I’m excited to bring an extensive background that bridges both the mainland and local island dental market to the clients I’m privileged to serve today. We don’t know what new challenges lay ahead in a changing world. But we know that the future favors those that prepare, and proactive dentists continue to build businesses that appeal to individual and corporate buyers alike.
The dental profession requires a skill set that’s not found in all small business settings. You work at a level of detail that’s not found in most businesses, and the technical aspects demand extreme focus. Simultaneously, you’re managing an entity and dealing with staff while keeping an eye on HIPAA and adopting changing OSHA regulations. As an entrepreneur, you also evaluate multi-platform marketing, online booking, and membership plans.
For any small business, this balance is challenging. If retirement seems far away, exit planning may not be your highest priority. The secret to successful dental transitions lies in preparation, and your decisions now shape the transition into your next phase.
Some practitioners have a few years before they step out of the operatory, and others realize they’re coming down the last few miles. It’s better when there’s more time, but your exit plan develops in steps whether you’re driving it or not.
As a dentist, you develop technical skills that improve the quality of many lives. And as an entrepreneur, strategic decisions lead to profitability now. But a holistic plan ensures that you develop a practice transition that pays off when you’re ready to retire.
Set The Direction Of Your Dental Practice Sale
Many dentists can tell that the profession is changing, but they don’t grasp the scope of the current forces shaping the market. Consider how these two facts could shape your planning:
In 2005, about half of dentists under age 35 owned a practice. That number retracted to 30.7% by 2019, and this percentage is continuing to reduce in 2022.
Many industry leaders see the steady acquisitions by DSOs continuing to develop. It’s estimated that the current DSO market includes about 30% of practices, increasing to 75-80% over the next ten years.
These trends may impact your transition and may even create more possibilities for you than in the past. Fewer traditional buyers may be available in the future, but well-run practices enjoy more exit options than ever.
By planning your dental practice transition early, you gain time to review your goals and enhance your business. You’re less likely to accept a sale offer that doesn’t fit your comprehensive plan. And you’re more likely to capture your practice value and boost your retirement funds. Every increment helps fund your dreams.
The Corporate Movement Opens More Doors
Traditionally, dentists get to a stage where they’d like to find a younger associate dentist who eventually buys the practice. You can open more possibilities if you focus on your overall operations, branding, and financial management. A well-run, profitable practice presents a compelling opportunity for a young practitioner to weigh against other options. And if you have time to match with the right buyer, you may be able to move through a sale and transition within a few months.
It’s much better to give yourself time to evaluate if a DSO or other acquisition group is your best exit option, too. DSOs generally require that the selling dentist continues in the practice for 3-5 years, and there are parameters to the overall agreement. For example, most DSOs offer 60-80% of the practice value up-front with an earn-out structure or equity rollover for the remaining amount. The seller continues to support practice growth during the earn-out period. But this scenario can be beneficial, especially if you opt for an arrangement that includes an equity rollover.
DSO opportunities are one reason an exit plan starts now, even if your retirement date isn’t fully defined. With a DSO sale, you would stay in the practice for a few years, so evaluating each organization is wise before you decide to sign on the dotted line. It’s wise to take a preemptive approach with the support of a transition advisor so that you’re not pushed into a hasty decision or enticed by an unsolicited offer.
Opportunities Abound In Today’s Market
Dentistry faces a rapidly changing landscape, and the evolution can make your own transition more challenging. It’s risky to try and navigate a transition without excellent advice or wait for a young buyer to appear when you’re ready. It’s possible, but it takes diligence to create a business that’s appealing to the modern buyer.
Many integrated pieces make up a successful dental practice, and it takes experience to weave all the details together now while continuing to prepare for the future. Your practice may be your largest asset and a significant contributor to your future plans. Strategic refinement of your key operational, branding, and financial systems can result in successful transactions with maximum profitability. For example, if you own real estate tied to the practice, a comprehensive analysis helps determine where it fits into your exit plan.
Whether you’re months or years from an exit, start the conversation with professionals that monitor today’s business environment and how to approach each option. More time offers more opportunities, but we’re here to help you at every phase. At DDSmatch, we partner with our clients to design a personalized exit plan that makes sense. I understand the local island market and the unique regional factors we need to consider in every planning stage, and I bring a trusted network of resources with a holistic approach. Reach out and start the conversation even if you’re years away from the final exit ramp.