Determining the best fit for your upcoming practice transition.
Have you hit a stride in your practice and are in the first-rate category of being able to consider selling your dental practice? You should know that such a practice transition requires working through priorities and values that are often deeply personal.
In this article, we offer potential sellers like yourself insight into what the preliminary thought process might look like for deciding whether or not selling to a Dental Support Organization (DSO) is right for you.
When you should sell to corporate…
- You should sell to corporate if you want the stability of a larger organization. If building the business side of a practice is less interesting to you, consider embedding yourself in a more established operation. In doing so, you take the pressure off having to complete administrative tasks and you receive a paycheck every two weeks from an employer of your choice. DSOs are established and well-resourced. They understand that building a practice requires spending more on hiring in growth phases. Selling to corporate would free you from concerns about the fluctuating bottom line as the practice grows, with the DSO taking over payroll responsibilities.
- You should sell to corporate if your revenue AND profits are high. If you have a practice bringing in $1.5 million in revenue and $250,000 in EBITDA, working with medical practice brokers or dental practice brokers can get you at least six times the amount an independent buyer would be able to offer. The case is too compelling to not take into serious consideration.
- You should sell to corporate if you have maxed out what you can do with the practice and need relief from administrative duties. Building up a successful practice is a significant accomplishment in itself. Once a practice reaches a certain point, the daily tasks and strategic requirements may become unsustainable. Approaching capacity is not a failure, and can be helped by bringing in operational and managerial help.
- You should sell to corporate if you’re getting close to retirement. If retirement is on the horizon within the next five years, it may be time to put your exit strategy into motion. Selling to a DSO might offer the clearest and most organized path forward versus selling to another health care professional.
- You should sell to corporate if you are interested in an investment vehicle. Deals with DSOs often include the opportunity to buy back into the business. Equity offers practitioners a way to multiply their personal wealth as the practice grows.
When you should not sell to corporate…
- You should not sell to corporate if you’re going to have a hard time letting go of decision-making. Letting go of operations after being the boss for so long can be difficult for most ambitious people. Honestly reflect on whether or not this is what you want or need. If you cannot stand the idea of not being at the decision-making table for the practice, it may not be time to hand the keys over to a DSO.
- You should not sell to corporate if you’re not retiring or you don’t necessarily need the support of a DSO. Don’t sell to a DSO if you’re planning on working for more than six years and you are not burnt out. The time and potential for growth are still on your side as an independent practice.
- You should not sell to corporate if it’s a bad fit. Don’t allow your desire to sell to compromise your judgment of whether or not the partner is a good fit. Often, waiting for another round of offers still lands well, if not better.
- You should not sell to corporate if the income you’re going to make after the sale isn’t enough to pay your bills. At the end of the day, a desire to begin a practice transition is sometimes not enough. If the income from the sale does not look like it will be enough to pay the bills, the time to sell may not be now. Consider the facts along with the offer on the table.
There can be a tedious number of variables to consider when you are looking to sell. Talking to practice transition partners may be beneficial in that they bring market insight and experience with them, as they learn about your unique situation. In the end, finding a trusted sounding board can be essential to making the right decision of whether or not you should sell to a DSO.