How to Find the Right Dental Practice Buyer

If you’re a dentist looking to sell your practice, you might be wondering how to find the right dental practice buyer. Selling a dental practice is a complex, multi-faceted process. It will require special professional attention to many technical focal areas, like terms, market evaluation, and the specific language of the deal. 

Finding the right buyer, a candidate perfectly well-suited for your practice, is imperative. Finding the right buyer increases the odds that the complex dental practice transition process is as stress-free as possible. The wrong buyer increases the odds that the deal falls through or takes longer than you’d like.

The Triumphant Transition Partners team has put together their thoughts to guide you through the process of finding the right dental practice buyer. Read on to learn more!

Ways Practices Find Buyers

1. Use Your Connections

If you’re looking to sell your dental practice, using whatever connections you have might be one fruitful option. You likely know plenty of dentists and those in the industry from dental school, alumni associations, and medical conferences.  

Leveraging these options can work for some dentists. This approach does tend to work best if selling to another dentist. Most dentists won’t have extensive connections to dental support organizations, so finding a buyer through your own network is best for dentist-to-dentist sales. 

2. Contact a DSO Directly

Dental support organizations will field offers and inquiries around the sale of a dental practice and may even reach out directly to begin conversations with dentists. It is worth bearing in mind, however, that DSOs are incentivized to make low offers when propositioning a dentist. You likely will not get the best possible deal when contacting a dental support organization directly. 

The DSO is banking on your unfamiliarity with your practice’s value and what is and isn’t a fair price. This isn’t, of course, a point of the process that you should be an expert on. You’re a dentist, after all, not an expert in business evaluation. Still, your lack of expertise in the process and lack of a clear benchmark to compare to an offer might result in a low-ball offer. Selling directly to a dental support organization without a trusted advisor to guide you through the process and transition doesn’t work well for many dentists.

Another often neglected piece of the process is finding the RIGHT DSO, not merely one that is offering the right price. Suppose you’re fielding offers from a DSO or opening conversations up directly. In that case, you could forget to carefully evaluate each buyer against what you want from the sale of your dental practice. 

3. List the Practice Yourself

Listing the practice directly is undoubtedly one of the most direct ways to garner interest in your practice. However, it may not always be a suitable method for all dentists. When you list your practice yourself, the result is often a deluge of DSOs and other dentists looking to buy. 

You’re likely to spend most of your time fielding these calls and offers, many of which might not align with your needs and criteria for a buyer. Listing a practice yourself might work if you’re adamant about selling that practice as quickly as possible and don’t need to maximize the deal’s value. It likely won’t be a good call for a dentist looking to find a highly-qualified buyer. 

Knowing You Have the Right Buyer

Knowing that you have the right buyer is a challenging task. Unfortunately, if you don’t handle it properly, you could end up in a disadvantageous business partnership. There are many potential downsides if you sell to the wrong buyer:

1. You Might Sell at the Wrong Terms 

Many dentists want to stay on and practice within their practice post-sale to a DSO. However, if you sell to the wrong dental support organization, the terms of your time post-sale may not align well with your goals. Pay specific attention to the deal terms offered, such as ownership of certain decisions, profit-sharing, and contracted time. If you don’t fully understand the terms of the transition process, you could end up with the wrong buyer.

2. You Might Sell at the Wrong Price

Without a clear understanding of your dental practice’s value, you might sell the practice for less than it’s worth. If you hope to retire, build generational wealth, or jumpstart a new business by selling your practice, anything less than the best possible deal is unacceptable. 

3. You Might Surrender Key Responsibilities

The right DSO will tell you precisely what is and isn’t your responsibility through the transition process. The wrong DSO might leave you surprised. Unfortunately, the duties you might give up or assume ownership of are too important. Hiring, firing, marketing, and training are all responsibilities for which a DSO might have a set process. If it’s imperative that you retain as much ownership in critical decisions involving the practice as possible, then the wrong DSO could break your satisfaction with the transition process. 

If you’re considering selling your dental practice, contact Triumphant Transition Partners for aid. By doing so, you’ll receive:

  • Access to Our Private Buyer’s Network
  • A Free Practice Evaluation 
  • Help with Screening Buyers and Navigating Letters of Intent
  • Financial Documents to Aid Your Attorneys Through Negotiation 

Reach Out to Your Trusted Triumphant Advisor for a Free Courtesy Consultation Today!

3 Reasons Your Dental Practice Might Be Undervalued

When you want to sell your dental practice to a dental support organization, few things are as important as knowing what your practice is worth. If your dental practice is undervalued, you can easily end up selling your dental practice to a dental support organization at less-than-ideal terms. 

Your practice must be adequately assessed and valued for optimal outcomes. However, too many dentists don’t fully understand the value of their practice. This can lead to their acceptance of offers they otherwise wouldn’t entertain. 

To combat this, we put together a few reasons why practices are undervalued when appraised. Knowledge is power; the more you understand the dollar value of your dental practice, the better equipped you are to sell at a fair price! 

1. The Assessor Is Motivated

Many practices receive offers from dental support organizations directly. If you’re a busy dentist trying to tackle all of the operational and administrative tasks in your day, you might be tempted by these offers. You might even look at the quoted dollar figure and think the offer in question might be worthwhile. This might be a good option if you’re looking to sell and are struggling to fit everything you need into your workweek.

However, it is worth remembering that many dental support organizations are motivated when they make an offer. If you are receiving a quote directly from a DSO or DPO, you likely are not receiving the best offer. And why would you? The DSO or DPO in question wants to offer you an offer that will entice you to commit, not the best possible offer. They’re representing their interests, not your own. If you are a dentist receiving an offer from a DSO or DPO, obtain a second appraisal for the best results. 

2. An Outdated or Irrelevant Assessment Was Used

You may have done your homework and received a second practice evaluation. That’s a good step and a great tactic to ensure you’re getting the best possible terms. However, knowing what method was used when your practice was evaluated is essential. You might not be familiar with the standard methods for evaluating a dental practice, but a cursory knowledge of common dental practice evaluation paradigms will take you far. 

Different practice evaluation methods can influence the total dollar value associated with your practice. Let’s say your practice is evaluated head to head versus others in your market. This look, which compares your value to the value of similar companies in your geographic area, could be helpful in understanding your practice’s value. 

However, let’s say you have a better online reputation, patient base or some external factor that makes you a stronger practice than a direct competitor. This market-based evaluation might not accurately assess your business. A custom practice evaluation is in order to make sure that your practice is properly measured. 

Inversely, focusing on past collections may not let you understand the actual financial health of your practice. If your assessor uses the wrong practice evaluation method, you might not have a truly accurate picture of your practice’s value. This could result in your acceptance of a less-than-ideal offer from a dental support organization. Be sure you understand the methods used when an outside party evaluates your practice’s value. 

3. You Never Were Given Your EBITDA 

If you want to sell your dental practice to a dental support organization, you must fully understand your practice’s EBITDA. Earnings before interest, taxes, depreciation, and amortization (EBITDA) is a tried-and-true method for evaluating the profitability of a business. Comparing businesses head-to-head is difficult. This is especially true with dental practices. 

Any two practices could have completely different client bases, cash flows, future earnings, markets, and asset portfolios. EBITDA helps strip away all of the external noise and focus on the core profitability of a dental practice. If you have not received an EBITDA quote, request one ASAP. Selling to a quality DSO without understanding your practice EBITDA will be tough. Get ahead of this and get a fully comprehensive practice evaluation. 

It is worth noting that many DSOs and DPOs will offer an EBITDA assessment, but they are usually motivated to underquote. Accepting their valuation of your practice at face value is bringing a knife to a gunfight; you’re just out of your element and you’re likely to accept a lower offer than you would normally. A dental broker can help you work alongside a specifically trained CPA to get an accurate EBITDA to help counteract lowball DSO and DPO offers. 

Call Triumphant Transition Partners Today! 

Are you a dentist looking to sell your practice to a dental support organization? Contact Triumphant Transition Partners today! Selling a dental practice is challenging, and many dentists can be overwhelmed by the process. If this is you, partner with a qualified dental broker to represent your interests in the practice sale process.

Partnering with Triumphant Transition Partners will:

  • Equip Your Attorneys with Relevant Data
  • Grant You Access to Our Qualified Buyers Network
  • Give You Consultative Insight Through the Process
  • Help You Understand Your Practice’s Value for Optimal Offer Values

Contact Your Friendly Triumphant Advisor for a Courtesy Consultation Today!