How to Effectively Run a Dental Practice

Dentistry can be a rewarding field to be in. The work dentists do is extremely useful, and dentists are also incredibly well-compensated. However, with high prestige and pay comes high responsibility. Many dentists, particularly those at small, independent dental practices, find themselves working nights and weekends to keep their business running. Unfortunately, many of those burning the candle at both ends to keep their business afloat often aren’t seeing the financial return or career satisfaction they would expect from all of their hard work. Many dentists are thus understandably asking themselves what they can do to run their dental practice more efficiently.

Partnering with a dental support organization (DSO) or dental partnership organization (DPO) is a great option for many dentists looking for the next step in their career. The right DSO or DPO provides you with a path to your ultimate career end goal, whether that’s a successful retirement, a more manageable work week, or an increased share of your local dentistry market. If you’re looking to improve the efficiency of your dental practice, selling to a DSO is a great option with many unique benefits. 

Reduce Administrative Time

As a dentist, you likely find yourself spending much of your time on tasks that don’t matter for patients but are necessary for the upkeep of your practice. A dental practice is a small business, after all, and if your practice is a small one, much of the onus of upkeep falls on you as the owner. This is one of the most arduous parts of running a dental practice for most dentists. You are trained to care for the dental health of your patients but likely find yourself spending more time on purchasing, record keeping, and policy negotiation than dental care. Reducing this administrative time is a key part of managing your dental practice more effectively.

The right dental support organization or dental partner organization will be able to help you reduce this administrative upkeep. A good DSO has years of experience in simplifying and standardizing dental practice management systems, and these systems can help you streamline the management of your practice. Now, the more mundane tasks of managing a dental practice can be entrusted to the dental support organization, and you have more time to focus on dental care! 

Understand Your Practice’s Value & Improve It

Even if you don’t find yourself spending too much time on administrative overhead, selling to a DSO can still be a prudent financial move. If you’re looking to maximize the equity you have built in your office, share the load, or partake on the upside, selling to a dental support organization is an excellent path to your next adventure. 

However, It is imperative that you understand what your practice is worth if you are looking to sell to a DSO or DPO. Many DSOs or DPOs will often reach out to dental practices with lower terms and favorable valuations of the practice. Too many overworked, understaffed, and unhappy dentists are quick to bite on these “golden parachute offers.” Unfortunately, they later discover that they were undervalued and could have sold to the DSO or DPO for far more. 

The better you understand your dental practice’s value, the better you can position yourself in the sales process. You don’t need to be a financial guru to action this, but you will need a trusted dental practice broker to help you through this transition. As you consult the right dental practice advisor, you’ll likely begin to understand the following.

  • What is the value of your local dentistry market?
  • What is the practice’s EBITDA? (Earnings before interest, taxes, depreciation, and amortization)
  • Do you own your dental practice’s real estate? 

Find External Support

Many dentists find themselves wearing multiple hats at their practice. You might be a dentist, but depending on the day, you could be a recruiter, a purchasing manager, or a marketing exec. This, naturally, wears down many dentists, and they grow exhausted with their practice. If you are interested in continuing to practice the medical specialty you love but without the multiple hats, leveraging a DSO’s resources could be a helpful move. 

Many DSOs have programs dedicated to maximizing the success of their practices. Your practice could benefit from these DSO support programs, whether in recruiting, marketing, or purchasing. Plus, many dental support organizations and dental partner organizations also offer their member dentists continued education, mentorship, growth in the same or other markets,  and networking opportunities that could help further your career. If you sell your practice to the right dental support organization, you no longer need to be the jack-of-all-trades and can let the organization handle the business side of the house while you focus on patient care.

Use a Trusted Partner

Selling to the right DSO can be a great career move and a great avenue to a well-operated dental practice, but it is imperative that you pick the right DSO. We cannot stress that enough. Many dentists will sell to the first DSO or DPO that matches their desired sale price and then be disappointed when they realize they could have sold the practice at a higher price. Even worse, some also discover that the terms of the deal are unfavorable to the selling dentist and give the dental support organization all of the power. 

The best way to mitigate this is to partner with a trusted dental practice advisor. Your career happiness is too important; ensure you sell at the right price to the right organization and have the right deal terms. 

When you partner with Triumphant Transition Partners, you’re working with dental practice advisors with years of experience on both sides of the buy and sell side with a vast network. We offer…

  • Unique Sell-Side Advisory With Buy-Side Experience
  • Detailed Discovery
  • Practice Valuation & Valuation Review
  • Access to a Private Buyer’s Network
  • Managing Prospective Buyers & Qualifying Letters of Intent
  • Representation Through Close

Your future, whether as a dentist, in retirement, or in a different vocation, is too important to risk; don’t sell without a dental practice broker you can count on. 

Contact Your Trusted Triumphant Practice Advisor for a Courtesy Consultation & Secure Your Future Today!

What Is EBITDA & Why Does It Matter for Dental Practices?

If you’re a dentist looking to sell your practice to a dental support organization (DSO), few terms will be as important for you to know as EBITDA. This simple financial tool is a great way to understand the value of your practice and is a great prism through which to consider any offers from a dental support organization. If you don’t know the value of what you are selling to a dental support organization, the odds of you maximizing the selling price of your practice are fairly low.

To help you better understand this financial term and the unique situation of your practice, the team at Triumphant Transition Partners got together and answered some of the most common questions we hear about EBITDA. 

What is EBITDA?

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It’s widely considered to be one of the best measures of the financial health of an organization and its ability to bring in cash. 

  • Interest: Interest paid on any debts
  • Taxes: Taxes paid to any entity
  • Depreciation: The amount of the value of your tangible assets that was spent in any given period of time 
  • Amortization: The expensing of the acquisition of an asset over a period of time

One of the key reasons why EBITDA is such a great measure of financial health is its simplicity. Yes, there are some big financial accounting words in that definition, but the complexity of taxes, debt structuring, gross margin, and asset valuation are kept to the side. At the end of the day, a business without an operating profit is a bad business to invest in. 

EBITDA also helps businesses cut through the “noise” and get down to brass tax. It can be hard to compare two dental practices of two different sizes, especially if one practice owns multiple practice locations and is thus rich in assets. EBITDA simplifies all of this and helps show the cash flow of the business. Maybe that asset-rich practice is operating at a loss, despite its valuable holdings. Regardless of size, location, and intangibles, all businesses should have a healthy operating profit before depreciation and amortization, so the EBITDA paradigm helps investors compare apples to apples. 

Why Does EBITDA Matter?

EBITDA is an important measure for all dentists considering selling their practice. The better you understand what your practice is worth, the better positioned you are to maximize the price at which it sells. Too many dentists are so overworked or so ready to retire that they sell their practice to the first dental support organization that meets their criteria. That can be a mistake. Without a clear understanding of the financial health of your organization, you can’t make informed decisions about any proposed deal with a dental support organization. 

Other methods of financial valuation do exist and are worth familiarizing yourself with. 

  • Market-based evaluation: In this method, a practice is compared to its wider dental market to forecast future earnings. While this can be an interesting valuation method, it can be difficult to compare dental practices in different markets. This method is also great for understanding a practice in its wider market context, but it is often not entirely accurate. Small changes in the wider market can impact the forecasted value of a dental practice, so we often recommend only using the market-based evaluation in tandem with another evaluation method. 
  • Asset-based: This financial valuation method can be useful for viewing a practice with a rich asset portfolio. For example, you should consider a dental practice with multiple locations through an asset-based view, as the value of the practice’s real estate is an important part of the practice’s financial health. 

While there are use cases where the above methods might be helpful in evaluating a dental practice, EBITDA is still one of the top ways to value. Other methods might be used as a frame of reference, but we’d always recommend using them in tandem with EBITDA to get the full scope of a practice’s value. 

What Do I Do With EBITDA for a Dental Practice? 

EBITDA helps potential investors understand how valuable your dental practice is. This is not the only way of valuing a dental practice, but it is one of the most common, accurate, and universal ways of reporting on a business’s value. 

So, if you have an understanding of your EBITDA, what do you do with it?

The main benefit of understanding your EBITDA is that it allows you to leverage this valuation in the sales process. Many dental support organizations or DSOs will reach out to dental practices with offers to buy, and too many dentists will agree to sell at the first offer, often without fully understanding just how valuable their practice is. If you have a good understanding of your practice’s financial health, you are poised to capitalize on this information in the deal process.

However, selling a dental practice to a dental support organization is no small feat. Even with a good understanding of your practice’s value, the deal process can be long, complicated, and risky. Too many dentists sell to the wrong dental support organization or walk away post-sale in an agreement that gives the dental support organization all the power. A bad business agreement can sap your career satisfaction, and too many dentists end up in deals that are stacked in the favor of the dental support organization.

That’s why you need a dental practice advisor to help you maximize your sale.

Transitioning your dental practice will be one of the most important deals of your career. Partner with a trusted advisor who understands the market and is dedicated to your success. 

You need the team at Triumphant Transition Partners! 

We’re a unique dental practice broker. We have both sell and buy-side experience, which means that we have a deep understanding of both sides of any dental practice deal. Our private buyers’ network also means that we offer access to highly-qualified and interested buyers that no other practice advisor can. This combination of experience and network results in our clients being positioned to sell their practice at the best possible price and on their terms!

When you work with Triumphant Transition Partners, you’re partnering with the best! Our process includes….

  • Detailed Discovery
  • Detailed Practice Valuation & Review
  • Presentation to Both Private & Public Market
  • Qualification of Prospective Buyers & Letters of Intent 
  • Representation Through Close 

The sale of your dental practice is likely one of the biggest decisions of your life. Trust that decision to a dental practice broker with the experience, network, and acumen to take your deal through to close and on your terms. Let’s put that decision to a Triumphant practice advisor.

Consult your trusted Triumphant practice advisor for a courtesy consultation today!