How To Increase the Value of Your Dental Practice

If you’re a dentist and you’ve ever considered selling your practice, then you’ve probably thought about how you might increase the value of your dental practice. And even if you haven’t considered selling your dental practice, you might still be curious about how to improve it’s overall value. 

Improving your practice’s value offers you several key benefits as the owner. Not only will doing so increase the dollar value of the offers you’ll receive, but it will also give you more options and help you access capital through a loan or outside investment. The reasons to increase the value of your practice are myriad.

However, many dentists still struggle with increasing their dental practice’s value. Dentistry is a busy vocation, and amidst the busyness of providing care, growing your business, and tending to administrative needs, it can feel impossible to find the time to be strategic about increasing the value of your practice. 

Luckily, it doesn’t need to be challenging to increase the value of your practice. With a bit of care, effort, and planning, you can increase the monetary value of your practice and be prepared to sell it for a nice profit! Even if you aren’t ready to sell, it’s still nice to have the option if you do ever plan on selling to fund your retirement or a career pivot.

Read on To Learn About Increasing the Value of Your Dental Practice!

Understand Your Value

First off, you must have a baseline gauge of what your practice is worth. You can’t increase the value if you don’t know what your practice is worth. This might seem obvious, but again, so many dentists are so busy with the day-to-day that they likely have never tried to measure their practice’s monetary value accurately. 

Understanding your practice’s value is the first step in this process. If you want to learn more about what your practice is worth, contact your trusted Triumphant Transitions Advisor for a practice valuation. 

Consider Different Valuation Methods

So, you’ve decided to learn more about what your practice is worth. That’s a great first step! However, it is essential to remember that there are several different ways of evaluating the monetary value of any business. We don’t need to dive into every possible form of measuring the value of a practice, but these are the more common methods.

  • Market-Based Valuation: A comparison of the practice to its local market to value the practice. 
  • Net Asset Value Valuation: A valuation of all tangible assets tied to a practice, plus intangibles like the size of the patient base. 
  • Income-Based Valuation: This can often be the most accurate and helpful way of valuing a business. There are several ways to do this, but we prefer to focus on your EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This is, in essence, the stock of how much operational cost goes into the profit of any given business. The higher the EBITDA of a practice, the more financially healthy the practice is typically. Different practices might have vastly different sizes, incomes, asset portfolios, and debt burdens, so EBITDA is a simple and universal way of comparing apples-to-apples.

Again, you do not need to understand how to measure the value of your practice with these methods, but know that different protocols can be helpful in understanding value. For example, let’s say you received a practice valuation, but the dental broker in question used only assets to measure your value. That may not accurately reflect the value of your practice.

Now, let’s say you’re an older practice without the latest and most valuable tech, but you have a large and faithful patient base. An asset-only valuation could not accurately measure how financially stable your practice is. That’s why you should consult with Triumphant Transition Partners today so that we can accurately gauge your EBITDA.  

Acquire Assets

One of the most straightforward ways to increase your practice’s value is to increase the value of the assets the practice holds. Many dentists look to modernize outdated equipment, expand to a second or third location, or bring on another associate to increase the practice’s monetary value. 

However, while acquiring more assets is a straightforward way to grow, it’s not always the best strategy for every practice. You might not have the funds to invest in assets. And even if you do, a second location or a new associate might increase the amount of administrative upkeep necessary to keep the practice viable. You might see your practice’s value rise and, with it, the amount of effort needed to keep the practice afloat. Investing in assets is a great way to increase your practice’s value, but again, any investment opportunity should be weighed against the business’s needs.

See What the Market Thinks With Triumphant Transition Partners 

If you’re a dentist considering selling your practice to a dental support organization (DSO), you might have wondered how much your practice is worth. Well, wonder no more! Putting your practice on the market and fielding offers is a great way to understand what your practice is worth! Having multiple qualified buyers interested in your practice is a great way to increase the asking price and close above your initial target selling price. 

It is important to remember that dental support organizations (DSOs often low-ball dentists when they approach any dentist. If a dental support organization ever approaches you and makes you an offer, it’s a fair assumption that their offer is not the true high watermark of the value of your practice. You’ve put so much sweat equity into your dental practice; don’t sell to a dental support organization (DSO) alone. 

Triumphant Transition Partners can help! We’re a top dental broker, able to represent you through the entire sales process! A great relationship with a DSO can be life-changing; a bad business relationship can dramatically reduce the quality of your work life. Partner with Triumphant Transition Partners to navigate the sales process and maximize your asking price, satisfaction, and negotiating power at the closing table.

Contact Your Friendly Triumphant Transition Partners Advisor for a Courtesy Consultation!

3 Common Misconceptions About Dental Support Organizations

You have likely heard a lot about dental support organizations if you’re a dentist. 

How could you not have? 

Many of these organizations are active across the US and Canada, and they’re often highly visible at any dental conference or in industry news. These organizations can benefit any dentist looking to jump to the next step in their career, and you probably know many dental colleagues who have contracted with DSOs. You may have considered the same for your practice. 

However, as dental brokers, addressing some common misconceptions about dental support organizations is essential. These organizations can supercharge your dental career, but these misconceptions must be put to rest before you partner with a dental support organization. As dental brokers, we have deep and rich relationships across the dental industry and wanted to share our expertise on dental support organizations.

Read on to Learn More!

Why You Might Partner With a DSO

First, let’s clarify: A dental support organization can significantly help many dentists. The simple fact is that many dentists are incredibly busy and need help to run their practices more effectively. Many dentists’ are on an island, and DSOs offer a tremendous dental community support system that is doctor-centric and typically doctor-led. 

A dental support organization (DSO) or dental partnership organization (DPO) is an organization that provides non-clinical business and operational services to a dentist, freeing up the dentist to more effectively care for their patient base. 

There are so many ways that dentists and dental support organizations can set up these agreements, but generally, an excellent dental support organization could assist with:

• General Administrative Services

• Human Resources and Staffing

• Payroll and Billing

• Insurance Coding and Insurance Services Liaison

• Advertising and Marketing Services

• IT Services 

• Building and Facilities Management Services

• Procurement Services 

• Accounting Services

• Regulatory Compliance

A dental support organization can revolutionize your career. However, while the above benefits are helpful, we still think it’s important to highlight three common misconceptions about dental support organizations that must be dispelled. 

Misconception: DSOs Are for Retiring Dentists

Many dentists sell their practice near the end of their career. It’s easy to see why. Selling a practice is a great way to transition into retirement, and many dentists are familiar with dental support organizations entering the picture at the end of a dentist’s career. 

While this is a common use of dental support organizations, we’d be remiss if we didn’t point out several other benefits of dental support organizations. Many dentists might sell their practice as an exit strategy from dentistry and use the funds gained from the sale of their practice to pivot to another vocation. Selling to a dental support organization is a viable option for early to mid-career dentists ready to say goodbye to the administrative part of dentistry and focus on the clinical or growth side of their dental practice. 

It’s also worth reminding the dentists out there that many dentists elect to stay on after the sale of their dental practice. It breathes new life and extends one’s career once they partner with the support they gain, and the incremental wealth built by partnering. It also gives an exit strategy, young or old, whether five or 25 years, out to a doctor, especially when they have built a great practice that the average dentist cannot afford. When you achieve a certain level of revenue and growth, it is challenging to find a confident buyer or doctor to sell to and that can take on this type of undertaking. This is a very common dental support organization arrangement. If you love dentistry, partnering with a dental support organization can free up your time to focus on patient care. The dental support organization has the resources and operational expertise to focus on business management and can simplify your practice and improve your quality of life. This often increases your income while decreasing the amount of administrative work you need to do. That can be a win for all parties involved! 

Misconception: DSOs Are Always the Right Call

We have seen and worked with countless dental support organizations and + dentist partnerships, leading to tremendous benefits for both. However, any dentist looking to contract with a DSO must find the right partnership for their unique needs and circumstances. There are thousands of dental support organizations, each with its unique core offering, specialty, and value proposition. You could be setting yourself up for failure if you do not consider each dental support organization against your own unique needs. You also need to know what the deal terms mean and how it benefits you in the short and long term. You do not know what you do not know, and we equate it to taking a knife to a gunfight. The devil is always in the details.

Let’s say you intend to stay on as a dentist and want the operational aid support of a dental support organization. You must understand what degree of input you will have in the practice regarding various operational decisions such as hiring, procurement, and marketing. Some DSOs prefer to handle all operational decisions with a templated method, which could mean that you’re left without much control of the practice, aside from clinical decisions. However, other dental support organizations are much more flexible and willing to customize transition plans accordingly to ensure you retain input into important decisions. They want a true partner where you have as much control as you desire, and they are there to support you as much or as little as you wish in the areas in which you need support. They want to align with the right doctor and encourage you to remain the leader in the practice.  The moral of the story here is that not all dental support organizations suit every situation, and how do you know which is the right one for your short and long-term aspirations? 

DSO Initial Offers Are Non-Negotiable 

You’re probably thrilled if you’ve received an offer from a dental support organization! After all, if a dental support organization has reached out to you with an offer, it’s an honest and accurate gauge of your practice’s value. 

Well, not always. Many dental support organizations have teams that reach out to dentists to entice them to sell. They spend hundreds of thousands of dollars on direct marketing, business development team representatives, and paying their own partner doctors significant referral fees to entice you to sell to them directly without representation. You need to know precisely what the deal terms and valuation mean. The adage of them wanting to buy low, sell high. The offers extended from these teams are often lower than what the dentist might receive if fielding multiple offers from qualified buyers. If you have received such an offer from a dental support organization, that’s great! It’s a sign that your practice is valuable and that you should consider every possible offer before selling. 

That’s why it’s so essential that you have industry-knowledgeable representation in the form of a dental broker with you as you sell your dental practice! The right dental broker will help you increase the value of your practice, expedite the sale of your practice, increase the number of interested buyers, generate more interest than you can alone, have an entire auction/bidding process, and equip you with the best terms and highest valuation. A dental broker represents your interest, while a DSO represents their interests. 

At TTP, we offer….

  • Unique Sell-Side Advisory With Buy-Side Experience
  • Detailed Discovery, Practice Valuation & Review
  • Access to Our Private Buyer and DSO Network
  • Management of Letters of Intent and Buyer Screening 
  • Offer Qualification & Representation Through Close
  • We represent your interest
  • We custom-tailor every transition to meet our vast array of clients’ specific needs
  • Negotiate the best deal terms for YOU
  • Create a competitive bidding process

You have put too much time into your dental practice to sell to the wrong dental support organization or with the wrong price or terms. Partner with a top dental broker and call Triumphant Transition Partners today!

Get Your Courtesy Consultation Today & Call Now!