MORR Perspectives

Not all dental professionals are created equal -- especially when it comes to value. Most general practitioners subscribe to the same primary value contributors -- revenue, infrastructure, and patients -- but there is one major difference for specialists: referrals.

Accurately valuing a dental practice requires a thorough expert analysis of several factors, including revenue, infrastructure, and profitability. However, there is one underlying aspect of value that is often overlooked: Marketing.

There are more than 4,000 private equity firms in the U.S. alone, according to the American Investment Council. That’s almost a 50% increase over the last three years! With the extreme rate of growth in the investment industry, more private equity firms are aggressively targeting potential acquisitions or promising investments. As discussed at this year’s ADSO Summit, investment firms are increasingly interested in dental practices due to dentistry’s seemingly recession-proof revenue stream. Partnering with a private equity firm can be an exciting opportunity to foster growth for your dental practice, but be sure you know what to expect before signing on the dotted line.

Chances are that if you are selling a dental practice, you have been thinking about it for years. Regardless of whether you’ve been following a legacy plan, many of your practice transition details may remain unknown until you begin negotiations with the buyer. This makes negotiating one of the most critical components of selling a dental practice. When stepping up to the negotiating table, there are three things to keep in mind:

One of the most frequent questions our team receives from those selling a dental practice is “How long will this take?” It’s a fairly straightforward question— and an important one at that— but, unfortunately, the answer is not as simple. There are a number of circumstances that contribute to the length of time it takes to sell a dental practice. If you are looking for a faster transition, consider what factors into the process.

The good news: Every dental practice—good, bad, or ugly— has inherent value. The bad news: The value of your practice might be impacted by key factors which you might be neglecting. Although there is no simple equation to determine how much a dental practice is worth, there are a few essential areas that can make or break your practice’s value.

Whether you are fresh out of school or a seasoned veteran, as a first time buyer there is a world of opportunity ahead of you. The first big question is “Should I buy an existing practice or start fresh with a new one?” While each has their upsides and downsides, choose what makes the most sense for your level of experience and tolerance for difficulty.

The U.S. workforce is undergoing a massive change in demographics as an entire generation seeks retirement—and the dental industry is no exception. A study by the Department of Health and Human Services projects that the inflow of dentists will not be able to match the future demand of the industry, likely due to the increased rate of retirement of the “baby boomer” generation.

Selling a dental practice is a huge life decision. You have likely been working in the industry for decades, developed a routine, and come to know your patients personally. Not only that, but you’re selling a practice that you have poured yourself into, and perhaps built from the ground up. Before you jump into the market with both feet, take time to ensure that you are sidestepping some of the most common mistakes during the selling process.

Today’s dental practice is no longer just an office and a chair. Although the clinical side is clearly a central part of the industry, a successful practice requires significant focus on management  — making the business side of every dental practice more critical than in the past. As new and existing practices experience the pressure to increase revenue and stability, more solo practices are turning to Dental Support Organizations (DSOs) for essential business management assistance.