considerations and things that will bring it up to a higher standard-of-care could make it more valuable. However, you’re probably not going to get a one-for-one pay back on your investment. I guess my end-all be-all recommendation is five years before the practice sale, unless you’re really making your practice digital or doing something that’s bringing it up to standard-of-care, any other significant remodels at that point would probably not be a complete one-for-one return on your money. Does that make sense?

RK: Yes, that makes great sense. Thank you for that clarification and answer. One other question we’d like to ask you, Matt, once we get down the road matching a buyer and seller together and negotiating the asset purchase agreement, there’s always the question of asset allocation which plays a pretty important part for both sides. Do you mind touching on that a little bit?

MH: Yes, so what we’re talking about here is let’s say we come up with a price, and the price is one million dollars for the practice. The practice price is set, and we’ve negotiated that. At the end of the day though for both parties at play, really even more acutely to the seller is, it’s not just the price, it’s the overall deal that makes it a good or bad deal for you. What I mean by that is this, the million dollar price is great; however, it’s not about what the price is. It’s about what you keep. Obviously, what I’m referring to here is taxation. As you come up with the purchase price, and it’s an asset sale, inside that sale you would have two different buckets to place things in that the IRS expects you to fill out on a certain form. How much of the price is going to be assets? And, how much of the price is going to be goodwill? Those two buckets are very important. For the goodwill side on the seller’s side, amount that is going to be potentially subject to capital gains. Capital gains is a big deal because the difference between that and ordinary income can be significant. We can talk about over ten percent difference here. That’s a big deal for a million dollar price. Ten percent is a hundred thousand dollars. It could be that important. The asset side is anything that’s called an asset in the sale. That would be more advantageous to the buyer. That means they can depreciate those assets quicker than goodwill. Goodwill they can amortize over fifteen years as under current law. To the seller, goodwill is important. To the buyer, assets are important.  It’s a little bit more important to a seller though. To a seller, that difference between capital gains and ordinary income can be quite significant. To the buyer, it’s a difference of when can I depreciate something; when do I get the tax write-off for this asset or goodwill. It’s the difference between five years to 15 years. They still get it. It’s just a question of when. For a seller, it’s a one-time deal. It’s either goodwill or it’s either assets. The more that’s goodwill, the better for the seller. And really, that is just subject to negotiations. It’s not really mandated by the IRS in any way. It’s based on what are the negotiated rates allocated to each bucket.

AE: What would you advise a young dentist in an associate for a couple of years, or two to five years out of school, paying off debt? They came to you saying, “I think I’m ready to look at purchasing my first practice.” What would you review with that dentist and how would you prepare him to be ready to engage with Randy and myself to find him a practice?

MH: Some of the first things here is have you spent the time clinically to get your hand speed up, to make sure, that whatever you’re looking at buying, you can actually do or can you document that you can do that in the that new practice? Something else or the bank will be looking at is have they been able to produce at the levels of the practice that they’re buying. That’s one important element. The second important element is taking a look at what does their world look like. Have they gotten in a couple years out of school. Have they been able to create some sort of emergency fund? Do they have some sort of margin in their life? That sounds very logical but a lot of times a buyer is not a good candidate because they don’t have any kind of safety net in their life. So, the third thing that I would talk about is do you know what you’re looking for? Do you know a geography? Have you really studied what area you want to be in and what that practice might look like? Having a clear direction and intentionality about the practice that you’re buying I think is an important thing for a dentist to address to a broker at ddsmatch Southwest because they really need to know that you’re fully vested in buying in a certain area, for a specific purpose, with a certain clinical skill set. Does that answer your question?

AE: Yeah, Absolutely I think that’s great. There’s a lot of young dentists out there that are just kind of on the edge, “am I ready?” It’s scary to start your own business.

MH: No doubt about it. I walk through maybe twenty buyers a year. and Some of the same elements that you’re just discussing here come up often. It can be a terrifying thing. You just need a really good board of directors to walk you through. I mean a great CPA like myself and a great attorney to help you understand the logistics of the transaction and how to structure it. Beyond that, if you have the right people on your team as advisors, we’ve been through this a hundred plus times just helping you through that is part of what we do.

AE: Well, thank you very much, and again we appreciate you taking the time today. You’ve been a huge partner and a huge help not only for us but especially for our clients, so thank you, very much, Matt.

MH: I think that this has been a great conversation and great questions. I think these are key elements to any transaction as these will come up at some point in the process. It’s nice to have a heads up for your sellers or even the buyers out there to understand the dynamics at play. Again, ddsmatch Southwest is a great brokerage. They really walk their clients through everything. It’s an open process. They invite your advisors in to help you through it. I’m a big fan.

To find out how ddsmatch Southwest can help you with your practice, call today.

Tips to Get the Most Out of Selling a Dental Practice

If you’re planning on retiring and selling your dental practice in the next five-to-seven years, what do you need to know before you head down that road? There are many factors to consider before selling a dental practice, and your transition out of the business and into retirement can either be rocky or smooth. Fortunately, the brokers at ddsmatch Southwest specialize in finding you the perfect buyer and making the transition as easy as possible. To help you ease into retirement check out the tips below from Matt Howard at Blue & Co., and the dental brokers at ddsmatch Southwest. With careful planning, you can ensure a smooth transition.

Business Valuation: What Is It?

As a dental CPA, accredited business valuator, and a certified valuation analyst, Matt Howard knows a thing or two about determining the value of a dental practice. Before selling a dental practice, you need a business valuation to show potential buyers. This document will show buyers how much the practice is worth, taking into consideration the physical practice, operations, and average collections. “The first part of the business valuation always has historical numbers of the practice,” says Matt. (For his full webinar, see the video below on this page.) Has your practice grown, stayed the same, or decreased in revenue in the past five years? After that, your business valuator will look through financial statements and your practice operations. “We’ll go through the data. We’ll enter it into our models. We’ll ask very specific questions about that data… We want to really understand everything that’s going in going on inside the practice,” explains Matt. After taking into consideration market variables, a business valuator will present a draft to the seller and be open for input from the seller’s perspective. Then a final draft is made that the seller can present to potential buyers.

Building Value Before Selling a Dental Practice

When should you start preparing to sell your dental practice? Matt Howard says “anywhere from five, maybe even a little bit over five years would be a good time to meet with your ddsmatch Southwest broker and start discussing what do you want to do in the future.” It is important to start planning your transition early so you don’t make mistakes that could cost you when selling a dental practice. Matt Howard explains that “some things to take into consideration are knowing yourself and knowing what your aspirations or your goals are for the practice transition.” If you desire to slowly ease out of the practice, you may have already started to cut back your hours and started seeing fewer patients. What you may not realize is that decreasing your revenue stream in this way makes your practice less valuable for a future sale. According to Matt Howard, “A decreasing revenue stream in the valuation world is not exactly ideal. What we like to see is [the practice] either consistently growing by inflation or at least steady in the collection perspective.” Decreasing your hours and your revenue stream is not a bad desire but consider how it will affect a future sale before you take that step. It may be time to bring in an associate so you can still build your business while cutting back on your hours.

Office Remodels and New Equipment: Is It Worth the Cost?

Many dentists think adding value in the form of newer equipment or a remodeled office will be helpful when selling a dental practice, but as Matt points out, that is not always true. Matt suggests avoiding significant equipment purchases and remodels five years before you plan on selling, saying “significant remodels at that point would probably not be a complete one-for-one return on your money.” If your practice desperately needs updates to bring it up to an average standard of care then spending money on that makes sense. For example, if your practice has not moved into the digital age, now is the time to update your operating systems. But a newer x-ray machine or more comfortable dental chairs won’t get you a higher price if the ones you currently have are working well. Hold off on large business expenses that aren’t necessary to get your practice up to an average standard of care as you won’t see that money coming back to you when you sell.

Talk to a Dental Broker About Selling a Dental Practice Today

The American Dental Association released statistics stating that in 2015 the average age of dentists in the US is 50 years old. With so many dentists nearing retirement age, an increase in those selling a dental practice can be expected soon. Don’t get stuck trying to sell your practice in a flooded market. Depending on your specific market, you could get more from your sale if you decide to sell in three years instead of five. Talk to a dental broker at ddsmatch Southwest today for advice from local experts. We can help you plan, so you can take the appropriate steps in the coming years that will assure your smooth transition into retirement.  Call today to find out how we can help you.

Retirement: When To Sell Your Practice

What dental trends should you be aware of as a dental practice owner? When you own a small business, planning for retirement involves much more than putting aside money in a retirement account. Knowing the trends in dentist retirement is an important first step before putting your dental practice for sale. New statistics from the ADA serve as an important signpost on the road to retirement.

ADA Statistics and Retirement Trends

The ADA recently released statistics from a Dental Workforce study showing that as of 2015 the average age of dentists in the United States was 50 years old. This statistic reveals that most dentists will reach retirement age in the next 5-10 years. Knowing that the market for dental practices is likely to be flooded soon, it is beneficial to start planning and strategizing today for your retirement, so you don’t put your practice on the market at the wrong time. Your dental practice may be worth more today than in 5 years when more dentists decide to put their dental practice for sale.  

Questions and Concerns About Retirement

Below we address some of the most common questions and concerns dental practice owners have when thinking about retirement. Even if you aren’t planning on retiring soon, it is a good idea to think through these questions and have a game plan for the next 5-10 years.

What is my practice worth?

Finding your practice’s value is a complex process. A general rule of thumb for valuations can be applied, but these estimations can often be inaccurate. Your best method for finding how much your practice is worth is talking to a dental broker. Brokers specialize in these transitions and know what market factors will play into your practice’s value. The experts at ddsmatch Southwest will help you determine your local market rate so you can make the most out of your practice.

Should I add an associate?

Often dentists will choose a slow transition out of their practice by adding an associate who will eventually take over the practice. This is a good idea for dentists who don’t want to put their dental practice for sale right now but want to cut back on hours and maintain a foot in the door. ddsmatch Southwest can help you find the perfect associate, whether you are planning for retirement or just want a little help.

Should I sell to a DSO?

A Dental Service Organization, or DSO, manages the non-clinical side of a dental practice. Deciding if you want to sell to a DSO is a personal decision. A DSO will relieve the headache of managing the business side of a dental practice and could make working in your practice more attractive for potential associates. However, many dentists who have built their business from the ground up, find it difficult to think of their practice changing due to a DSO’s management. To learn more about the recent rise of DSOs and the benefits they may provide read this piece by Dental Money Digest source.

How do I find the right buyer?

If you do not sell your practice to a DSO, how do you find the right buyer? ddsmatch Southwest helps dentists in Texas and New Mexico find the perfect buyer for their dental practice. The brokers at ddsmatch Southwest will use our Trusted Transition Process™ to determining your wants and needs and decide how much your practice is worth. Then they will find a buyer that matches the skill set and personality of your office. Before you put your dental practice for sale, call the experienced brokers at ddsmatch Southwest for a consultation.

What should I do to prepare for retirement?

If you’re planning on retiring in the next 3-5 years, it is time to start planning now. Talk to a financial advisor to determine if you have enough set aside to retire. Dental Economics has an excellent post about planning for retirement to retire on time.  Next, find an experienced broker to help you with the transition into retirement. A broker will guide you seamlessly through the next steps, so the years leading to retirement are a breeze.

What about my real estate?

When you put your dental practice for sale, that does not automatically include the real estate where your office is located. If you own the real estate, you will need to sell that as well. The process is not difficult but may change who ends up as a potential buyer since they need financing for both the practice and the real estate. The good news is both parts of the transaction can often be closed at the same time. Another option is selling the dental practice but keeping the real estate and becoming a landlord. This post goes into more detail what options are available to buyers and sellers in this type of transaction. Talk with your broker about which option fits your lifestyle and your budget.

Do I sell now to get maximum value or wait?

This question can only be answered on a case by case basis since the values and trends of dental practices vary. However, based on the above statistics from the ADA, putting your dental practice for sale before the market floods will help you get the maximum value. Talk to an experienced dental broker with knowledge of the local market and they will be able to advise you whether to sell now or wait.

I have a partner who won’t buy me out, what do I do?

Partnerships in dental practices can be beneficial for many reasons but tend to get mucky when there is a transition, and you don’t see eye to eye. ddsmatch Southwest helps dentists who are selling their ownership, even if it is a part ownership. We find buyers who are specifically looking to buy into a partnership, so everyone ends up with what they want. For more information on how this process works, and to find the answers to more specific legal questions that may apply to you, set up a consultation today.

How do I find someone I can trust to help?

This is by far the most important question you can ask before you put your dental practice for sale. You have spent your career building a thriving practice, and now you need to get the most out of its sale while leaving the kind of legacy you want. A dental broker with local experience, many years in the business, and proven examples of successful transitions is what you want. For dentists in Texas and New Mexico that broker is ddsmatch Southwest. The brokers at ddsmatch Southwest will take care of every detail and guide you through the transition process so you can retire with confidence.

Think Ahead about Putting Your Dental Practice for Sale

If there is a chance you will be retiring in the next 5-10 years, keep the above statistics and questions in mind. If you start planning now, you can ensure a smooth transition when the time comes. For more information contact ddsmatch Southwest and set up a consultation.

Putting Your Dental Office for Sale: Lease or Sell?

Profit By Selling Your Dental Practice

To receive the maximum profit when selling a dental practice, you first need to create a practice that brings in maximum revenue. This can be a difficult task. Dentists have more competition than ever before. Building a successful dental practice does not happen overnight. It takes a strategic and purposeful business model.

Avoid Costly Mistakes

Behind every thriving business is a solid business model. Unfortunately, some dentists have learned this the hard way. But growing a dental practice is like building any other type of business. There are certain tools and methods that are proven in the business world to help entrepreneurs become profitable. At ddsmatch Southwest, we offer a few suggestions to help you get the most out of your dental practice. So whether you are starting up your first practice or trying to recover from a failed attempt, there are several key components you should consider, especially if you anticipate selling a dental practice in the future.

Increase Your Online Presence

If your business does not have an online presence in this digital age, you are in trouble. More and more people are turning to the Internet to find answers to their everyday questions, including the question of what dentist to go to. One major benefit of an online presence is that you can reach people at times that are convenient for them. What you put online is available for all to see 24/7/365. You can grow your dental practice on holidays, weekends, and even in the middle of the night.

According to statistics released by the United States Census Bureau, at the time of their survey:

“Among all households, 78 percent had a desktop or laptop, 75 percent had a handheld computer such as a smartphone or other handheld wireless computer, and 77 percent had a broadband Internet subscription.” To beat out your competition and create a profitable practice, you simply cannot afford not to go online.

Don’t Forget About Social Media

Dentists need to proactively work to reach prospective patients through social media. The world freely communicates and interacts through social media. It is one of the best ways to have potential patients learn about your practice through personal recommendations.

A 2018 report from the Pew Research Center states: “Roughly two-thirds of U.S. adults (68%) now report that they are Facebook users, and roughly three-quarters of those users access Facebook on a daily basis … Americans ages 18 to 24 are substantially more likely to use platforms such as Snapchat, Instagram, and Twitter even when compared with those in their mid- to late-20s.”

Make it About Your Patients, Not You

The average adult does not understand, nor care about, the technical points of certain procedures or the extent of your training as a dentist. Rather, make your marketing easy for any given adult to understand. Patients want a dentist they can trust, that will listen to their concerns, and provide superior care. When you advertise, do not market to impress other dentists. Have the needs of your patients be your priority. Explain how you can provide solutions to their dental problems. Point out the benefits of your procedures and how pursuing dental care is important. Help them understand why your dental practice can improve their quality of life.

Gather a Team

There are many elements to managing a dental practice. Dentists need a team of professionals to help them grow their business or when selling a dental practice. It is wise to hire out additional staff to handle the marketing, clerical work, accounting, and other responsibilities of your practice. A dentist’s time is best spent with patients. Patients bring in revenue. Patients are the ones that will spread recommendations to their friends and family. Invest your time into meeting the needs of your patients’ dental issues.

Selling a Dental Practice

Selling a dental practice takes time and preparation. You will get out of it what you put into it. You need to first create a successful dental practice to be able to have a profitable exit. Dentists need to consider:

  • How can I boost my online presence?
  • Am I utilizing social media?
  • What message does my marketing promote?
  • Do I have a sufficient team to build a solid dental practice?

The Services of ddsmatch Southwest

At ddsmatch Southwest, we help dentists buying or selling a dental practice. We are expert dental practice brokers and know how to make you successful. With our expertise and knowledge of the dental industry, we help you achieve the vision you have for your dental practice. The team at ddsmatch Southwest understands the challenges and needs of dentists. Put our experience to the test. Learn more about our services and get a free Practice Transition Assessment. Call today and let ddsmatch Southwest help you reach your financial goals.

Financing for Buying or Selling a Dental Practice

Whether you’re looking for financing for one or multiple dental practices or looking to transition into retirement and sell your practice, it’s crucial to have your financial package organized and ready for presentation. However, finding lending if you’re interested in opening up more than one practice will require more documents as proof that your business is and will continue to be a profitable one. If you’re buying or selling a dental practice, there are many variables to take into consideration and many questions to ask when shopping for lending.

Questions to Ask Lenders

The first and most important question to ask is “do you finance multiple practices?” Institutions should be able to give you a firm yes or no. Most institutions do finance multiple dental practices, but research shows that lenders providing this type of service may ask for more requirements and collateral if opening multiple practices.

There are different types of loans associated with dental practices, including SBA loans and alternative lenders, so you need to inquire about which type of loan serves you best. SBA loans tend to be more popular among dentists as the interest rate is lower than alternative loans and the term is longer. However, if you need lending quickly, alternative loans may be the right option for you. Consider that alternative loans have a shorter payback period and typically only loan up to $500K. Depending on your credit history, ask if your lender requires collateral. They may use a house, car, assets or equity to help qualify you. Ask whether the interest on your loan is simple or compound. Laid out simply, compound interest compounds on the outstanding balance and any interest accrued. This means your interest can change month to month. Simple interest is interest at a fixed rate, payment, and term. Whether you’re just starting out or thinking about selling a dental practice after 30 years of being in business, simple interest should always stay the same.

What Lenders May Ask if Lending for Multiple Dental Practices

The more practices you have, the more difficult it may be to find funding. When approaching a lender, make sure you have a clear vision of what you plan to accomplish. Take into consideration if you plan to own five practices, ten practices, or a larger number which would require a lot of infrastructures.

Lenders will only agree to give you a loan if you can prove that your business is currently profitable or has all its “ducks in a row” giving it a promising head start. And of course, based on credit history. Lenders can inquire as to the specific locations of the practices, so they can geographically see if it’s possible for a dentist to commute to all of his or her locations regularly. They may also inquire as to the amount of cash on hand. This could become beneficial in planning and emergency situations. Laying out a detailed business and marketing plan helps lenders see where the funds are going.

If you envision a large network, hiring a CEO and CFO will be needed to keep track of all credits, debts, invoices, and cash flow. If you intend on selling a dental practice down the road, having people in these executive positions will help you understand how much your practice is worth. The larger your practice, the more employees and organization you will need. Lenders can and will put a hold on funds to expand if you cannot prove that your practice is under sound fiscal control. Some lenders may put a limit on the number of practices you can open and own under your loan portfolio, while others may specify a dollar amount of the maximum debt you can incur.

Factors to Consider When Starting or Expanding your Dental Practice

When looking to start or expand your dental practice, consider the following costs:

  • Rent of new location
  • Utilities
  • Staff salaries
  • Dental supplies and lab equipment (if acquiring from someone selling a dental practice, equipment may be outdated and in need of replacement)
  • Office supplies
  • Marketing and Advertising Costs
  • Expanding your Insurance Coverage
  • Business License
  • Remodeling costs

In addition to costs, consider the time frame that you need the loan. Alternative loans provide quick funding. SBA Loans are known for taking weeks or months.

Making a Smooth Transition when Selling a Dental Practice

Whether you’re the seller or the buyer, you want to make certain that the sale doesn’t negatively affect your staff and patients. With over 25 years of experience, ddsmatch Southwest has a proven process that uses technology to reach a wide range of vetted buyers and long-standing relationships with 3rd party valuation analysts and dental industry experts to make certain your practice is priced fairly and competitively.

Transitioning or selling a dental practice requires careful planning and preparation. Leave it to the professionals at ddsmatch Southwest to ensure everything is handled safely and that the future is promising for everyone involved. Call us today.

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