The Truth Behind Taking on Corporate Partners

You’re ready to sell your practice, but what really happens once you close the deal?

Selling a dental practice or selling a medical practice is choosing a path forward that will unavoidably reshape your organization.

The process often includes working with dental business brokers or medical business brokers to help determine the best fit for a corporate partner. Together, you and a broker comb through expectations and paperwork, and subsequently, make and sign a deal. Post-close, you are typically rewarded with a significant payout for taking such a risk.

Nevertheless, after the check lands, the work of becoming a new organization begins.

To help set expectations, this article explores four ways that we at Practice Transitions Group (PTG) have seen sellers face negative surprises after the close.  

The integration process will most likely be demanding and require patience.

Even with intensive preparation before a sale to a corporation such as a Dental Support Organization (DSO), the post-sale process requires holistic integration of all accounting practices—payables, receivables, payroll, and billing. There is also a high likelihood that a new partnership will change the practice’s management software.

Don’t forget: Deploying new systems can be taxing, especially in health care spaces that are people-oriented, not systems-oriented. Onboarding will require time and perseverance. Adjust expectations for a learning phase, proactively putting in buffers for the team to get up to speed.

The deal will not close when you think it’s going to close.

If you’re looking to sell to DSO, you’ll only be able to consider such a sale if your practice is performing well. As a result, your work days will be long. Work on the sale will often get delayed for various reasons. Often, a significant factor is that a health care provider is waiting for the right moment to break the news to personnel in a way that does not cause major disruption to the practice. 

Working with dental business brokers or medical business brokers is beneficial in that the broker is going to help drive the deal to close with your interests in mind. Their job is to offer insight and stay on top of the DSO’s details so that the transition is as smooth as possible. 

Don’t forget: Hiring a health care practice broker helps drive the timeline for the deal to close. Even with someone in charge of moving things along, remember that the process can be nebulous and will undoubtedly require patience and agility.

There will be detail-oriented interruptions. 

Corporations looking to purchase practices are run by professional healthcare operators. Their acquisitions teams are made up of accountants who are trained to look for discrepancies throughout the business side of the practices.

Selling a medical practice or selling a dental practice to corporate is a high-stakes endeavor, so analysts at DSOs walk through highly detailed and comprehensive protocols. 

Don’t forget: Submitting your practice to a detailed business examination is a challenging task. You’ve done all you can to build a practice worth selling. This phase of being analyzed can be an exercise in letting go of control. Expect analysts to ask for more details along the way, even after you think you’ve given them all that you have.

Rollover equity is often unknown at the time of a transaction.

When working with health care practice brokers, the run-up to closing a deal can be filled with research and market insight. All this work looks to offer the best possible prediction of how well the practice will perform post-sale. At the same time, the nature of selling an operating business means that rollover equity is difficult to predict.

Don’t forget: Remember that equity is an investment. A health care practice sale to corporate is considered risky because of all the unknowns. Keeping this in mind will help frame the outlook on future returns.

Summary

Preparing for a sale and closing a deal takes an enormous amount of coordination and energy in multiple stages. While there may be relief post-close, it is helpful to bear in mind that the job of the sale is not yet over. Integrating an established practice with the corporate world will entail endurance as new systems and strategies are deployed. When stuck in the mire of details, it is beneficial to look up and recognize the accomplishment of a successful deal and the many positive implications for the future.

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