Prepare to Buy a Dental Practice for Sale: First Steps

At ddsmatch Southwest, we are dental practice transition specialists who focus on matching the right buyer for doctors who have placed a dental practice for sale in Texas or New Mexico. We believe that the right match is important because a successful practice transition is one where the practice continues to thrive, protecting the legacy of the selling doctor and providing the buying doctor with a solid foundation on which to build their own legacy. Because of this, we believe it is important for the buyers in the practice transitions we facilitate to be well prepared and well informed, with everything they need to have confidence in both the practice they are buying and the fairness of the transaction. 

To this end, we will be posting a short series of articles about how to best be prepared to purchase a dental practice for sale in Texas or New Mexico. In this article, we will provide a brief overview of the first steps of the dental practice transition process, from the buyers point of view, and some general principles to keep in mind. 

Assemble a Team of Advisors

After you have decided the time is right for you to buy a dental practice, and have an idea of where you would like that practice to be, you should identify and retain a small group of trusted advisors to counsel you through the process. This should include, at least, a dental CPA, a dental attorney, and a banker with experience lending for dental practice purchases. You may also want your own dental practice broker.

You may wonder why you can’t use your family member who is a respected attorney or a friend who is a CPA. While these types of contacts may be great for general purposes, you need advisors who understand the particulars of dental practices and the accounting and legal issues that are unique to your industry. You don’t want something important overlooked because your CPA didn’t recognize its significance. And you don’t want to pay an attorney’s hourly rate while they get themselves up to speed on an issue. You’ll save money and time by retaining specialists with experience.

Before you get anything but the most cursory information about a dental practice for sale, you will be required to sign a non-disclosure agreement. This agreement will protect your personal and financial information, as well as the selling doctor’s, and will protect the dental practice from staff and patient concerns if knowledge of a transition is leaked too soon. It’s a good idea to have your own dental broker or attorney to help you review and understand the agreement.

Have a Realistic Idea of What You Can Afford (and Need the Practice to Earn)

In 2018, the average dental student graduated with over $285,000 of student loan debt. When you are buying a dental practice, you have to consider both what you can afford to buy and what you are going to need to earn to cover the practice’s expenses, pay off the practice loan, keep paying on your student loans, and still have enough for your personal expenses and savings.

Depending on the practice, you may need some operating capital to keep things going in the early days after the transition. You may also need to compensate the selling dentist if you both agree it will be mutually advantageous to keep the doctor on for a period. A dental CPA and a dental practice broker can help you better understand how to look at a dental practice for sale and see its potential—or its problems. A banker with dental practice experience can also discuss with you how much you might expect to be lent for the practices you are considering.

Know the Value of the Existing Dental Practice Staff

When you are buying a dental practice, you are also getting the existing employees: hygienists, billing staff, receptions, etc. Although you will be the doctor, they are the ones that really know the patients and how the practice runs. Their institutional knowledge will be invaluable to you, both during and after the transition, to keep the operation running smoothly and help the patients feel comfortable with you, the new doctor. It is imperative to show them respect to help the transition be as smooth as possible. It’s a big change for them as well!

See It for Yourself

Every dental practice is different. You won’t really know what the practice is like until you can experience it in person. You also will want to look closely at details indicating the health of the practice: how many patients have visited the office over the past 18 months, whether the practice is appropriately staffed, patient flow, and cash flow. Those last two items, in particular, can show you whether a practice is growing, stable or shrinking. If the practice is underperforming, there may be some untapped opportunities for growth.

Look Closely at the Practice’s Financials

The asking price may not reflect the actual value. Many people tend to overvalue their assets because of their emotional attachment to them. Dentists are no different. The price of a dental dental practice for sale in Texas or New Mexico should be a reflection of its value based on sound accounting and valuation methods, not a reflection of what a doctor has put into the practice. Have your team of trusted advisors review the financial information with you to help you understand what it really says about the practice and whether its in line with what a business of its type should be doing.

Understand What Is and Isn’t Part of the Deal

If a selling doctor is asking $750,000 for a practice, you need to understand what you get for that amount. That may not include the equipment. It probably won’t include the accounts receivable. If the doctor owns the building, and you want the building as part of the deal, that can be a separate transaction and will definitely be a cost in addition to the practice sale price. If you have to purchase a lease, that will also have to be negotiated.

The selling price is a good place to start, though. If you and the selling doctor can reach an agreement on the sale price, usually negotiations on the other aspects will be smoother as both parties are motivated to complete the deal.

Be Wary of Owner Financing

Simply stated, a bank is more objective. Banks certainly have an interest in the money they lend—they want it back with a return on that investment. But this means they will perform a thorough due diligence relying on independently verifiable information. In a seller-financed deal, the seller is less likely to have a third-party valuation of the practice and asking price. They are likely looking to finance their retirement out of the sale and want to capture the interest as well as the principle. This can result in them trying to get a certain number rather than the true value of the practice. 

Consider the Value of the Seller Staying On After the Transition

It is common for the selling doctor to remain working in the practice for a period after the transition. This can be useful for helping to ease the transition for the patients, the staff, and the new doctor. It can be an attractive option for a doctor who is not ready to fully retire but wants to be rid of the business responsibilities and just focus on patient care, perhaps with reduced hours, before fully stepping away. Occasionally, however, it can indicate a seller who wants to have their cake and eat it too: sell the practice but not really have to give it up. Discuss this with your advisors. But be wary of a doctor who is proposing a period in terms of years, rather than weeks or a few months.

We Have Available Dental Practices for Sale in Texas and New Mexico

As stated, as ddsmatch Southwest, we focus on finding the right buyer for dental practices we have available for sale in Texas and New Mexico. If you are ready to make your move into practice ownership, check out our listings. If you see any your are interested in, or have any questions, please contact us— it starts with a conversation.

Should I Sell My Accounts Receivable when Selling a Dental Practice?

When selling a dental practice, there are a lot of things to consider and details to manage. Among those are how to value your practice. However, one thing that is generally not factored into the selling price is the accounts receivables. Accounts receivable are the amounts owed by patients who have been provided service but either they or their insurance (or some combination of the two) have not yet remitted payment. Accounts receivable are generally handled as a separate item as a transitioning dentist may or may not want to make them part of the deal.

Similarly, when buying a dental practice, the buyer might not want to buy the accounts receivable because they can impose an unwanted administrative burden and cost. Typically, however, it may be to the advantage of a buyer to try and get them. They are usually sold at a discounted rate (for reasons explained below) and can provide a source of operating capital from day one as opposed to borrowing additional funds from a bank.

In this article we’ll discuss the three basic options you have when and the advantages and drawbacks of each. Whether you ultimately decide to sell or not sell your accounts receivable will depend largely on the particulars of your practice and, importantly, the counsel of your financial adviser and dental practice transition specialist.

Sell the Accounts Receivable

If you include the accounts receivable when selling a dental practice, you are doing two things. First, you are releasing any claim you have on payment for work you did prior to the sale. It now belongs to the buyer. Second, you are also getting rid of the responsibility of trying to collect those outstanding payments. Under this scenario, you get to walk away with no further responsibility with regard to the accounts (except having to possibly endorse some checks over to the buyer).

As mentioned, this can be advantageous for the buyer who can use the funds as operating capital. If your buyer has reached the limit of their borrowing capacity, this can be a good way for them to make sure they have funds to keep the practice operating in those early days after the dental practice transition. If they need the accounts receivable for this reason, it may also be to your advantage to sell them, to ensure that the sale closes.

And while you will receive some compensation for the sale of the accounts, it will not reflect their full face value. This is for two reasons. First, simply stated, an agreement by a patient or insurance company to pay for your services is not the same as cash in hand. There will always be risk involved in collecting payment and this risk is reflected in the discounted rate. If you use dental accounting software, you probably know that it groups your accounts receivable into different categories, 0-30 days outstanding, 31-days days, 61-90 days, and so on. The longer the account is outstanding, the less likely you are to collect, and the more expensive it will be to do so. So a buyer may offer 85% for accounts that are due in 30 days or less, 75% for 31-60 days, 50% for 61-90 days, and so on.

The second reason, acknowledged above, is that there are costs involved with collections, costs which increase with each billing cycle. This will be discussed in more detail below.

Don’t Sell the Accounts Receivable and Have the Buyer Collect Them

If, when selling a dental practice, you and the buyer choose to not make accounts receivable part of the overall deal, you still have to have someone collect on those accounts. Basically, this can be either you or the buyer. Administratively, this is a more complicated option, but it means you get to keep the payment for the work you actually did.

Two things have to be considered. One, how the buyer will keep your accounts separate, making sure you get the funds that belong to you. The administrative staff will have to keep track of your accounts and the new doctor’s accounts separately. This will become increasingly complex for patients with ongoing treatment that you started and that the buyer is completing.

Second, when buying a dental practice, the buyer may not relish the idea of running a collection and accounting office for a retired doctor. The new doctor will be incurring the costs of collections and will rightly expect you to compensate the practice for this work out of the money being collected. Some of the expenses (in terms of either employee time or actual money spent) may include: electronic statements or paper statements, electronic claims (or in rare cases manual insurance claims), postage, labor, phone calls, secondary insurance submission, and communication time with patients or account holders. These costs can take between 5-12% of the revenue being collected, with an additional 5% convenience fee (that is, you are paying for your convenience and the practice’s inconvenience), and an uncollectable debt percentage of 3%. Therefore, you could reasonably expect about 83-85% of the money that is actually collected.

Whether this is more advantageous than simply selling the accounts receivable along with the dental practice will depend on how much you have outstanding, how long its been outstanding, and who is obligated to pay (insurance companies likely being more reliable than individual patients).

Keep the Accounts Receivable and the Responsibility for Collecting

Under this option, your only costs are your own and you get to keep everything that ultimately gets paid out, less whatever administrative costs you incur. This option is really only best in circumstances where you have a minimal amount of accounts receivable and from sources that are likely to pay.

Resources are also a factor. You may be able to do it all yourself. You may also be better off just paying your (former) administrative staff to work on the project on their own time. It is also most easily done in circumstances where the person selling a dental practice is staying on in the practice for a period of time after the dental practice transition.

Get Expert Advice on Selling a Dental Practice 

A big takeaway you should get from this article is that there are a lot of factors particular to your dental practice that will determine whether selling the accounts receivable is the smart move. For help in navigating this decision, you should rely on expert advisors with experience in dental practice transitions who can help you identify and weigh your options. 

Here are ddsmatch Southwest, we are dental practice transition specialists with experience in hundreds of successful practice transitions from across the country. We find out what your goals are for your transition and bring that experience to bear to help you meet those goals. If you are considering transitioning your practice in the next five years, we offer a free, no-obligation Practice Transition Assessment, including advice on how best to prepare your practice. It all starts with a conversation. Give us a call today and find out what we can do to help you. 

Dental Practice in Rural Areas: Better for You and Your Bottom Line

Typically, the plan for a recent dental school graduate is to practice in a suburban area around an urban city. A dental practice in a rural area is seen as less appealing. However, what young doctors are finding out is that these areas are already at or over capacity for dental practices and doctors. This means more competition for jobs and patients, lower salaries, and limited opportunity for growth. More often, practices are resorting to extended and weekend hours to try and capture more patients. Costs of living are higher. Participating in PPO plans may be necessary if the competition is doing it (especially when considering student loan debt, practice loan debt, and overhead and personal expenses).  So while the urban area may appear to offer more in terms of lifestyle, dentists practicing in these areas may not be able to enjoy those supposed benefits as they imagined they would.

Below we discuss some of the advantages of dental practices in rural areas. But don’t just take our word for it, read what a recent satisfied ddsmatch Southwest client has to say about his career in a Texas small town.

Dental Practice in Rural Areas Provide More Economic Opportunities

While high-density areas leave dentists scrambling for jobs and patients, and established dentists may have deferred retirement due to economic conditions, dentists in small towns are experiencing the opposite. Most small town dentists are doing quite well because they don’t have the same kind of competition. In fact, many rural areas are underserved, making patient demand for dental services high in comparison to urban areas. 

Dr. Bill Dean, recently used ddsmatch Southwest’s dental practice transition specialists to help him sell his practice. In a recent interview about his practice transition, he noted this benefit of small town dentistry,

“We’re a town of about 3,500 people, but we’re about 50 miles from Lubbock. It’s the nearest town, large town. And, I have a drawing area of probably 20,000 patients and coming from three or four different counties that don’t have dentists, and it’s hard for young dentists coming up to realize that they can come to a real community and have an instant practice when they start out.”

“Particularly if they’re buying a practice. There’s a ready-made client base that they can go to work from day one and be busy. They don’t have to try to develop a clientele, and they get to know their patients and the patients . . . Once they’ve won a patient over they will tell all their friends, and it just is an ongoing process of good people.”

Small Town Overhead with Urban-Level Fees

Fees charged by dental practices in rural areas are comparable to those charged in suburban and urban areas. But the overhead is much lower. A small town practice typically has its overhead expenses in the 50-55% range. Two major factors are lower wages and lower real estate or lease costs. Combined with less competition (meaning you save in your marketing costs as well), this means higher profits for your practice, and more money in your pocket. The faster you can accumulate wealth, the sooner you can retire, and the easier it will be to do on your own terms.

Dr. Dean also addresses the belief that being in a small town might make you feel isolated. To the contrary, given the realities of transit in sprawling urban areas, his access to larger city amenities wasn’t an issue, and the increased opportunities to earn and own a practice are accelerated by the built-in clientele and lower overhead:

“Lubbock is a town of about 200-and-something-thousand people, Texas Tech University is there, and they’ve got everything you could want. It’s 45 minutes away. If you’re living in Houston you may drive an hour to go eat somewhere and if you’re living in Floydada, you could be anywhere in Lubbock within an hour, and you’ve got anything you want. You got a major airport that’ll get you where you want to go, and, as I said, you’ve got an instant practice the day you open up your doors and in a large city you have to work to get people to come in. Or, go in as an associate and work for five years before you can actually become a partner.”

Student Loan Forgiveness Programs

Because many rural areas are underserved, some state agencies have established loan forgiveness programs based on the number of years a doctor practices in one of the underserved areas. So, in addition to earning more, you can also work to reduce your debt faster than otherwise, accelerating your savings. Some of the programs may require participating in Medicaid. Visit for more information.

Small Town Life Style

Many dentists who do practice in more densely populated areas grow tired of the tough economics of urban life, the competition, and the stress. These are factors that are intrinsic to city life. We’ve discussed above how a dental practice in rural areas can increase your income. It can also greatly decrease your stress while increasing job satisfaction. 

The slower pace of life allows to you both be more flexible in your schedule and to get to know your patients better. Creating a personal bond who those to whom you provide care adds an additional dynamic to your work day that can make it more enjoyable, and less of a chore. You also will have more time to enjoy the things that make life worth living, like friends and family, and hobbies and recreation. The ability for better life balance will reduce the likelihood of burnout.

Additionally, you can enjoy the esteem of your community. A dentist is a valued member of the community, providing a valuable service. You can be seen as a respected professional whose advice is valued. Diagnosis and treatment plans are more readily accepted by patients who know and trust you. 

Dr. Dean confirms these benefits. Speaking of the doctor who bought his practice, Dr. Dean noted that he was looking specifically for 

“[s]omeone that would be a part of the community, that was more than just drilling and filling and seeing patients. And, [Dr. Shively, the buyer, has] been with a corporate firm in Lubbock for the last six months and it wasn’t a matter of getting to know the patients, it was a matter of production, and Dr. Shively didn’t like that, didn’t want that. He wanted to be a part of the community. . . .

“He said when he came out there was little league baseball playing, and he said that’s what he’s looking for, and, you know, that’s what I’ve had for the last 27 years. We’ve known for two months . . . that Dr. Shively was taking over, and that I would be leaving. And, the last two months with patients have the most humbling and rewarding of my entire career. The patients just saying, ‘we appreciate you and love you,’ and that’s what dentistry’s all about. It’s getting to know people. . . . 

“Probably half of my patients call me Dr. D., the other half call me Bill, because I go to church with them, or I’m on the school board. I’m just one of them. Particularly for these that, like the Davidsons, where I see their kids and grandkids and great grandkids, they’re really more family than they are patients. And that’s the beauty of working in a small town. When you leave the office you may see them at the grocery store, you’re going to see them at the football game, or the basketball game.”

ddsmatch Southwest Has Rural Practices Available Now

The dental practice transition specialists at ddsmatch Southwest have dental practices in rural areas in Texas and New Mexico ready for buyers. If you are looking to start your career, or are looking for a change of pace where you can own your own practice and enjoy the benefits of that ownership, take a look at our available practices

If you are considering transitioning your practice in the next five years, we offer a free, no-obligation Practice Transition Assessment during which we’ll our experience to work for you, advising on how best to build value and get ready to transition on your terms. Contact us today.

ddsmatch Has Partnered with ZipRecruiter to Find and Place Dental Associates

Increasingly, dentists have been asking us, “How do I find a dental associate? Where do I find an associate? How do I pick the right candidate?” ddsmatch listened and we have the answer. We’re pleased to announce that we’ve partnered with ZipRecruiter to leverage their proven employment solutions to expand your options, along with the continued support of our team of professionals, and the thousands of dental associateship candidates on our website.

What is ZipRecruiter and How Will it Help You?

ZipRecruiter is an online job board that allows employers to post jobs to hundreds of job boards, including to ZipRecruiter’s own job board. ZipRecruiter has the #1 rated job search app on iOS & Android. Also, in 2019, ZipRecruiter was named one of the world’s most innovative companies by Fast Company. Simply stated, ZipRecruiter is one of the smartest ways to hire. It sends employment notices to hundreds of job boards with a single submission, reaching over seven million job seekers. More than 1,000,000 companies have already used Zip Recruiter to meet their employment needs.

Among the features that sets ZipRecruiter apart are: 

  • Powerful Technology: With one click, ZipRecruiter send your job to hundreds of job sites across the web, identify the best candidates, and notify them to apply.
  • Pre-Screen Interview Questions: Add pre-screen interview questions to save time and ensure you only see the most qualified candidates.
  • Reusable Job Slots: All plans include reusable job slots, so when you’re ready to post another job, simply close the position and reuse that same slot.
  • Social Network Posting: Send your job to Facebook and Twitter, then manage, screen, and rate candidates on your Candidate Dashboard.
  • Mobile Friendly Interface: ZipRecruiter is designed for mobile so you can post a job, review candidates, and more while you’re on the go.
  • Premium Customer Support: You can call them, email, or chat live with a real customer service professional who will be happy to help you get the most out of their platform.

How Do You Get Started Finding Your Dental Associate?

Getting started is as simple as 1-2-3.

  1. Contact your ddsmatch professional
  2. We complete your custom online profile
  3. We facilitate the process

If you are in a dentist in Texas or New Mexico, contact ddsmatch Southwest for a no-obligation consultation. The cost for ZipRecruiter’s services will be determined based on your specific job posting and placement needs.

Why You Should Consider a Dental Associateship for Your Practice

A dental associate can be a highly effective way to increase production in your practice. If you have reached the maximum of what you can do on your own, find you are having to set appointments for more than three to four weeks out, and are consistently adding around 30 to 40 new patients a month, your practice may be ready for an associate. 

When it’s done right, adding another doctor can be a good investment in the future of your practice. You can improve patient care, increase the services you offer, and possibly begin the dental practice transition process, if the circumstances are right.  

How to Know if Your Practice is Ready for a Dental Associate

Bringing on another doctor requires a lot of thought, planning, and due diligence. Bringing on an associate may increase expenses and decrease profits in ways you might not predict. If you do it too soon, you might struggle to reach the point where the associate’s production is covering their expense, which can be bad for your practice. 

One rule of thumb is to look at your production numbers. If your total production is consistent at $140,000 per month (breaking down roughly to $90,000 from you, the doctor, and $50,000 from your hygienists), you are probably ready to add another doctor. Another way to look at it is by treatment room, where you want to be at a production level of about $25,000 to $30,000 per room, doctor and hygienists combined. If you are interested in adding a dental associate but aren’t quite meeting those production levels, take a look at your practice to determine what changes can be made to get you there.

Also consider your referral and case acceptance rates. A good rate for adding another doctor is around 40 to 50%. Your case acceptance rate should be at about 80%. If you are not meeting these kinds of numbers, you may have internal issues in your practice that need to be looked at before you can get those numbers up. Those issues should be resolved before you start looking to add another doctor or you can end up harming your practice.

ddsmatch Can Help You Find the Right Match for Your Practice

ddsmatch is proud to serve dentists all over the country. Our dental practice transition specialists average over 20 years of dental industry experience and have served dentists through every stage of their careers. We bring that knowledge base and depth of experience to bear for you, to help you get what you want out of your practice transition. Also, we pair our dental relationships with our searchable database to create the perfect match for dentists across the U.S.

ddsmatch has been successfully connecting the dentist’s present with their future for ten years. At ddsmatch Southwest, we focus on dental practices in Texas and New Mexico. If you are interested in adding a dental associate, or are considering transitioning your practice, contact us today for a free consultation.

What to Consider When Selling a Dental Practice to a DSO

Our two most recent client testimonial interviews are with doctors at very different stages in their career, who sold their practices but either aren’t retiring or will continue to see patients under limited circumstances. If the idea of selling a dental practice is appealing to you but you don’t know that you are ready to retire or stop doing clinical work, a dental service organization (DSO) can be a good fit.

Some Pros and Cons of DSOs

For instance, if you are nearing retirement—just not quite there yet—the thought of being free of the business and administrative side of a dental practice can sound very appealing. If this sounds familiar, but you don’t think retirement is the next step, you probably are still interested in clinical work, just not everything that comes from running a small business. A DSO can be a good option because their goal is not to replace doctors but to take over the business and administrative side. Because of their size, they have economies of scale, which means that setting up their practice models around your clinical work can be mutually beneficial. They see the profits to be had from your practice and you don’t have to worry about the business side.

Even if you aren’t near retirement but have found that running a business is not something you are cut out for, a DSO can still be a good choice. You’ll make a good living doing what you do best—practicing dentistry—in the practice you’ve built, but without the headaches and extra hours needed to take care of the business side. Because of those economies of scale, DSOs can, under the right circumstances, do better than individual dentists with collections, strategic marketing, and reducing supply costs, all of which can increase the practice’s profitability. You may also have the option to transfer to other practices within the DSO’s network.

On the other hand, not all DSOs are created equal. Some have gotten in trouble with industry oversight organizations and regulators. Some have pressured dentists to work more than they agreed to. And if the DSO is not well managed, the lower costs won’t be realized.

Also, after years of being your own boss, you have to seriously consider how well you would do as an employee. You may lose flexibility in your scheduling or be compelled to comply with policies and procedures that you might not think are right. Before you sell a dental practice to a DSO, you need to be sure it’ll be a good fit for you and your practice.

Finally, you also have to consider your legacy and what it means to you. With any buyer, you are giving up control over your practice and how it functions in the future. But with a dental practice transition specialists, like those at ddsmatch Southwest, you can put the effort into finding the right buyer who will be the best fit for your practice, your staff, and your patients.

With a DSO, you are getting more of a one-size-fits-all approach to running a practice. The changes may have a negative impact on your reputation if they result in a lower quality of patient care, especially if you continue to work in the practice. That said, DSOs also can provide a number of features patients like, such as flexible financing, or expanded services and hours. 

What to Look For in a DSO

When you are selling a dental practice, whether to a DSO or private buyer, you need to look closely at who you are selling to. This is much more important when you are going to continue to work in the practice. You need to decide what is important to you about your practice and how to preserve that. The answer to that question will be quite personal. 

There are some practical things to consider and you’d be well advised to look and them closely as well. At ddsmatch Southwest, we always recommend that you retain a dental practice transition specialist, and that you have an attorney and accountant with dental practice-specific experience to review your documents and advise you on your decisions. 

Remember that no matter how well you get along with the buyer and their representatives, no agreement that is not in writing is unenforceable. Be sure that everything you need to have as part of the deal is recorded in the deal papers. Not only does this protect you, your patients, and your staff, it also makes sure everyone is on the same page about how you are moving forward.

Some things you should consider include: 

  1. Terms of payment. Will you be paid for the practice up front? Or will you be paid when you separate from employment? What is the impact of your current liabilities on the payment? What accounting methods are they using to calculate the sale price or commissions? Be sure that you are clear on these details to avoid unpleasant surprises and to be able to double check anything that seems off.
  2. Employment status. Its typical for a DSO to require the seller to stay on for a minimum of two years after the sale. You should have an employment contract that explicitly lays out how you will be paid your salary, whether commissions are based on your personal production level or the practice’s overall profit, whether those calculations are based on net or gross revenue, what the exit strategy is, and whether you will have any say in your replacement.
  3. Practice model. You won’t really have much room for negotiation here, if any. The practice model is what drives the DSO’s profitability, so they aren’t going to want to tinker with it to accommodate your preferences. You just need to make sure its a model you can work within. Do they use reliable vendors? Will budget restrictions interfere with your ability to provide quality care? How much freedom to you have to make clinical decisions and discuss the available treatment options with patients?
  4. Support services. This refers to the business and administrative side. This is what the DSO is supposed to be good at but you need to make sure it’s going to be a help to you and your staff, not a hindrance. Speaking of staff, be sure to be upfront with them about the changes that are coming and make sure the DSO is hands on during the whole transition process. Good support services will make it much easier to run and grow your practice.
  5. Capital resources. Because of the nature of the business, dental practices can experience significant fluctuations in cash flow since many services are not being paid for as they are provided. A well-capitalized DSO can alleviate the pressures from fluctuating cash flow. They can also advise on streamlining operations and other ways to increase profits.
  6. How helpful and flexible will the changes be? Be sure to have as comprehensive of an understanding of the changes that are coming and when to expect them. Have regular meetings (at least monthly) with your DSO support team to review performance and address any issues that arise related to the transition. You DSO support team should be helpful and flexible, not a thorn in the side of you and your staff.
  7. Exit Strategy. If you have an idea of when you want to leave the practice, let that be known up front. Be clear on the process and, if you want, ask to be guaranteed that you will have a say in your replacement. 

As with any time someone is selling a dental practice, you should take your time and research your options. Talk to other doctors who have sold to the DSOs you are considering and find out their experiences. A good DSO is one that gives you peace of mind that the practice is growing and well run while allowing you to focus on dentistry.

Considering Selling a Dental Practice to a DSO? We Can Help!

At ddsmatch Southwest, your dental practice transition goals are our goals. An essential part of our process is working with you to learn and define those goals so we can use our expertise to best help you. We bring the experience of hundreds of successful dental practice transitions from all over the country and put it to work for you, to get you the best match for you and your practice. Contact us today and find out what we can do for you.

“The Personal Touch”: Why One Doctor Used ddsmatch When He Put His Dental Practice for Sale

We sat down with Dr. Bill Dean, of Floydada. Texas, to discuss his dental practice transition, facilitated by ddsmatch Southwest. He had recently seen his last patients, who were, coincidentally, among his very first patients—they are part of a family, four generations of which, have been his patients. Dr. Dean makes the case for practicing dentistry in rural areas and for using the ddsmatch dental practice transition specialists. 

“ . . . they did everything that I needed help done. They supplied all the paperwork, all the forms. They did all of the listing and advertising, and all I had to do was be there to open the door when they brought someone out.”

When you first put your dental practice for sale, what did you have in mind for the type of person you were hoping for in a buyer?

Someone that would be a part of the community, that was more than just drilling and filling and seeing patients. And, [Dr. Shively, the buyer, has] been with a corporate firm in Lubbock for the last six months and it wasn’t a matter of getting to know the patients, it was a matter of production, and Dr. Shively didn’t like that, didn’t want that. He wanted to be a part of the community.

He said when he came out there was little league baseball playing, and he said that’s what he’s looking for, and, you know, that’s what I’ve had for the last 27 years. We’ve known for two months . . . that Dr. Shively was taking over, and that I would be leaving. And, the last two months with patients have the most humbling and rewarding of my entire career. The patients just saying, “we appreciate you and love you,” and that’s what dentistry’s all about. It’s getting to know people.

When he came out with Andy it was an instant bond with both of us, and we knew that this is what we were going to do.

It seems like it’s the kind of community that allows people to get to know each other as people, not just as part of commercial transactions.

Exactly. We’re a town of about 3,500 people, but we’re about 50 miles from Lubbock. It’s the nearest town, large town. And, I have a drawing area of probably 20,000 patients and coming from three or four different counties that don’t have dentists, and it’s hard for young dentists coming up to realize that they can come to a real community and have an instant practice when they start out.

Do you feel that younger dentists coming out might not recognize the benefits of a rural community?

Particularly if they’re buying a practice. There’s a ready-made client base that they can go to work from day one and be busy. They don’t have to try to develop a clientele, and they get to know their patients and the patients . . . Once they’ve won a patient over they will tell all their friends, and it just is an ongoing process of good people.

You mentioned that the local newspaper ran a story about you putting your dental practice for sale?

The local newspaper came out probably three months ago now, and interviewed Dr. Shively and me, and ran an article in the paper, front page, half a page story about him coming in and wanting to be a part of the community. And, he’s been out a couple of times, shadowing me and then he came out one day when I wasn’t there and saw patients and then Wednesday will be his first day to see patients, and he’s got a full schedule for the rest of the week.

What is happening with your staff?

My staff will stay. My hygienist has been with me 16 or 17 years, Gracie, who’s the office manager’s been with me 13 and then [Kiera] is a new one, but they are all staying. And, they’re the ones that are going to make the transition for him. They’ve been building him up since the very beginning.

Was your staff involved in considering buyers or were they not really involved in that process?

They weren’t really involved, but some of the first ones that came out, they came out after hours, and it was obvious that they weren’t going to work, and so we didn’t do that. When I met with Dr. Shively, we brought him back out to shadow me, and I told them that he was coming and was probably going to be the one. And, there was a little apprehension until they met him, and then they were quite satisfied.

Let’s talk a little bit about the process with ddsmatch. If somebody came up and just said, “hey, you used a broker, why would you do that?” What would your thoughts be?

I’ve got a colleague in Plainview, that’s about 30 miles from Floydada, that’s tried to sell his practice, I think three times, and it’s all fallen through because he didn’t have the right, I don’t know, idea of how he needed to do it, what he needed to do, and with the ddsmatch they did everything that I needed help done. They supplied all the paperwork, all the forms. They did all of the listing and advertising, and all I had to do was be there to open the door when they brought someone out.

Did they help you out with getting your practice appraised?

They did . . . I supplied, I think it was bank statements and production figures for, I believe, three years. I don’t know now, but they went through and evaluated everything, and they came up with the figure of what they thought the practice was worth, and it was pretty much what I had estimated in my mind that it was going to be and took over from there.

How did that process work?

I supplied three years of bank statements and three years of production figures, and then they took production and expenses and came up with a percentage of office overhead, and lab fees and everything, and based their projected income off of that. They had one problem that they were concerned that my accounts receivable was very, very low. And, for 25 years or since I’ve been in Floydada, we’re a fee for service, we do file insurance but everything is paid by the patient and really the only accounts receivable we have is outstanding insurance.

At the time that Andy looked it was less than $5000, and they used that, and once they decided that that was legit, that we weren’t trying to pull something over, and then my office overhead is quite low for an average dental office. I had to justify the reason that we were doing that but we have a very low rent, or lease payment, and it includes everything, janitorial. They were able to take that and run with it. It’s almost a no-brainer to come.

Did you have a lawyer already in place or did you use one that they had referred you?

I’ve got a friend for the last 40 years and he looked over my part. They supplied or recommended a lawyer to Dr. Shively and he used a financial consultant that ddsmatch recommended, and they did most of the paperwork, and my lawyer looked over it. There were a couple of items that I wanted changed, took a week to do that, and everything was signed and ready to go.

If somebody were to say, “hey, I know of another guy who’s a broker, why shouldn’t I use him instead of ddsmatch?” Why would you recommend that they would use ddsmatch?

For the personal touch. Maybe it’s because I’ve known Andy for 25 years, but I’ve met some of the other consultants with the ddsmatch and I think they go above and beyond what has to be done to list a practice. I can’t say enough good about ddsmatch.

Did they help you with the transition with your staff? Do you feel like they saved you from anything?

They saved me from a disaster of trying to do it myself. Because if I had done that, there’s several things I would not have thought of that had to be done, and they helped with easing the staff into the transition, to assure them that they would be taken care of and supplying all of the necessary forms for state board, radiation board. There’s a multitude of things you have to do to quit practicing dentistry.

Did you send a letter out to your patients informing them about the new doctor?

We did. Right after we had the interview with the newspaper, Dr. Shively and I together wrote a letter and we took the active patients from the last two years and did a mail out to them. We actually used patient families rather than individual patients because some of those would have four and five patients in a family. But, we sent that out about a month ago.

Have any of the patients mentioned the letter or say anything about their impression of Dr. Shively since learning about you putting you dental practice for sale?

They were, most of the patients, when they came in, they were more interested in talking about me leaving than Dr. Shively coming. But, the fact that he has devoted the last five years to serving our country in the military with nine months deployment in Iraq, speaks volumes for his character and what he’s going to mean to the community. I have no doubt that Dr. Shively will be an instant success in Floydada.

If somebody doesn’t know Andy or ddsmatch, could you reassure them about his character?

Andy’s the most honest person I know. I have no . . . I’d trust him with my wife and kids to go somewhere, and I don’t do that with most people.

Having practiced for so long in a smaller community, you’re watching kids grow up, then you’re treating their kids. What that is like from your perspective?

Probably half of my patients call me Dr. D., the other half call me Bill, because I go to church with them, or I’m on the school board. I’m just one of them. Particularly for these that, like the Davidsons, where I see their kids and grandkids and great grandkids, they’re really more family than they are patients. And that’s the beauty of working in a small town. When you leave the office you may see them at the grocery store, you’re going to see them at the football game, or the basketball game. The only problem I have is that we have patients coming from all the little towns around and at the basketball game, I forget and holler for the wrong team sometimes.

Dr. Dean and the Davidsons

It must be really nice to be able to regard your patients as neighbors and friends.

Exactly. I treat them like I would want to be treated because they’re coming back. Even though I’ve got a drawing area of 20,000 people, that’s a finite amount of people and if you don’t treat every one of them properly you’ll eventually run out and that’s what little towns are all about.

What is your case to make for doctors choosing smaller towns or rural areas over the city?

If you go to a small town, we are . . . Lubbock is a town of about 200-and-something-thousand people, Texas Tech University is there, and they’ve got everything you could want. It’s 45 minutes away. If you’re living in Houston you may drive an hour to go eat somewhere and if you’re living in Floydada, you could be anywhere in Lubbock within an hour, and you’ve got anything you want. You got a major airport that’ll get you where you want to go, and, as I said, you’ve got an instant practice the day you open up your doors and in a large city you have to work to get people to come in. Or, go in as an associate and work for five years before you can actually become a partner. 

The nice thing about being in Floydada is, I am my own boss. If I want to take Thursday and Friday off, I take damn Thursday and Friday off.

What you’re looking forward to next?

Got my four grandkids here. I’ll have them for the rest of the week, and two are from Virginia, and two are from about two hours away. I’ll play with them. I’m going to do some part-time dentistry in Lubbock, doing dental sleep medicine with oral surgeons that I’ve worked with, but just slowing down, enjoying life. 

Ddsmatch Southwest can also help you with your dental practice for sale 

At ddsmatch Southwest, our team members are dental practice transition specialists. Our aim is to help you get what you want out of your dental practice transition. We meet with you to find out or help establish your transition goals and work diligently toward them. With our experience, we know to cover all the details. You can be as involved—or not involved—as you’d like. If you are considering transitioning your practice in the next five years, we offer a free, no-obligation Practice Transition Assessment. Contact us today and find out what we can do for you.

Ten Years of Success in Assisting Doctors with Dental Offices for Sale

2019 marks ten years of ddsmatch providing expert dental transition services. Over that time, we have helped hundreds of doctors all across the country achieve their dental practice transition goals. With each successful dental practice transition, we only get better at providing the kind of care and service ddsmatch has come to be known for as we bring that experience to bear for each new client. Your transition goals are our transition goals and we are never satisfied unless our clients are also. If you are thinking of putting your dental office for sale, you can’t do better than with a ddsmatch dental practice transition specialist.

About ddsmatch

In 2009, our founder, Thad Miller, had a vision of a better way for doctors to transition their dental practices by combining technological advances with the human touch to find the right match for your practice, both on a professional and personal level, to better serve your patients, your staff, and give you the peace of mind that they were being provided for. Each of our dental practice transition specialists, and the outside professionals we refer (such as attorneys and accountants), serve our clients at the highest level.

Our specialty is in connecting those putting a dental office for sale with the right buyer by using a process we call “The Trusted Transition Process,” which focuses on integrating relationship capabilities, supported by our technical platforms, and advise based on our extensive professional expertise.

We can assist you with: 

  • Practice sales
  • Practice mergers
  • Dental partnership agreements
  • Associate placements
  • Dental office appraisals
  • Dental Real Estate sales

We are able to achieve a high level of results with our specialized tools, including:

  • The Trusted Transition Process
  • An in-depth clinical practice analysis created by Dr. Charles Blair & Associates PracticeBooster®
  • Fair, dependable third-party business valuations and practice appraisals supported by accredited professionals
  • An interactive website that allows you to search for a practice buyer or partner for your practice
  • Kolbe testing to better assess the nuances of potential matches between dentists and their associates

About the Trusted Transition Process

The key to our Trusted Transition Process is what we refer to as the Conceptual Transition Experience. This begins with a comprehensive interview with, you, the doctor wanting to put a dental office for sale, in order to determine your financial goals and personal requirements about what kind of match you are seeking to take over your practice, attend to your patients, and work with your staff. We understand that these personal relationships have developed over time and are important considerations—a dental practice transition is not just a financial transaction, it’s also about protecting your legacy.

We work directly with you to set your objectives, identify your transition (based on your individual circumstances), and create a plan to meet your objectives. At every point, you are always in control of the process.

About the Trusted Valuation Analysis

Our appraisal process is designed to determine the most accurate fair market value of your dental office for sale. The analysis is based on the financial and other information you provide about your dental practice, along with the economic conditions of your local market and how those relate to your practice and the dental industry overall. One aspect unique to ddsmatch is that we only rely on Certified Valuation Analysts at Blue & Company to provide the most comprehensive appraisal of your practice. These analysts are all CPAs, specifically trained to evaluate business with a specialization in medical and dental practices. This means you are getting the most industry-specific appraisal possible.

Blue & Company has over 40 years experience in providing business valuations. Their staff are recognized for their skill and are regularly retained as valuation experts in both business transactions and litigation, and are certified as valuation analysts (CVA) and accredited senior appraisers (ASA). They are also business valuation members of the American Society of Appraisers and have specialty designations for business valuators (ABV).

This means the appraisal of your dental practice for sale will be fair, based in fact, and detailed with information on the scope of work performed, how the calculations were completed, and the calculated value. Additionally, our team will provide on-site inventory and valuation of your equipment, and, if necessary, we can arrange for a real estate appraisal though our professional partnerships.

Our aim is to provide you with a fair market evaluation of your dental practice that is both realistic and as thorough as can be, based on the experience and knowledge of trusted and qualified professionals.

About our Clinical Opportunity Blueprint

The more information you have, the better positioned you are to make good decisions that further your dental practice transition goals. As stated above, your goals are our goals. To assist you, we will provide you with a forecast for your practice in the form of a 70-page, customized report detailing your practice opportunities, based on Dr. Charles Blair’s Clinical Treatment Analyzer. The Clinical Treatment Analysis can reveal:

  • Over 50 clinical procedure tendencies of the practice’s procedure mix
  • 15 areas of potential within a hygiene department
  • 12 doctor procedure ratios
  • At least 16 monitors that reflect the dentist’s service mix intensity level

Potential matches for your practice will benefit from this information by:

  • Understanding your practice mix from the beginning
  • Assessing their practice philosophy in relation to yours
  • Identifying areas for potential growth
  • Making a fully educated decision based on the facts of your practice

When you are ready, your practice will be posted on our website. By that time, you will have a thorough understanding of your practice transition options, better enabling you to choose your direction on the best way to proceed for your to meet your transition goals.

ddsmatch Southwest Can Help You Put Your Dental Practice for Sale

ddsmatch Southwest focuses on matching available dental practices in Texas and New Mexico with potential buyers. Our success speaks for itself. One satisfied client said 

“It was a pleasure doing business with [ddsmatch Southwest]. You were able to sell my practice when three other brokers failed . . . Selling one’s dental practice and retiring from 48 years dentistry is not an easy, painless decision, but through your guidance (and a bit of counseling too), you made it happen with a buyer to whom I feel very comfortable turning over my practice . . . Your professionalism was absolutely critical to the successful sale and transition of my dental practice, and I am deeply grateful.”

Bill Wolfe, DDS

Contact ddsmatch Southwest today and find out how we can help you meet your dental practice transition goals.

“They were very good”: Why You Should Let ddsmatch Southwest Handle Your Dental Practice for Sale

Dr. Gwen Eaker went through two dental practice brokers, each of whom left a bad taste in her mouth, before finding ddsmatch Southwest. Our team members are dental practice transition specialists who aren’t happy with a transition if you aren’t happy with your transition. Read more and learn why after letting our team handle her dental practice for sale, she considers Randy and Andy to be her “very good friends.”

How is it that you decided it was time to move on from owning your own practice?

I’m just tired of being an owner and having all that responsibility. I wanted to just take a job that had less responsibility but still good money. So, I found that.

How long ago did you make the decision that you wanted to make a change? Has it been quite a while?

I think it was about a year ago . . . Maybe about a year ago I decided. I signed on with [ddsmatch] maybe eight months ago. It took a little while to sell it, but it takes some time. It was less than a year for sure.

Had you worked with anyone else before you worked with Andy and Randy?

Yes. I’ve been with two other brokers. They were horrible. They were crooks. Really they were. It was really bad. One was way worse than the other, but they both were bad, very bad. Not trustworthy. Just in the end you felt like you were taken advantage of.

The second one, I felt he was working for the buyer in the end. You know? And he kind of is working for both, so it’s a tough line to toe, you know? In the end, I felt like he was more in favor of the buyer. I had bad feelings.

I didn’t feel that with Andy and Randy. They were very good. Very good. They helped me come to grips with even just making the decision. They helped me work it through and decide what was  . . . no pressure to sell it because you know that’s how they make money, is to sell my office. But they did not pressure me to do that. They would have helped me jumpstart it, and make it more of a success if that was the road I chose to take. They helped me decide. They were very good friends.

How did you even find out about them and ddsmatch Southwest?

Oh my gosh. I found out from a little dental equipment repair man, an independent guy who came to my office. He’s the one that told me about Andy.

By that time, I’m sure you had some trust issues there about using a broker to put your dental practice for sale.

Yeah. I let them know that. And, so, they were very good about my little roadblocks that I had from my previous experience. They were very helpful to help me overcome those hurdles because they knew I really did want to get out of this, and I needed to get out of this. But I was scared because of everything that had happened before, and the change is scary. So, they did, they helped me to make a good decision without pressure. That was important to me.

Where was your practice?

I was in Spring Branch, Texas. It’s north of San Antonio, about a half hour.

Did you have an idea of the kind of person you were looking to sell to?

Well, I love my staff. I still love my staff, so I cared about who bought it. I’m really pleased with who did end up buying it. So, yeah, I cared about that. I don’t know what would have happened if I’d come down to it, and it was somebody I didn’t really approve of. 

But they brought me some good candidates. They all were pretty good. And then, I really loved who ended up buying it. It’s harder if you don’t like whose buying it, or you’re questioning how they’re going to change the office, and how they’re going to treat your staff. That makes it more difficult, but I didn’t have that. I was lucky.

Did you have a part of your agreement where you had to work in the practice for a little while? How long was the transition period?

Well, we worked that out with the buyers. They wanted me to stay until the new doc out of dental school could get his license. So, you know, yeah, they were helpful with that. That just all depends who the buyer is. Some want you out right away.

You’re almost finished. What are your plans? What are you hoping to do now that you’re going to move on?

I took a job in Ohio, to just work for a company. A friend of mine . . . So, I know who I’m going to be working for. But I’ll be an employee, associate dentist.

You are basically saving yourself the stress of having to run a business, and do all the things on top of actually just doing the work in the chair, right?

Yes. Oh, it’s a huge headache. It’s a huge headache. It’s very difficult here in this area. It’s very hard for me. I’m very relieved.

If somebody was in your shoes in a similar situation, would you recommend ddsmatch Southwest to help put their dental office for sale?

Oh, I would definitely recommended ddsmatch, Andy and Randy particularly. I guess it’s regional, so it would depend where the office was. I have faith in the company and I really enjoyed the experience I had with them.

I mean, I would not recommend anybody else. And I’d never do it alone. I know some people do it alone, but I was like, ‘No way. I’m not doing it alone.’ So, for sure. I really, really enjoyed working with them.

What is it about doing it alone that you think you would never want to do that? Why you would really want a dental practice transition specialist?

Oh, I just think legally, something could come back and bite you. I just don’t know enough about business. I don’t think anybody knows all that, unless you’re an attorney and a dentist. You know, know all the things you have to think about to wrap things up.

Yeah. Too risky. I would never do it.

Was there anything specifically about the way ddsmatch Southwest handled it that you appreciated in particular?

Yes. I really appreciated, they had referred me to an excellent attorney out of Dallas, who I was very happy with. I had worked with an accountant that they told me about, who was excellent. So, they have a good referral base. They help you and have special people that they refer to that can really help you, and they’re the best at it.

So, that was really important to me because I don’t know people here. So, that was really great.

In terms of the transition over to your staff, did they help you with that transition or did they work with your team?

Oh, they did. Yes. He came to the office and talked with my girls. It was very smooth.

Any other advice that you would give to a dentist in your shoes?

Just let them handle it. Because I didn’t know how to do it, so he guided me the whole way. He was really good. He was very accessible. You know, text, phone, email, very responsive. I just don’t have any complaints.

Let ddsmatch Southwest Handle Your Dental Practice for Sale and You Won’t Have Any Complaints

Our team here at ddsmatch Southwest are dental practice transition specialists and your goals for your dental practice transition are our goals. For more about how our clients feel about us and how we’ve served them, check out our Client Testimonials page. To find out what we can do for you and your dental practice transition in Texas and New Mexico, contact us today.

Practice Valuation for Selling a Dental Practice

When people talk about the valuation of dental practices, there is a lot of jargon thrown around. As is generally the case, the jargon makes it sound harder than it is. Simply stated, dental practice valuation is a determination of the value of your practice. The valuation is important because of what it communicates to parties either interested in or involved in a dental practice transition. Before you can start selling a dental practice, you need an idea of what it’s worth.

The fact is, you want to get as much as you can out of your dental practice. You can set the price as high as you’d like, but, more realistically, you need to find that point at which you are getting the most for your practice within the range of what a buyer in willing to pay. Valuation methods are simply a means to get, as much as is possible, an “objective” value in order to begin negotiations with a buyer for the final sale price and terms.

To help you along, we’re going to answer a few questions about practice valuation. A little general knowledge can go a long way toward understanding what your accountant, business valuation consultant, and practice transition specialist will tell you about the value of your practice.

Why You Need a Dental Practice Valuation

People tend to overvalue their own assets. Not out of any kind of bad intent, but simply because our estimates are based on the value of the asset to us: what we paid for it, what we’ve put into it, what it means to us psychologically, the role the asset has played in our lives. All of these things affect how we see it. By having a third-party business valuation consultant assess and value your dental practice, you are starting with a value that has a greater degree of objectivity. Meaning that the value is one that outside parties can agree on, based on factors that matter more universally and less subjectively.

Having a more objective sense of the value of your dental practice can be useful for a number of reasons. It can give you a sense of what you can expect out of the deal. Meaning that you can project how much money you will walk away with and can determine whether your practice is really ready to sell. If the valuation comes in at or higher than what you expected, that’s great. If it comes in lower, you have the opportunity to consult with your advisors about investments to boost value before you put your dental office for sale.

When you are selling a dental practice, the outside valuation gives you an asking price. The buyer, however, also benefits from the valuation. The buyer is looking to balance a fair price with a strong investment. The valuation can either be simply accepted by the buyer as the baseline for negotiation. Or if the buyer wants to use their own business valuation consultant, the consultant will be verifying the accuracy of the valuation that is already done. In either instance, the valuation you provide is the starting point.

The methods for practice valuation is the same whether you have a general dentistry practice or a specialist practice. The difference, however, is in the risks associated with each of the different practice types— the number of patient cases, the stability of your referral base, etc. Because of this, you want to be sure your financial advisors and business valuation consultant has dental industry experience, so they know how to assess these factors.

How to Determine the Value of a Dental Practice

While the real work of valuation will be done by an accountant, it can be helpful to have an understanding of the methods and theories of dental practice valuation before you get too far down the road of selling a dental practice. Valuation relies on a combination of the following accounting methods:

  • Capitalization of earnings: this method takes the last three to five years of earnings, averages them, and divides that number by the capitalization rate. Earnings is typically defined as collections (not production but what you are actually paid) less overhead. This is basically the rate of return. It also identifies the risk to a buyer. The capitalization rate will be influenced by factors including A/R, patient flow, treatment planning, and staffing, so, again, you really need someone with a deep understanding of the dental industry and practice management in order to get a reliable number.
  • Discounted future cash flows: this method estimates your practice’s future cash flow, indicating to the buyer whether it’s really a good investment or not. The value is found by determining the annualized earnings (this is the actual income and expenditures of the practice for a particular period multiplied by the ratio of 12 to the number of months in the period; for example, if annualizing the income for the period January 1 through May 31, multiply the income for the period by 12 divided by 5, or 2.4), subtract the average individual tax rate, and then divide by the discount rate. Then, five years of future earnings are projected at a set growth rate (which is usually the baseline inflationary rate based on current trends) and averaged.
  • Comparable sales method: in a very basic sense, this method simply considers the sale of similar practices. This is similar to how residential homes are valued. With dental practices, this method considers a percentage of the revenue, perhaps a three-year weighted average, and multiplies it by 55-75%, depending on factors unique to the dental practice.
  • Summation of assets method: this method is simply determining the value of the tangible assets (equipment, furniture, building or lease, materials, etc.) and adding it to the intangible asset of goodwill.

A dental practice business valuator may take the numbers from each of these methods and combine them using a weighted system. How they are weighted will depend on an assessment of the actual practice and the informed opinion of the business valuation expert. Again, it is essential that your consultants have dental industry specific information or you risk the valuation being unreliable.

Note that what is not considered in any of these methods is past performance of your dental practice. A business valuation expert is not simply going to look at the history of your profit and loss statements and pick a number in line with those. They are more interested in performance trends overall, along with other factors not reflected on a balance sheet, such as the age of the practice and its assets, overhead percentage, and accounts receivable.

What Happens After Valuation?

When selling a dental practice, valuation is merely the starting point, not an end unto itself. The valuation gives the seller of a dental practice the information they need to set a listing price and begin marketing the practice. For the buyer, the valuation gives them the information they need to decide whether to pursue purchasing the practice at that price, to begin negotiations on price, or to look for another practice to purchase. Often, the value of a practice as determined by the business valuation expert is not the price it sells for. The terms of the deal, including seller carryback, contingent part of the sales price, and a split of price to determine long- and short-term capital gains, can influence the practice’s price.

How to Choose a Dental Practice Valuation Expert

Any accountant can look over your financial and tax records and stick a price tag on your practice. For that number to be reliable, however, you need a CPA who really understands the dental industry and all of the factors that make dental practices run. Specifically, you need a CPA with a specialization in dental practices. In addition to valuing the practice, a dental-specific CPA can offer additional assistance in areas such as structuring the transaction in the most advantageous format, obtaining financing, and minimizing tax exposure. If you are selling a dental practice and don’t already have an accountant with this level of expertise, ask your dental practice transition specialist for a referral.

Selling a Dental Practice? ddsmatch Southwest Can Help!

Here at ddsmatch Southwest, we bring the experience of successful dental practice to work for you. But don’t just take our word for it. Here is what one of our satisfied clients said:

“I would literally tell anyone, call those guys up. Follow exactly what they say to do, and just let them do it. There was zero effort on my part to do this.”

Mitch Conditt, DDS

As part of our process, we consult with you about your goals for your practice transition, the local dental practice transition market, establish the best transition options for you, and advise on improvement and investments that can boost your practices value. If you are considering transitioning your practice in the next five years, we’ll provide a free, no-obligation Practice Transition Assessment address each of those issues. Contact us today and find out what we can do for you.

What You Need to Know About Buying a Dental Office for Sale

A young doctor, on the cusp of their career, is full of hope for what lies ahead. But there can be apprehension as well. For many, ownership of one’s own practice is the goal. Many have done it, so it is certainly not out of reach. If you’ve not had experience with dental practice transitions, however, the process of buying a dental office for sale can seem difficult, complicated, and risky.

We’re not going to lie to you and say that is not complex. And there is certainly risk involved, as with most things in life. But with a little bit of information, and the right support team in your corner, it can be much simpler than it seems.

Here at ddsmatch Southwest, we are dental practice transition specialists. To help quell any fears, we’ll provide a short overview of why it can be a smart move to buy an existing dental practice rather than starting one from the ground up, and then we’ll give you some information that will help you get started. When you are ready to make your move, we have several dental offices for sale in Texas and New Mexico.

Why Buy an Existing Dental Practice: Built-in Patient Base = Built in Cash Flow

While this is far from being the only advantage, it is certainly the most significant one. You have a stream of income from day one that you will need to cover the debt you incurred to buy the dental practice, your dental school loans, the practice overhead costs, and your personal expenses. If you start a new practice, you’ll have those same expenses but will have to cover it all with your practice loan until your new practice can cover its own costs. That is to say, most often, an existing practice will get you closer to where you want to be earning—and paying off those loans—much faster.

Don’t Try and Buy a Practice on Your Own

As stated above, dental practice transitions can be quite complicated. Fortunately, however, you are not expected to be an expert at anything other than dental care. You don’t need to be a financial expert, a legal expert, a business valuator, or a practice transition specialist. You can—and most definitely should—hire those people. This investment is the foundation of your career and will be the financial bedrock you build the rest of your life on. Do not cut corners or proceed blindly. The money you spend on trusted, qualified advisors will be well worth it in the end.

You should think carefully about hiring the following types of advisors:

  • Dental Practice Transition Specialist. Some doctors will try and put their dental office for sale on their own. Going through a broker or specialist, however, has many advantages. Typically, in dental practice transitions, the broker represents the seller. This, however, doesn’t mean that you, as the buyer, should be wary of them. Any one with a good reputation understands that their job is to try and get a mutually beneficial outcome for both the buyer and seller. This means a responsible broker has vetted the listing, done an appraisal, and set a fair market price; and the broker is looking for the right buyer—one who’s experience, goals, and personality are a good match for the practice. A successful dental practice transition is one where everyone walks away happy. Plus, someday you will want to sell your dental practice and you will need a broker then. Smart brokers understand this.
  • Dental CPA. Even if you already have an accountant you like, you will be best served by one with extensive dental practice experience. A good rule of thumb is to find one with a minimum of 25 other dental clients. There are a number of financial issues, especially regarding the buying or selling of a dental practice, that are unique to the industry, such as the tax ramifications of how the practice assets are allocated, costs analysis on hiring and equipment purchases, expense averages, and other best practices they’ve learned from serving their dental clients. Finding a dental CPA you can trust and work with now can result in a lifelong professional relationship.
  • Dental attorney. This person can act as your representative in the deal, as the seller is already represented by the practice transition specialist. You are better off with a specialist as there are issues specific to the industry that you’ll need advise on. These include the terms of the buy/sell agreement, office lease negotiations, non-compete covenants, establishing your corporation, and lender requirements. Because this is a niche service, local dental-specific attorneys will have a reputation among doctors in the community and may offer their advice at a package price (avoiding billable attorney hours which get very expensive, very fast).
  • Dental lending specialist. You may have heard that banks like to lend to dentists to buy practices. Generally speaking, it’s a good investment for banks and most banks know this. But dental practice loans aren’t like other small business loans. A lender who doesn’t understand the industry may not know how dental practices are valued, with the intangible “goodwill” of the practice often being 75% or more of the value of the practice. To a typical banker, this could look like a bad deal, as the tangible assets are far, far less than the requested loan amount. This could mean that you get the loan but with less favorable terms (shorter term, less flexibility to grow, etc.)

By working with these specialists, you are buying knowledge and experience to help navigate the complexity of the deal without having to become an expert yourself or stumbling blindly into a thicket of legal and accounting issues. With a good team in your corner, you can rest assure that your interests are being protected.

Risks of Buying a Dental Practice

Nothing in life is risk free, especially nothing really worth doing. Risk is not to be feared but to be intelligently assessed in order to make an informed decision. Here are some things you should think about both before and while considering existing dental offices for sale.

  • The practice is built on someone else’s personality and philosophy. The selling doctor built up their practice the way they wanted their practice to be. This includes everything from equipment to furniture to staff (hiring, training, supervising, or lack thereof) to patient flow and so on. We’ll discuss this more below, but consider carefully whether the practice is one that you can fit in to. You can make changes as you go, but for the practice to maintain the level of success it has at the time you buy it, you need to be able to keep it running smoothly.
  • You will lose patients during the transition. While the fears of patient attrition in dental practice transitions can be overstated, the fact is that some patients will leave. How many and how quickly depends on how you manage the transition with the selling doctor. The seller’s broker, the person with the most experience in this area, can be an invaluable tool in helping guide this part of the transition.
  • Staff may be overpaid, undertrained, disloyal, or all three. It is generally to your advantage to keep staff on at their same level of compensation for at least 90 to 180 days. That said, you can only control what you do. Some staff may choose to leave on their own. However, changing faces in the office or disgruntled employees can have as much, if not more, of an impact on patient retention as the change in doctor. After all, patients begin and end their experience in the office with the front desk staff and often spend more time interacting with hygienists and administrative personnel than the doctor.
  • Equipment and office decor may need to be updated. This can be expensive, so look carefully at how the office is furnished and equipped. Determine if there is an effective office management software system. If you need to make any of these upgrades, you’ll want that provided for in your loan.

Do Your Due Diligence

While the seller’s broker will have done work on their end to evaluate and value the practice, you should still have your own consultant analyze the staff, the systems, and perform a complete chart audit/patient count to make sure you are buying what you think you are. This person can also help you post-sale with concerns regarding staffing (hiring and firing), and customizing the practice to shape it the way you want it to be, without doing too much too soon or in a haphazard manner.  In addition to the practical aspects of the practice, you also want to consider with any dental office for sale the following questions:

  • Does this practice match your professional vision, and will it continue to for years to come?
  • Do you and the seller practice the same quality of care?
  • Is the practice’s type of dentistry align with your vision? Is the practice fee-for-service?
  • What percentage of the practice capitation?
  • What is the percentage of PPO patients?
  • What is the ratio of cosmetic or restorative dentistry versus hygiene? How much business is referred out to specialists?
  • Can you perform the specialty care if it has been kept in house?
  • Knowledge is power, and the more you know about this big investment, the better.

Bring Change Slowly

Despite all of this talk about how you are buying not just the office, but the staff, systems, and philosophy of the selling dentist, that does not mean you are locked into any of those things. Once the practice is yours, it’s yours. You should plan on making it into the kind of dental practice that you want it to be—one that will support your vision for your career.

The key is that the changes you make should be done with deliberation. That means after careful consideration and in due time. Make sure you understand how every part of the office works, and why it was set up that way, before you start making changes. There is a lot of history there and that can include a lot of information you don’t yet know. You have time, so be careful and be patient.

ddsmatch Southwest has Quality Dental Offices for Sale Throughout Texas and New Mexico

If you are looking for a dental office for sale in Texas or New Mexico, check out our current listings. And, as dental practice transition specialists, we have the experience of hundreds of successful dental practice transitions from all across the country to draw on to help match the right buyer with our sellers for a mutually beneficial outcome. If you have questions about our available dental practices or want more information, please contact us today.