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The Advantages of Dental Associateships and Buy-Ins

It’s a great time to be a dentist that owns their own practice. Whether you are currently in a dental associateship looking to expand your interest in a practice, or an owner looking to sell or expand, a buy-in—also known as a minority interest transaction—can work to the advantage of both the buyer and the seller. 

From the point of view of the owner-dentist, a dental associate buy-in can be a good plan for a dental practice transition. Rather than just bringing on an employee, a dental associate becomes a partial owner. The benefit here is that the junior dentist has a greater investment (both literally and figuratively) in the practice. They are more likely to stay with the practice and work harder for its growth and success. By having more at stake, they will have more of a long term view. Also, when it comes time for the senior dentist to retire, there is already someone settled in the practice, who knows the staff, the patients, and the community. It makes for a smoother, simpler transition. By going through the process of hiring an associate and allowing them to buy-in, you are essentially hand-picking your successor.

Additionally, by creating a partnership agreement between the senior and junior dentist, the senior dentist is assured of the continuity of the practice in the event of their death or disability. Partnership agreements typically require the surviving partner to buy-out the other, meaning that the practice will continue. Without such an arrangement, it’s possible that the practice—something a doctor has worked to build over many years—may end up closing its doors without any of its value being transferred to the dentist’s family.

For the associate, a buy-in can be a tremendous opportunity. They get to share in the benefits of practice ownership, not just be a worker that clocks in and out and collects a paycheck. They get to learn how to manage and grow a practice, but do so under the tutelage of an experienced practitioner and business owner. It provides the opportunity to learn real world skills and business acumen that isn’t taught in dental school. Essentially, the associate gets to learn how to own a practice without having to take on the full risk of ownership.

How it Works

The dental associateship buy-in timeline usually takes place in two parts. First, the associate would buy a minority interest in the practice. 10-20% is a good starting point and is typical for these arrangements. A smaller percentage is beneficial for these types of partnerships because this will be a trial period for both parties. If it turns out to not work for whatever reason, it will be a lot easier to end a partnership that only involves 10-20% rather than half, most, or all of the practice.

The second part, then, is the complete buyout of the senior dentist’s remaining interest. This would probably occur when the senior dentist decides it’s time to retire, but, as referred to above, could be accelerated by the death or disability of the senior dentist. Although such instances are not common, its best for both parties to carefully consider what they would want to happen in such circumstances before finalizing a buy-in agreement, just to be sure this is a path they want to go down together.

After the junior dentist has purchased an initial stake in the practice, generally staff and patients take that doctor’s role more seriously than if they were simply an employee for hire. Although the junior partner is not on par with the senior partner, there is a clear difference when they have bought into the practice (literally and figuratively). Staff will view them differently, especially knowing that the junior will become senior one day. And when that day comes, it can be a more seamless transition than if a stranger is brought in one day and introduced as the new boss. The associate will have had ample time to earn the confidence of the staff and patients.

The Best Partnerships are True Partnerships

There is no doubt that a dental associateship and buy-in is a serious commitment by both parties. It requires mutual respect, open communication, and a solid legal agreement. The most heavily negotiated part of buy-in is not the purchase agreement, but, rather, the partnership agreement. Both parties must be clear on their expectations and those expectations must be aligned for it to work. 

These documents can be very detailed and technical. Whichever side you are on, you will need an experienced attorney to negotiate on your behalf and provide expert counsel on such things as voting rights, management responsibilities, CEO compensation, withdrawal provisions, personal guaranty requirements, matters requiring unanimous consent, deadlock provisions, drag-along rights, required chairside responsibilities, and several other issues.

You should be carefully considering each of these issues, along with the others raised by your attorney. And don’t just considering them in abstract, but within the context of a very real long-term working relationship that you are taking on. Unfortunately, not all of these partnerships work out. Most do, however, you will be well served by not going in blindly or with rose-colored glasses. As with any relationship, business or personal, If you proceed with good faith and your eyes open, you greatly increase your chances for success.

ddsmatch Southwest Can Help You with Right Dental Associateships

ddsmatch has been successfully connecting the dentist’s present with their future for ten years. Recently, 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.

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.

Start Planning for Retirement Before Selling a Dental Practice

It’s never too early to start planning for retirement. As dental practice transition specialists, we here at ddsmatch Southwest know that selling a dental practice is often not enough, on its own, to support a dentist and their family through the period of retirement. Proceeds from the sale are significant, indeed. But consider, if you are accustomed to earning $200,000 or more a year from your practice, selling it for $1m will only support your lifestyle for five years or less.

If your practice consistently reports high earnings, it’s a good time for you to start an employer-sponsored, qualified retirement plan. In addition to good planning for your future, you can do it in a way that will also save you money on your yearly tax bill through deferred compensation.

The Devil is in the Details

First, you will need a dental accountant. The ability to maximize your retirement savings and minimize your tax liability is going to require an accounting professional with an expertise in your business. Using a general CPA might seem like it will be cheaper, as they may have lower fees. However, in the long run, what you save—both in your retirement accounts and from lower tax bills—will make a dental CPA specialists worth the extra costs.

The reason for this is twofold. First, you need a CPA who understands your business in the most detailed way. If you are the only dentist in your accountant’s portfolio, then you are paying for their learning curve. And you can’t be confident that they are picking up on and correctly incorporating all of the details that are specific to dental practices.

Second, you need a CPA who has a functional understanding of the full panoply of retirement plans, not just the most common ones (such as the ones you, as a non-accountant, can think of off the top of your head). Do you know the difference between a defined contribution plan and a deferred benefit plan? That difference could mean savings in the amount of hundreds of thousands of dollars. The specialist is worth the extra expense.

Is Your Practice Right for a Defined Benefit Plan?

Do any of the following apply to you?

  • Are you nearly 50 years old or older?
  • Are your earnings consistently on the higher side?
  • Do you have a relatively young staff?
  • Do you employ a high number of specialty employees (i.e. hygienists)?

If any of these apply to you, a defined benefit plan might be a good fit. Consistent high earnings are important because these types of plans are based on formulas. With a deferred contribution plan, you have a maximum contribution, set by law, for your allowable deductible contribution. If you can save more, with higher tax savings, through a defined benefit plan, you should be making use of one. However, you need to review your financials with a dental CPA to be certain.

Also, if you are nearing 50 or older, you should be considering what position you want to be in when it comes to selling a dental practice. The better prepared you are now, the better prepared you are when that day comes (especially if it comes sooner than you think because of an unexpected life change).

Here’s How it Works

If you paid yourself $300,000 dollars in salary and paid your taxes on those wages, this can be essentially the same as claiming $150,000 in salary and your business organization contributing $150,000 to the defined benefit plan as a deductible contribution made on your behalf as an employee of your business. This would save you money on your state, federal, and Medicare taxes for the first year you claim it (even if you wait until the very end of the fiscal year) and every subsequent year, as you would only be taxed for the $150,000 claimed as salary.

If you are paying close to 50% in taxes, considering the double Medicare tax as the owner of the business, and the extra Medicare tax on earnings above $250,000 for a married couple filing jointly, this can translate into at least $75,000 each year that you will save in taxes. Instead of paying that to the government, you are paying it into your defined benefit plan for your retirement. This means that half of your $150,000 retirement plan contribution is being made of tax savings.

How this will play out for your specifically is dependant upon a number of factors, a major one being how you have organized your dental practice (as an S-corp, LLP, LLC, etc.). That factor, after consultation with your dental CPA, can be combined with other methods of savings to fund the balance of your retirement account. 

Finally, a defined benefit plan, like most qualified employer-sponsored retirement plans, are immune from creditors. Regardless of what happens after you set it up, the contributions will appreciate without being taxed until the funds are disbursed, which will likely be after selling a dental practice.

What’s the Downside?

Of course there is a downside. An employer-sponsored defined benefit plan is different from other retirement funds because the employer knows the formula calculating the benefits ahead of time. This means that if there is a funding shortfall (due to either faulty assumptions or poor investment returns), the employer is legally obligated to make it up with a cash contribution. As the owner of your business, this would mean you would owe yourself the difference out of your business’s earnings.

Because of this potential liability, it is essential that your carefully consider your options after a thorough consultation with an experienced and reliable dental CPA.

Selling a Dental Practice? We Can Help

Ddsmatch Southwest are dental practice transition specialists committed to helping doctors meet their practice transition goals. If you are considering transitioning your practice in the next five years, we offer a free, no-obligation Practice Transition Assessment during which we will review with you the current, local dental practice transition market, best transition options for your practice, physical and image improvements to increase value, potential practice investments, and present and future staff integration. Contact us today and find out what we can do for you!

How Asset Allocation Helps When Buying a Dental Practice for Sale

It’s easy to think of buying a dental practice for sale in a monolithic way. For instance, you might think, “What am I buying? I am buying a dental practice and it costs $500,000.” But, in reality, you are buying several different components that, together, constitute the dental practice. These things include: 

  • Equipment
  • Supplies (dental and office)
  • Improvements to the office or property
  • A covenant not to compete by the seller
  • Patient records
  • Goodwill

Each of these can be valued separately. When negotiating the price of each separately, you can get away from just talking about one number—the overall value. By breaking each item out by individual value—known as asset allocation—you can do a couple of things.  First, you can actually make negotiations go smoother by not just dealing with one big number that a seller (or buyer) can get hung up on. Second, your dental accountant or tax professional (and the IRS) will not categorize all of these items in the same way. By using asset allocation, you can save yourself from overpaying taxes. These two factors, together, result in a better conclusion to the deal for both you and the seller.

The Depreciation Rule

The rule the IRS will use when looking at the assets in the sale is depreciation. Depreciation is the allocation of value to an asset over its useful life. The goal with depreciation is to try and match an asset’s expense to the revenue it helps generate. For instance, if you spend $1,000 on a computer, you will likely use that computer for several years. Because of that, the cost of the computer will be viewed, for tax purposes, as spread over the period of its useful life, not just in the year it is purchased. This rule applies to any asset with a value over $600 and a useful life of more than one year.

Using the assets identified above, the IRS will typically view them as follows with regard to the buyer of a dental practice for sale:

  • Supplies (dental and office) – expensed in the year purchased
  • Equipment – depreciated over five to seven years
  • Improvements to the office or property – depreciated over 15 years
  • A covenant not to compete by the seller – depreciated over 15 years
  • Patient records – depreciated over 15 years
  • Goodwill – depreciated over 15 years

For the selling doctor, the IRS will typically tax the sale of these items like this:

  • Supplies (dental and office) – ordinary income
  • Equipment – ordinary income
  • Improvements to the office or property – long-term capital gain
  • A covenant not to compete by the seller – ordinary income
  • Patient records – long-term capital gain
  • Goodwill – long-term capital gain

Because long-term capital gains are taxed at a much lower rate than ordinary income, the seller will want as much of the value as they can get assigned to goodwill.

The Fair Market Value of an Asset is the Negotiated Price for Each Asset

After a transaction to buy a dental practice for sale, when it comes to tax time, both parties are required to independently report the values of the assets included in the sale. Both parties must be in agreement in what the value for each is. However, what values they assign to those assets is negotiable. 

The rule applied by the IRS to the valuation of assets is their fair market value. But fair market value is simply the price that an independent buyer and seller can agree upon. So, basically, you reach an agreement on overall price for the practice, then negotiate the value of the supplies, equipment, improvements, covenant not to compete, and patient records, and the rest of the value is assigned to goodwill. As long as both parties agree on the value assigned to each asset, then that is the asset’s fair market value.

Why Negotiating Asset Allocation Matters

Negotiation asset allocation is important because it allows you, when buying a dental practice for sale, to negotiate points beyond overall price. It allows you to find areas where your interests and the interests of the seller are aligned—or, at least, aren’t in opposition—and work toward a mutually beneficial final arrangement.

Here at ddsmatch Southwest, we believe a good deal is one where both parties walk away from the table satisfied with the terms of the deal. Asset allocation allows you and the person on the other side of the table to move pieces around to find the combination that works best for all involved. For instance, if a seller feels strongly about getting the full asking price, they may be willing to move some value out of the goodwill category and into equipment, which would benefit the buyer. Or, if the seller is concerned about their tax bill, they may be willing to come down on the overall price and keep more of the value in goodwill.

Everything is Negotiable

Saying everything is negotiable might be an overstatement, but, remember, there may be a lot more that is negotiable than you might first think. What we’ve discussed here has focused on the money involved in the sale of a dental practice for sale. There are a lot of things that don’t impact the valuation of the practice that can be negotiated to facilitate a successful transition. These include the buyer’s starting date, the seller’s letter to patients, ways to protect current staff, other restrictive covenants beyond the non-compete, or a right of first refusal on purchasing real estate (if the seller owns the building).

The key takeaway is that the more knowledge you have about your options, the higher the probability that you will close a successful deal. After all, both parties want essentially the same thing: the sale of a dental practice in which they have confidence. The seller wants confidence that the buyer will take care of the practice, patients, and employees—that their legacy will be protected. The buyer wants to own a dental practice with a steady income stream that they can feel good about.

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

If you are ready to make this next step in your career, we have available dental practices throughout Texas and New Mexico. You can view our listings here. If you see any your are interested in, or have any questions, please contact us— it starts with a conversation.

Tips for a Successful Transition when Buying a Dental Practice

When it comes to owning your own practice, the big question, of course, is whether to start a new one or whether to buy an existing practice. While its a question you should think about carefully, there are a lot of considerations that support buying a dental practice. When you buy a practice, you get—from day one—an existing, paying patient base, established relationships with insurance providers, a reputation in the local community, staff, and an infrastructure for both providing patient care and handling the business and administrative side of things. 

At the point in your career where you’re making this decision, you’ve probably got at least a few years as an associate under your belt. You know the clinical side, you know how to manage your patients, but you likely have less experience on the business side. When you buy an existing practice, having staff and structure in place will go a long way toward easing you into the role of a small business owner, rather than having to piece it together yourself. 

In this post, the fourth in our series on preparing to buy a dental practice, we’ll discuss a few points about how to have a successful transition into dental practice ownership.

Patience is a Virtue

All good things come to those who wait. This is one of many maxims that are easier said than done. A dental practice transition can be a long process, and some even take years to complete. You might get to feeling, “Enough, already!” But being careful in your transition will likely pay off in the end.

First, you need to be patient to find the right match in buying a dental practice. At ddsmatch Southwest, our goal as dental practice transition specialists is to help facilitate that match. We believe a good deal is one where each party walks away from the table happy with the agreement they’ve made. 

The best way to accomplish this is to match a seller with a buyer who shares their practice philosophy. This way, you, as the buyer, get a practice with the kinds of patients you are looking for, which practices the type of dentistry you want to practice, and which has the type of office, staff, and location that matches your career goals. The seller gets the peace of mind knowing that their patients, staff, and legacy will be well cared for.

Figuring out this match takes some time. It might not be the first or second practice that you look at. And, even when you think you’ve found the right one, you’ll need to spend time in the office and with the doctor. Get to know how they practice and why they do it that way. Look at their management style, business methods, and even get to know them a bit personally. The more you know, the better you can determine how good of a match it is.

Since the selling doctor has more experience, you can learn from their successes. Importantly, you can also get a better sense of what can be improved. Finally, when it comes time to implement changes, you’ll be prepared to do so in a way that meshes with the established strengths of the practice.

Don’t Mess with Success (Yet)

If you’re buying a dental practice that’s thriving, there are reasons it is doing well. The doctor has put in a lot of time and thought into how the practice is managed, especially on the clinical side. The seller will know their patients and their community, what works and what doesn’t. Remember, the patients aren’t necessarily going to be thrilled about getting a new dentist—patients don’t stick with a dentist they don’t like. So you need to learn why they come to this practice. And, at first, you should strongly consider adjusting your style to mimic the selling doctor on things like how they explain treatment, how casual they are with patients (joking and conversational or not), and how they interact with and manage staff. This will help put everyone at ease. 

This doesn’t mean you necessarily have to be a clone of the selling doctor. This is simply providing a baseline of consistency as an important part of the success of the practice. Once you’ve got that down, then you will want to make small adjustments to bring in your own style. But too much change too quickly can spook patients. You want them to feel comfortable with the change, and assured that the care they’re accustomed to receiving and paying for will not be downgraded.

If it Ain’t Broke . . . 

While even the best practices have room for improvement, when it comes to buying a dental practice, those improvements are best incorporated slowly. Sometimes older doctors haven’t kept up with advances in technology, marketing, or even the current clinical practices. However, you will be well-served by taking the time to really get to know the practice—both from the clinical and business sides—before making big changes.

One reason has been addressed above: too much change too soon can make patients (and staff) uncomfortable. You need that steady stream of paying patients coming through your door each day and you need the confidence of a staff that feels secure to help serve your patient’s needs. Once you’ve earned their confidence, you can start tinkering with improvements. 

Starting small with things like improving efficiency or updating marketing practices is a good place to start. It will show your staff and patients that the quality of care isn’t being impacted by things that are making the practice better. These smaller changes will also show you how malleable the practice is; you can learn more about where to focus next and how much flexibility you have to make further changes.

Considering Buying a Dental Practice in Texas and New Mexico?

If you are ready to make this next step in your career, we have dental practices for sale throughout Texas and New Mexico. You can view our listings here. If you see any your are interested in, or have any questions, please contact us— it starts with a conversation.

Good Hires Build Value When Selling a Dental Practice

One of the most valuable assets of a successful dental practice is its employees. Whether they are front desk personnel, office managers, hygienists, or assistants, a staff member that is responsible, attentive to detail, good with patients, has the ability to listen and learn, and looks for ways to improve office practice or policy is worth much more than what they may represent in terms of production or collections. They are invaluable. In addition to making your practice more successful (and your life much easier), they are part of what will ensure your legacy and reassure your patients when it comes to selling a dental practice.

The question is, how do you hire good people? It’s a difficult question to answer, however, one method is to hire smart people with the intangibles you need and then train them in whatever technical skills they may lack. That is, you look for attributes as much as specific skills. For instance, you may be accustomed to posting want ads that are a list of skills, including a working knowledge of your equipment or software, thinking that you don’t have the time, or need the bother, of training a new hire on how to use it. And, true, it will take some time. Consider, however, how much longer it will take—if it’s even possible—on how to teach a new hire appropriate interpersonal skills. Or how to think critically. Or how to understand their role in a team environment. Which would you rather do?

There is no harm in requesting preferences in terms of these skills, such as “proficiency in Acme Software preferred.” But if you make it a requirement, you may be weeding out the best candidate before you’ve even posted the ad. Honestly, if a smart and capable person can learn one software program, or machine, they can learn another. And a few months down the road, you’ll find yourself with an employee that you appreciate and contributes to your practice, as opposed to one who requires less up-front training but may end up creating problems with their personality.

What Qualities Do You Really Want from an Employee?

The first thing you have to determine is what is it that you are looking for. Some of this may be applicable to any dental practice. Good dental office employees often are positive people with upbeat personalities. Let’s be frank, many people dread the dentist and a friendly smile and helpful attitude can go a long way to helping your patients feel comfortable. This kind of employee is often calm, kind, friendly, and wants to help the patient feel comfortable and cared for. In short, these employees are putting patients’ needs first.

Beyond that, however, you need to ask yourself what are your practice’s core values? What is your practice’s identity? What is its image? What do you want to communicate to your patients, and the community you serve, about who you are as a care provider? The answers to these questions will further illuminate the qualities you should look for in your hires.

Having a strong sense of you practice philosophy will be a great aide to you throughout your career. It will help guide how you market your practice, how you grow your practice, and, when it comes to selling a dental practice, which doctor is the right doctor to sell to— one who reflects your practice’s values and will mesh well with the legacy you have built. 

Essential Attributes

The Ability to Learn

A person who believes they already know everything they need to know will always be at a disadvantage to one who is open to being taught. This applies to everyone, even dentists. An assistant who is open and willing to learn new technologies and techniques will be a much better addition to your practice than one who assumes that how they’ve always done things is simply good enough.

While this might seem simple enough, many people are made uncomfortable by new information or methods. They may see it as a challenge to their abilities or value as an employee. Instead, you want employees who are comfortable with opportunities to expand their knowledge and skill set, who will see it as a chance to make themselves better prepared and more capable at doing their job.

Instrumental to this, however, is that your employees understand how they fit into your organization. That is, they can see how all of the parts mesh, working together for the efficiency and success of the organization. You and all of your staff members should be able to see themselves as parts of a whole, each benefiting the others, not as individuals whose interests are at odds with one another.

The Ability to Listen

The ability to listen within a clinical context takes two forms: the ability to listen to patients and the ability to listen to coworkers. 

You need your patients to feel calm. In order to feel calm, they must feel comfortable. To feel comfortable, they need to feel that they are in a friendly and safe pace. This is done when they feel that they are seen as individuals whose concerns are being heard and addressed. And for them to feel heard, they must be listened to.

Also, remember that your patients may not be expressing themselves directly. Sometimes it’s in the idle chit-chat that they reveal themselves. So, when your patients are talking, be sure that your staff is listening. When your patients feel heard, they’ll feel cared for. 

Additionally, you need staff members that listen to each other. If there are problems in the office (and there will be problems), you need staff members who can communicate openly about the issue and work together to resolve it. Many disputes between co-workers originate and escalate when they view each other as rivals. This means they are not talking or listening to each other, but advancing personal goals. As much as your patients, your employees need to feel that their workplace is one that is calm, comfortable, that values them and their contributions, and where they can also be seen as individuals. An office that functions this way will also be highly attractive to potential buyers when it comes to selling a dental practice.

The Ability to Present Cases

The attributes discussed above lend themselves well to case presentation. This is important, however, because it’s more likely that your assistants, hygienists, or administrative personnel will be regarded as a confidant than you, as the doctor. 

There is no question that what you are prescribing is the best course of treatment for your patients’ needs. Patients, though, may be skeptical about whether there is a difference between what they need and what you may want to earn. This is simply a reality of the dental business.  

When you have employees that communicate well with your patients, actively listening to and understanding their concerns, they are well positioned to back you up on treatment plans. They can reinforce the importance of the care being provided, reassuring the patients that its in their best interests. An ability to hear what is on the patient’s mind and respond, both with empathy toward the patient and an understanding of why the treatment plan is important, is an essential attribute. 

ddsmatch Southwest Can Help With Selling a Dental Practice

Protecting your legacy is important to us when it comes to selling a dental practice. That means finding the right match to reflect the values you’ve built your practice around. To find out more about how we can help you find the right buyer, contact us today.

Why You Need a Marketing Plan Before Putting Your Dental Office for Sale

Marketing is not always something a busy doctor wants to spend their limited time on. Regardless of the relative success of your practice, without adequate marketing, you may see your busy practice become less so. Whether you are just starting out (looking to draw patients and build a reputation), are comfortably ensconced in your practice (looking to maintain or enhance your reputation and continue to draw new patients), or are preparing to put your dental office for sale (looking to bolster your practice before the transition to a new doctor), marketing is an important part of maintaining a successful practice.

Consider this: of the major brands out there—such as McDonald’s, Coke, Nike—how often do you encounter their advertising? Constantly. Is it because they lack customers? No. Its because they understand that by keeping their brand in front of consumers’ eyes, that recognition will translate into customers. People are drawn to the familiar, as it seems reliable. And when it comes time to choose a dentist, you want people in your community to see your practice as familiar and reliable.

What is Marketing?

Marketing is basically anything that you do to make potential patients aware of your practice and promote your expertise, reputation, and quality of care. It includes a wide variety of communication tools: signs on your building or on the street near your parking lot, advertising (increasingly this is online, however, depending on your market, it may also include billboards or other outdoor ads and local tv or radio spots), sponsorship of local events, social media, your website, email, direct mail, and in-office brochures. With a small business like a dental practice, your focus should be on targeting your local community. Advertising outside of the area from which you draw patients will be wasted money. Look around at other successful local business and see where are they putting their resources.

All of these “channels” make both your current patients and potential patients aware of your practice. The most effective way to make use of these channels is, first, be sure to have a strong logo with a consistent use of colors so that its recognizable wherever it’s seen (again, think of the McDonald’s yellow M, Coke’s red and white colors and font, the Nike shwoosh). And, second, consider what you want associated with that logo. What defines your practice? Quality of care? Sensitivity to patients’ needs? These two together are your brand identity.

Having a strong brand identity is particularly important when it comes time to place your dental office for sale. The brand should transcend simply the identity of the individual doctor, but represent something larger than one person: an idea of the practice, a philosophy to which the practice, as an institution, is committed. This way, when you have a change in doctor, or staff, your patient base can feel reassured that they’ll receive the same quality of care to which they are accustomed.

If you don’t already have a strong logo and practice identity, it may be worth hiring a local marketing consultant to help you develop them. This consultant will also have unique insights into your local market to help guide you towards the messaging and channels that will be most effective in your community. This will certainly require some capital, but, remember, this is money invested in boosting your practice. 

On that point, be sure you can track the effectiveness of your measures (for instance, ask new patients how they heard about your practice). If your marketing efforts aren’t bringing a return, you’re on the wrong path.

How Marketing Helps

The bottom line of marketing is getting patients into your chairs. This is done by making your community: 

  1. Aware of your practice.
  2. Aware of your particular services, skills, and other practice attributes.
  3. Aware of how these services, skills, and attributes will be of benefit to them.

You make people aware of these things by:

  • Building brand awareness – As discussed above, whenever a patient or potential patient sees your logo, you are making them aware of your practice and planting a seed in their mind.
  • Targeting specific audiences – This can be based on the location of the audience or it can be further targeted to sub-demographics such as more affluent patients, budget-minded patients, families, patients focused on obtaining the best services, etc. What audience you want to reach will largely determine which channels to focus on and where to place your ads.
  • Connection with Community – social media is a great way to communicate directly with your community. Facebook, Twitter, Instagram and other platforms allow a back and forth with patients outside of the clinical setting in which you can express your practice’s “personality.” Don’t be afraid to be informal or funny if that reflects you and your practice.
  • Develop Your Practice Identity – As you identify your practice values, you can express these through your marketing efforts. Potential patients get a sense of what your practice represents and how they can connect to those values. You can emphasize these through consistent use of keywords such as “compassionate” or “gentle.” Your website and social media channels can also show what your office looks and feels like, so people know what to expect and can be reassured their making a good choice in choosing your practice.
  • Showing What Sets You Apart – Its important that you distinguish yourself from other practices in your community. Do you have technology or tools that are different? Do you have any promotions or pricing programs that might make you more attractive? Do you offer unique services or procedures? Do you have amenities that other providers don’t? Showcase these differences. You don’t have to be negative about it—there is no need to call anyone out. Just show what you have that patients want.

It’s never too early, or too late, to start a strong marketing program. As mentioned above, it will pay off when it comes time to place your dental office for sale, because you’ll have something of value that goes beyond just a patient base. You’ll have an identity that represents ideals that are valuable in your community.

ddsmatch Southwest Can Help Prepare Your Dental Office for Sale

At ddsmatch Southwest, we believe that the right buyer for your dental practice is not just one with financing, but a doctor who is the right fit for your practice. You’ve spent your career building a reputation in your community and the right buyer can help to protect your legacy. If you are considering transitioning your dental practice in the next five years, we offer a free, no-obligation Practice Transition Assessment to help you get ready to place your dental office for sale. Contact us today to find out what we can do for you.

What Information Do You Need Before Buying a Dental Practice?

One of the most important decisions you can make in your career is about buying a dental practice. It is essential that you be thoroughly informed in order to make a decision that will be a solid foundation on which to build your career. Your clinical skills can only get you so far. In order to run a successful practice, you must also have the requisite business knowledge and acumen to manage every aspect of your practice. And, in order to make a strong choice in what dental practice for sale you choose to buy, you should be working on developing those skills now.

However, there is truth in the saying that a jack of all trades is a master of none. It’s simply not possible to be an expert in everything. As you’ve likely heard, you will need to surround yourself with a team of professional advisors who have the education, training, and experience to be the expert in areas where you are not. These include, at the least, a lawyer, an accountant, and a dental practice transition specialist. In particular, a reliable dental accountant will help you evaluate potential dental practices for sale to determine their viability as good options for purchase.

Below we will discuss some of the essential information you will need about a dental practice for sale before you can make a fully informed decision. If a seller is unable or unwilling to provide this information, that should be noted as a warning sign. It indicates that they either don’t want you to know it (a major red flag) or that they don’t have or aren’t able to provide it (indications that the practice may be poorly managed on the business side).

Financial Information

  • Tax Returns – You should expect to see three to four years of tax returns for the practice. These documents provide insight into the historical financial performance and illuminate the practice’s earning trends and stability.
  • Practice Valuation – If the seller is serious about selling the practice, they should have had a professional valuation by a certified valuation expert. Here at ddsmatch Southwest, we use Blue & Co. for our valuations. Regardless of the valuation expert, you should consider how thorough the valuation report is and look into the qualifications of the firm that prepared it.
  • Cash Flow Model – This model is a projection of the practice’s earnings over the next five to ten years. The model should take into consideration growth rates, operating expenses, debt service for the practice purchase loan, and your take home pay.
  • Accounts Receivable – This will show you how well the practice is doing at making its collections.
  • Lease Agreement or Real Estate Appraisal – When considering buying a dental practice, you have to consider whether the practice is leasing space or whether the seller owns his own building and land. Taking over the lease, buying the real estate, or leasing from the seller are all options, but these arrangements are separate from the agreement to buy the practice. In any of these instances, you have to look at what the seller has and whether a deal can be reached that will work for the long term viability of the practice. Also, your lender may have terms that need to be satisfied (e.g., the lease being equal to the term of the loan).
  • Production/Collection Reports – These reports should break down what procedures the seller is performing and what they are actually collecting from those procedures, including those performed by associates and hygienists.
  • Associate Agreements – If there are associates, you need to review their agreements with the practice, especially the restrictive covenant mileage, the length of the agreement, and the non-solicitation terms (of both patients and staff). If there are associates, but not associate agreements, be aware that the associates are free to leave at any time and poach employees and patients. 
  • Employee Salaries and Benefits – This information provides two functions. First, it shows you in detail who the employees are and what they cost the practice. Second, it can show you whether the practice is appropriately staffed or over-staffed. While it is typically advisable to keep current staff on at their current compensation for a certain period of time, you will likely have no legal obligation to do so. However, staffing decisions, especially immediately after a dental practice transition, need to be made carefully. Staff morale can have a significant impact on patient retention.
  • Financing Ability – This involves two factors: your ability to borrow and the practice’s ability to be financially viable enough to service the debt and cover its other expenses, including your take home pay.

Information About the Office

In addition to financial information about the practice, there are some important things you need to know about the office before making a decision about buying a dental practice. 

  • Site visit – You must make a visit to the physical space and be able to see every part of it. Is it in an appropriate location? If it’s in a building with other tenants, how is the property maintained?
  • Equipment and Improvements – You must be able to see the equipment and its condition. If its old and outdated, or in poor condition, that may communicate things to you about the practice. Importantly, it will let you know what you are going to need to replace or upgrade.
  • Ability to Expand – If the practice can be expanded in regards to procedures and patient base, will the office space be able to accommodate it? If not, do you have the option to expand? You don’t want to be locked into a lease that will hold you back. 

Patient and Practice Characteristics

Finally, there are aspects of the patient base and other practice characteristics you need to examine.

  • Active Patients – How many patients have had appointments in the last 12 to 18 months?
  • Insurance – What percentage of the patients participate in insurance plans accepted by the practice?
  • Demographics – What are the patients’ age groups and zip codes?
  • New Patients – How many new patients are coming into the practice each month?
  • Hygiene – How many hygiene appoints are made each month and how much revenue are those generating?
  • Appointment Schedules – Ask to review several weeks of appointment schedules for both doctors and hygienists.
  • Fee Schedule – This would include the list of procedures offered and what the practice charges for out of pocket patients and what they get from insurance reimbursements. How are the normal procedure fees being adjusted for insurance reimbursement? This should be compared to local competitor fees and industry standards.
  • Office Hours – What days is the practice open and for what hours on those days? Consider whether this may be expanded to increase revenue.
  • Reason for the Sale – Why is the seller transitioning the practice? Retirement? Relocation? Selling off a second location? Financial distress? Licensing issues? Other reasons?

While this is a fairly comprehensive list of considerations, it’s not exhaustive. As you review the information relevant to these categories, it can point you to other areas where you may have questions. Be sure to ask those questions. The more information you have, the better prepared you are to make a reliable decision about buying a dental practice.

Considering Buying a Dental Practice for Sale in Texas or New Mexico?

At ddsmatch Southwest, we have dental practices available for sale throughout Texas and New Mexico. Contact us today for more information.

The Practice Optimizer Experience: A New Tool to Prepare a Dental Practice for Sale. in 3-5 years

ddsmatch has been successfully connecting dentists’ present with their future for ten years. A major factor in our success are our proven processes, which are continually revised with new information from each dental office transition that we facilitate. Continuing this tradition, we are pleased to announce our newest program, the Practice Optimizer Experience. If you are thinking about placing your dental practice for sale, this program can be invaluable to you as you prepare, plan and prioritize for your future transition.

Below, we’ll briefly outline each step of the process.

The Practice Optimizer Experience—Helping Dentists Plan and Prepare for a Future 

Step 1: Conceptual Transition Experience

In this first step, your ddsmatch dental practice transition specialist will help you visualize your future, set achievable goals for your transition and afterward, and devise strategies to start you in the direction of your post-transition dreams, well in advance of your intended transition timeframe.

Step 2: Trusted Valuation Analysis

Your dental practice will be analyzed twice by Certified Valuation Analysts with dental industry expertise. Their findings are fair, reliable, and, importantly, respected by banking institutions. At ddsmatch, we’ve partnered with the professionals at Blue & Co. to provide our valuation analyses. This step is an important part of your wealth management planning. The first analysis will be at the beginning of the process. The second analysis will be when you are ready to actually start your practice transition and move on to our Trusted Transition Process.

Step 3: Ideal Retirement Calculation

For this step, ddsmatch has partnered with HK Financial Services to conduct a Retirement Check-Up. This is a financial review of all of your investments and projected future income to establish security in the timing and planning for your future transition. This can be done in tandem with your current advisor or as a supplemental third-party opinion. However you prefer to approach it, it’s an important step toward your ideal future.

Step 4:  Estate Preparedness Gameplan

Your ddsmatch practice transition specialist will refer you to a local experienced and reliable attorney with expertise in wills, trusts, and estates, to update or create the essential legal documents that will protect your practice assets and value in the event of an unforeseen death or disability. 

Step 5: Dental Insurance Navigator

Before you place your dental practice for sale, ddsmatch will arrange for a comprehensive and customized consultation with Shelley DeGroff of Integrative Dental Solutions, a PPO Advisor on the current dental insurance plans in place in your practice. Ms. DeGroff will advise on new insurance plans to consider adding to your practice, or plans to discontinue to achieve your ideal payer mix. Ms. DeGroff and her company have established relationships with insurance companies and their representatives that allow them to be in a unique position to negotiate terms to increase your revenue, with established success nationwide.

Step 6: Clinical Opportunity Blueprint

Using Dr. Charles Blair’s “Practice Booster Clinical Treatment Analyzer,” we reveal your practice’s potential in a 70-page report. This report functions as a blueprint of opportunities, detailing production mix and intensity, new patient flow, and more. This step allows you to maximize the opportunities for growth in your practice.

Step 7: Critical Metrics Analysis

Importantly, the analysis of your practice is not static, but evolving. We will provide you with the Practice in Your Pocket Ongoing Report, a customized practice report on critical items conveniently delivered to your phone, tablet, or workstation. This report will be a guide to keep your practice producing at a high level. An annual review of the results is included as part of the analysis.

Step 8: The Trusted Transition Process

When the time is right, your ddsmatch practice transition specialist will start you on the Trusted Transition Process. This process provides a clear and consistent path to help you transition your practice, while maintaining the legacy you have worked so hard to establish. We offer a complete range of professional services, which includes a full business valuation, to provide reliable information and counsel from the start of your transition to the successful finish.

Let ddsmatch Help You Prepare Your Dental Practice for Sale

Here at ddsmatch Southwest, we are excited about this new opportunity to better help doctors considering placing their dental practice for sale in Texas and New Mexico. The Practice Optimizer Experience will be of great value as you set your future goals and map out the path to achieve them. The Practice Optimizer fee will be refunded against any fees for the future transition. Contact us today to learn how you can get started.

One Doctor Explains Why You Should Consider a Rural Dental Office for Sale

We’ve posted an interview with one doctor, Bill Dean, that we assisted with selling his dental practice. We also posted part one of an interview with the buyer, Dr. Kevin Shively, about his experience on the other side of the deal. Here, in part two, Dr. Shively discusses why he was looking for a rural dental office for sale. 

Let’s talk about the benefits of buying a rural dental office for sale. There are a lot of dentists out there that just think a city is where they need to be to have the practice they want. What would you say to people about considering smaller towns? Has it been good for you?

Oh, absolutely. I wholeheartedly support and agree going rural for opening a practice. Trying to make it in the big city, especially as someone new-ish coming out of dental school. “New-ish” being, you know, five to maybe seven years out of school.

Everybody’s business background is going to be different and, for me, being in the military, I never had to worry about the money issue. It was, “Okay, you need a crown. Let’s do a crown,” kind of thing. But trying to make it in a bigger city like Lubbock, or Odessa, Midland, somewhere like that, it’s going to be a lot harder and you’re going to have to look into participating with insurance, figuring out how to do reimbursements, things like that.

So, can you open a practice in a big city like Lubbock just on your own? Yes, you can. But it’s going to be much more difficult. I would wholeheartedly support and suggest looking into rural practices. The people need the treatment. They will come from, in some cases, hundreds of miles away to get the treatment. And at the end of the day, they know how much work went into it and they are so, so appreciative.

When you’re in the military and you have a bunch of 17 and 18-year-old kids, they don’t necessarily really understand how much work goes into things. They’ll say things like, “Yeah, I don’t know what I’m here for today. My leadership told me I had to come for an appointment today.” While they cooperate and do everything, here’s a case where you worked hours and hours on something, and they take a look at it and they’re, like, “Yeah, looks okay, I guess.”

So, you really kind of lose that love and that drive to do dentistry. Within the first week or two being in Floydada, I found that I was loving coming to work. I found that I loved getting to know and interact with my patients, and just having those moments where patients will cry because of how beautiful their teeth look again, and how they’ll fall over themselves to thank me for the work and everything that I’ve done. It really, really helped me reaffirm why I got into dentistry in the first place.

Let’s talk about your hopes for the future. We’ve talked to a lot of retiring dentists, and they have all sorts of plans of all the fun that they’re going to have. But we haven’t talked to a lot on the buying side. What are your hopes for this practice? How you see it playing out throughout your career?

I definitely want to grow the practice. Being out in the rural area, the patients … They understand there’s some procedures they can’t get around going to Lubbock for, but if they can stay in Floydada, they would appreciate it.

I want to grow the practice and ultimately start doing more procedures and make it a true … as much as possible, a true one-stop shop to be able to get everything done. That’s my hope for the future, is to grow the practice to really make it a well-rounded family dentistry practice.

Going back to rural practices, people might be worried about, “How do I market myself? How do I get more patients?” How are you getting patients to your practice?

Well, I would say rural is going to be more word of mouth. Those first few patients are going to be very leery, which mine were as well, because I’m not Dr. Dean and it’s a situation where you have to trust in yourself. You have to know that you’re doing the best for the patient and also treat them as you want to be treated. Treat them with the kindness and respect that you would love to have if you’re the one sitting in the chair. If you do that, it will come back to you a thousand-fold.

I do a little bit of marketing on Facebook. Dr. Dean, one of his main marketing ploys was, he would … There was a local restaurant in Floydada. He would frequent it, and if he noticed that one of his patients were sitting somewhere in the restaurant, when he went to pay he would also pay for that patient, as a sign of goodwill and “Thank you for your patronage with my practice.”

Because it’s such a wide area that you pull from, you’d want to have some face recognition. Word of mouth obviously would be huge.

We do have a website that we’re starting. It’s still a work in progress. But I want to, for those patients that are, let’s say, 45-50 miles away that are looking for a dentist, I’d like for them to be able to look at the website and look at what the practice looks like. And get to know our staff a little bit more, and what we can and can’t do for them, before having them make that trip out there.

There was also a transition letter that was sent out to all the active patients from the last five years. ddsmatch helped with that, but Dr. Dean and myself crafted it and then we sent it out to all the patients. So that was, I think, the biggest initial marketing plan that we had.

Looking for a Rural Dental Office for Sale? ddsmatch Can Help!

If you are considering a rural dental practice, here at ddsmatch Southwest, we have several available dental offices for sale in Texas and New Mexico, as well as across the country. Check out our listings online. Contact us today for more information— it starts with a conversation.

From the Other Side: A Doctor Discusses Buying a Dental Practice

We recently posted an interview with one doctor, Bill Dean, that we assisted with selling his dental practice. To shed light on the other side of the transaction, here is part one of an interview with the buying doctor, Kevin Shively, about working with ddsmatch Southwest, dental practice transition specialists, and his experience with buying a dental practice.

Could you please talk a little bit about your background and how you came to hear about ddsmatch?

My name is Dr. Kevin Shively. I’m originally from Louisville, Kentucky. How I came upon ddsmatch was, I was serving on active duty in the military in Germany and was contemplating my next step. I had found a job opportunity in Lubbock, Texas, that wasn’t everything that I was hoping it would be.

I had heard about ddsmatch when I was in dental school and it was a company that had interested me, and, ultimately, I knew that I was going to own my own practice one day. When I reached out to ddsmatch, they helped make that dream become a reality for me.

Can you just talk us through how the process went for you, from the time you first got in contact and how it proceeded?

Yes, absolutely. I accessed the ddsmatch website, the Contact Us portion, and put in some information, some basic information, name, things like that, email address. I was promptly called, I believe, within 48 hours by Andy. He started getting some background information on me, and trying to figure out exactly what I was looking for, and things like that. Because they don’t just help match up people wanting to buy practices, they also help find associateships and things like that. So, he was finding the best fit for me based on all those questions and everything. Going forward, we looked into some practices and went from there.

How long did the process of buying a dental practice take, from when you first started looking until you finally found a seller?

Well, it’s a little misleading, because I was dragging my feet. I had a little bit of cold feet in making such a big purchase. But all in all, I would say from the first conversation I had with Andy until the closing of the practice, no longer than about seven, eight months.

Did you look at several practices or did you find the right one early on?

Based on what my criteria were that I gave Andy, we found two that were the best fit for what I was looking for. At the time, with ddsmatch, there were several practices, but not within the Lubbock, Texas, area. And being that I had just moved halfway across the world, I wanted to stay in one place.

What were the major factors for you? What were the things that you felt were important to you in finding a match?

Well, you always have to trust your gut and your instinct on things … I toured both practices. I enjoyed and liked both practices, but I had a strong sense of one practice, which ultimately was the practice that I ended up purchasing. Once I started going through the numbers and doing the due diligence, it just further bolstered my decision to want to proceed with that practice.

Did you have any “deal-breakers” that you were looking out for?

I don’t really know if I had a whole lot of deal-breakers, this being my first time purchasing a practice. I had things that I really wanted in a practice which, going forward, if I were to do this again, they probably would have been deal-breakers. But with the practice that I ended up acquiring, it was, again, like the stars kind of aligned for me for that practice.

If someone were where you were a year ago, do you have any words of advice?

I would say it is a big step. There are a lot of unknowns, but it is a wonderful path to walk down. It is challenging work, but at the end of the day it’s extremely rewarding, and it really affirms my love for dentistry, with having patients that are extremely appreciative, and just doing what I love.

In terms of staff, do you have any thoughts on the experience of coming into a completely staffed-out and ready-to-go office? Has it been challenging?

Not so much. I learned early on in the military that a lot of change right out of the gate usually backfires on you. So, that was a lesson that I learned and implemented with this practice. I acquired all the staff from the outgoing doctor, and they were very, very hesitant and leery of the transition because change is hard for everyone. I think taking incremental steps in making changes has been very well received by the staff.

What has been your experience with the patients as they’ve come in and had a chance to meet you? What’s been your approach to making sure that you hold onto those patients?

Well, it is a small town practice. The city is only 3,000 people, but I pull from about 30 miles in any direction. Every day is a wonderful experience, in that the patients are so thankful. They are very appreciative. It’s very heartfelt. Here’s someone they don’t even know. I’m introducing myself, and the first thing out of their mouth is, “We are so glad you’re here.” And it’s such a rewarding thing to hear that.

Let’s back up a bit to the process of buying a dental practice itself. What did ddsmatch bring to the table to make the process easier for you?

As far as making the process easier, I could not have done it without ddsmatch. It’s one of those situations where you just don’t know what you don’t know, so Andy and Randy were absolutely instrumental in getting this whole thing going, as far as helping with going through the numbers, the due diligence, and they went beyond the scope of what they normally do to help.

They’re more than willing to do whatever they can to help. They’ll be the first to tell you, “Hey, this isn’t my area of expertise. Here’s my opinion, but I’m going to introduce you to so-and-so, who is the absolute expert in this.” Not only do they give you their advice, they set you up with professionals that have done this several times in the past and can guide you every step of the way. So, it couldn’t have been any easier using ddsmatch.

If someone else is in your shoes, and they’re trying to make the same similar decisions, trying to decide if they want to go with ddsmatch, what would be the selling points?

Well, my main advice with using ddsmatch is, they will guide you. They will help you in doing everything in the correct order … [If] you don’t have a strong business background, they can set you up with a CPA, with a business manager. If you’re wanting to change staff, they have connections with local dental assisting schools and hygiene colleges. If you need help going through the due diligence … It’s any and everything that you could need, they help you with. And if they can’t, they know the people that can help you with it.

Trust is a big deal. For anybody who feels like, “it’s just really hard for me to trust somebody in this situation,” what would be your thoughts for them?

The reputation of ddsmatch, in my opinion, is what can help bridge that trust gap, in that they’ve been around. There’s been, in my estimation, hundreds, if not thousands, of successful transactions and acquisitions using ddsmatch. The proof really is in the pudding, and it’s by far worked out for the vast majority of clients.

It sounds like you really felt like they had your best interests at heart.

Yes, absolutely.

With regard to the outgoing doctor, what was your timing in terms of transitioning him out and you in?

Well, mine was a little abnormal, in that I’m still in the army reserves. Uncle Sam said, you know, “You need to go to Hattiesburg, Mississippi, for 30 weeks,” right in the middle of my transition. It was a little bit of a hiccup and, admittedly, it threw the process off a little bit.

But Andy and Randy were awesome at communicating between myself and Dr. Dean, the outgoing doctor, and working out an agreement to where Dr. Dean would be an associate for me while I was serving my country. Again, it was a wrinkle in everything, but without ddsmatch I would not have been able to get the agreement in place, and get everything situated and done to allow me to go on that mission.

In conclusion, what would be the bottom line for your advice to a dentist in your situation?

The bottom line I would give anyone is, yes, purchasing and acquiring a practice can be scary, it can be a very daunting task. There will be pitfalls in areas where you can get tripped up very easily, but that happens with everything. If you buy a car, if you buy a house, things like that can occur.

ddsmatch knows where those pitfalls can occur, and they can help you navigate around them. They can help you network with other local dentists. They can help you network with people to help grow your practice, and help you to make it as smooth a transition as possible. Ultimately, ddsmatch will make your life so much easier in acquiring a practice.

Looking at buying a dental practice? Ddsmatch Has Practices for Sale

If you are considering buying a dental practice, we have several dental practices for sale in Texas and New Mexico, as well as across the country. Check out our listings online. Contact us today for more information— it starts with a conversation.