Staff at a dental office

Learn tips for attaining and retaining employees.

Many dental offices are finding it harder than ever to find long-term (or even short-term) employees who are ready to work. Historically, employees rarely left — from front desk employees, dental assistants to hygienists — we’ve entered a new era of having to do more to retain employees.

To ensure you carry on with your practice as uninterrupted as possible consider these ideas to boost your hiring and employee retention efforts:

    Dentist and staff talking together

  1. Offer prospective employees sign-on bonuses or increase wages of your current team. Offering a prospective employee, a sign on bonus could be the extra factor for someone to select your position over a competitors. Review your team’s salaries and see if you have room to adjust wages to gain a competitive edge.
  2. Provide growth opportunities like employee training and continuing education to help your employees grow in their roles. Create apprenticeships. If you’re getting applicants who are underqualified, try providing them with the training they need. You may just find a diamond in the rough.
  3. Keep people motivated in a positive environment. Some ways to do this include upgrading equipment, renovating the practice, and even just taking the employees to breakfast or lunch on occasion.
  4. Communicate. Let employees know they are being heard, and they’ll feel a stronger connection to the practice.
  5. Employee recognition. Regularly recognizing employees for their contributions to your practice will motivate them and others. Celebrate anniversaries and birthdays on social media. Drawing attention to these milestones helps build that foundation of loyalty.

These are just some of the ideas dental practice owners are using to find and retain employees. Most importantly, remember to keep an open mind and be ready to be surprised. Use these ideas to hire your next amazing employee!

Dentist standing behind a dental chair
There are many reasons why dentists might want to have their practices appraised.

Some of these reasons include:

  • Sale or purchase
  • Associate buy-in
  • Partner buy-out
  • Mergers
  • Death or disability
  • Estate value
  • Divorce

No matter what the reason for the sale, it’s important to understand the term “value.”

There are three values for most dental practices:

  • Seller’s
  • Economic
  • Market

The purpose of this article is not to provide formulas for determining these values, but to discuss their meaning.

Dental chair

Seller’s Value

This is what most sellers apply to their practice. Whether it is relative or not will depend on the seller. Some sellers underestimate the value of their practice because they don’t have a clear idea of its true value. They know there is value in the tangible assets, but they often look at the replacement value, which is clearly not the value of existing equipment in any practice.

They then add value for goodwill, which is realistic. What is not realistic is adding value for the “blood, sweat, and tears” a dentist has put into his or her practice. Also unrealistic is adding an additional value for “building out” a new facility. Although there is value in the owner’s time and energy, it is not something a typical buyer is willing to pay for when purchasing a practice. In most situations, the seller’s opinion of value will be the highest and most unrealistic assessment.

Economic Value

It would stand to reason that the economic value of the practice would reflect the most reliable value. This number is arrived at when a dental practice appraiser, who thoroughly and objectively reviews practices, is hired to determine value. The major components making up this value are the tangible assets (dental equipment, furniture, fixtures, and office equipment) and intangible assets (goodwill).

When assigning value to tangible assets, appraisers consider the age and useful life of the equipment. Tangible assets fall between depreciated book value and replacement value and an economic useful life, to which a representative value is applied. Intangible value is determined by goodwill, which is comprised of location, active patients, staff, cash flow, and other factors.

The ultimate economic value of the practice is based primarily on the metrics generated — active patients, gross receipts, and most importantly, adjusted net income or cash flow. Once these factors are reviewed, the appraiser will render his or her opinion regarding the value of the practice.

From a pure numbers standpoint — and viewing the practice as an isolated asset — this opinion of value may be accurate, but unrealistic.

Graph with lines going up

Market Value

Two practices with nearly identical financial numbers, equipment, physical characteristics, and staff may have similar values, but may not generate the same selling or purchase price. The market factor or market value will have a dramatic impact on the two practices. As in real estate, the mantra, “location, location, location” is all-important when viewing a practice. This is never more obvious than when practices are in rural areas verses urban areas, the right side of the tracks versus the wrong side of the tracks, or the “older” area versus the new growth area.

Hiring an appraiser who is familiar with your area and who practices within that locale will help you determine whether you set a realistic value for your practice. The right professional is critical as you attempt to maximize your practice value. Pricing your practice to the market will ensure a fair price for both you and a buyer and will ensure a timely sale.

The value placed on your practice must pass the “justification test.” After expenses, will it pay the debt service, provide adequate cash flow to the buyer, and withstand the need for future new equipment, as well as fluctuations in business cycles? Adequate cash flow is always relative to any buyer, but ideally it should be more than a buyer would earn as an associate to justify the risks that are part of any sale or purchase. If not, the potential for practice growth should outweigh the other risk factors.

John M. Cahill, MBA, of Western Practice Sales, CA (member company of ADS Dental Transitions) has more than 40 years of experience in the dental industry, including all aspects of appraisals, sales, purchases, and buy-ins in connection with dental transitions. You can contact him at 800.641.4179 or info@westernpracticesales.com.

Two people shaking hands
As a Dental Practice Broker, I meet with dozens of private practice owners each year who feel as if they are getting closer to selling their private dental practice. The point in their career and the reasons why vary. In some cases, this may be in the next three to five years or it may be much sooner. In the initial conversation they always ask about today’s buyers along with several other questions which usually stem from an article, a post, a podcast, or something they heard at a conference. Having this face-to-face conversation, we get the opportunity to understand them better, answer their questions and educate on the various options.

The Q & A goes like this:

Is there a buyer for my office?

Yes, No or Maybe. There are so many items to consider and to properly analyze, but rarely is the answer NO. Most likely there is someone, finding him or her will take some time and effort. Currently, there are 68 dental schools in the U.S. and Canada with over 6,500 new dentists graduating each year. Today’s graduates have, on average, $300,000 in education debt.

How much can I sell my office for? What is it worth? My CPA Advisor said it is worth X%.

Again, this requires not only a deep understanding of how to properly value a dental practice but also requires someone who is very familiar with the market. Most CPAs and Advisors have limited experience in valuing and selling a dental practice. Marketing your office, while maintaining confidentiality is essential.

Can the buyer get financing? With so much student debt, I hear they can’t get financing.

Financing is available provided they meet some reasonable requirements. There are several great lending options for today’s buyers with historical low interest rates. Seller financing is rarely required but remains an option with a variety of pros and cons.

How long will this take?

It could take every bit of six to twelve months and in some cases longer. Location, price, demographics along with a dozen other components might affect the timeline. A general dentistry practice located in a rural community will most likely take much longer to find a buyer than a practice located in a metro area.

What about a corporate buyer, a DSO?

That is an option. What do you know about DSOs? Let’s take a few minutes to scratch the surface on them and see if that is a path for you.

Two dental practices with text Insights into DSO vs private practice

What is a DSO?

The Dental Service Organization dates to the 1970s. Dental Service Organizations, Dental Management Organizations and Dental Support Organizations are variations of the same. They provide support with human resources, marketing, branding, recruiting, IT service, payroll, capital, financing, tax services, accounting, risk management and practice support, to name just a few.

Who do DSOs Employ?

Aside from acquiring private practices, DSOs provide employment opportunities for new graduates. They have locations and opportunities. With a limited number of associate opportunities in private practices in the location that new graduates want to be, the DSOs provide an option for some. DSOs play a big part in employing new graduates and giving them experience essential for when they decide to pursue owning their own private practice. Most lenders usually require a new graduate to have at least one year of experience before they will provide financing.

What is a DSO Appetite?

Not every private practice is a candidate. Typically, there are several factors that have to be thoroughly reviewed. The first three major questions before any due diligence is performed pertains to the seller, facility and revenue.

Is the seller willing and able to remain in the practice for a period of time? Usually a period of three or more years is required. Can he or she continue to produce at or above their current level?

Does the current space have enough operatories and the necessary technology in place? Can the facility be expanded? Does the seller own the premises? What is the cost to update?

Does the current revenue and demographics meet the standard that the DSO is seeking to add to their group? Depending on the location the revenue requirements may vary.
Road that splits into 2 directions

Private Practice Advantages

As a private practice owner, you call all the shots, and you are 100 percent responsible for everything. This often creates somewhat of a family type of environment. You tend to focus on the relationship and well-being of your staff, and it isn’t always about the numbers. Obviously, the numbers are important, and some operate very successfully this way. Patients tend to have substantial trust in their provider and remain very loyal.

Private Practice Disadvantages

As a private practice owner, you are sometimes pulled from the primary responsibility which is caring for a patient to deal with an issue like HR, payroll, IT to name just a few.

Taking time off for any reason scheduled or not usually means the office will be closed.

Covid-19 has affected all businesses and many are still dealing with staffing issues and increased operating expenses. Patients have returned to the practice, but some employees remain at home and some have jumped to your competitors.

DSO Advantages

As a part of any large organization, you might receive a comprehensive benefit package including insurance and retirement benefits. Depending on the DSO, they may have a large team of associates and assistants to support you and to provide you the ability to take time off without having to temporarily close the office.

Some DSOs invest in continuing education and skill advancement. This not only serves the dentist with essential ongoing training but may also provide the corporation the ability to expand certain services to patients that were previously referred out.

DSO Disadvantages

You may be required to sign a lengthy employment contract in order to receive your full purchase price. Some organizations offer investment and stock opportunities and interest earning options. Some of these payouts may be tied to the overall success and performance of the organization.

Businesses need to be profitable and to do so there is a lot of focus on the numbers. New patients are essential and production reports are constantly being analyzed.

Day to day HIPAA, OSHA, HR, maintenance, payroll and all the other non-clinical tasks and decisions may be totally out of your hands. For some, this might be an advantage but for someone who has owned and operated their own practice for many years not having any input and turning over the controls might be a challenge.

What about your staff? Going forward you may have little to no input.

What about your building? Most DSOs do not purchase buildings. You would not only be an employee but you might also be a landlord. This can be both a positive and a negative.

Lastly what is your compensation? Going forward how will you be paid? What percentage? Percentage of what; collections, production, total office, including or excluding lab? How many years do you have to stay and what happens if you leave and what happens if you don’t meet or exceed goals? What about the stability of the DSO? What if they get acquired or what if they go under?

Whatever path you think is right for you, it is essential you don’t do it alone. Having an experienced advocate makes everything better.

To help you understand the different paths you can take, contact your local ADS Dental Transition expert and schedule a time to see what options are available for you.

Doug Sellan is a Transitions Consultant with PMA Practice Transitions with over 30 years of experience in the healthcare industry.

Dentist signing a contract

Whether you’re buying or selling a dental practice, one of the most important initial documents is an Offer to Purchase (OTP). This signed document lays out the price, terms, transition, and real estate (if applicable) of a practice being sold. Recently, we’ve seen buyers increasingly use a Letter of Intent (LOI) to make the offer, especially when the buyer is a corporation or a DSO. When an individual dentist is the buyer, however, a simple, one-page offer form is often all that is needed to agree to the basic terms of the deal and move forward. A broker is prepared and can easily create a personalized OTP document for you.

Dentist shaking hands in front of dental chair

One page is more than sufficient to lay out the basics of the deal, including:

  1. Buyer’s name & address
  2. Seller’s name & address
  3. Assets being purchased
  4. Assets not being purchased
  5. Price
  6. Terms of payment
  7. Transition details
  8. Real estate (if applicable)
  9. Contingencies
  10. Anticipated settlement date
  11. Signatures

At this stage, regardless of the document that is used, from a simple offer form or a formal Letter of Intent (LOI), it is non-binding. The specific details will be worked out in the Asset Purchase Agreement (APA) by attorneys for both parties. The sooner the offer form is agreed to and signed, the sooner the buyer can secure financing, begin the credentialing process, give notice to an employer if necessary, and allow the attorneys to begin working on the APA and other contracts.

A formal LOI often goes into more detail than is necessary in the early stages of a dental transaction. Also, it often involves the attorneys at an earlier point in the process, which can slow it down and lead to unnecessary costs for both parties.

If you have any questions about how to structure an OTP, your ADS specialist is ready to help.

Kevin Cooper, MBA, is a Practice Broker with American Practice Consultants.

Dentist standing in office with staff

None of us want to discuss or think about death or long-term disability. Humans cope with the possibility of death by ignoring it, which leads to a lack of preparation when the inevitable happens. In any given year, 10-40% of our dental practice transitions are the result of an unexpected death or disability, and less than half of those clients are adequately prepared for it. I’ve lost count of the different ways dentists find to die or cripple themselves, from the run-of-the-mill heart attack to freakish accidents you would swear came from a movie. No matter how it happens though, it is usually sudden and with little warning.

Usually, I receive those dreaded calls about someone I don’t know well, and I try to comfort the family left behind. There are no words that really provide comfort, so my primary job is to see if I can assist in maximizing the return on the sale of the deceased’s dental practice. Time is the greatest enemy in distressed practice sales; purchase offers decrease immediately upon death and all but evaporate within a few short months. Consequently, practitioners should prepare their spouses or loved ones to bring the practice to market quickly once a tragedy occurs.

When a death occurs, the survivors move in a fog and are usually unable to think clearly or make important decisions. So, please be sure to leave your family and employees some guidance on what to do with your practice. If the data is readily available, we can act quickly. However, we are often left piecing together records and searching for information in order to bring the practice to market.

Two women looking over paperwork

  1. Have a will and update it every few years. Either execute a codicil with instructions for your practice, or leave a letter of direction for your heirs to follow. Designate a lead advisor for the practice sale (CPA, attorney, broker, etc.)
  2. Have an emergency plan with the office staff. Make a list of possible substitute dentists who might help keep your practice open in an emergency. Have a plan for rescheduling patients. Providing a game plan to the staff helps keep morale up during a highly stressful time.
  3. Write down user IDs and Passwords for your practice management software and other accounts. Review this list every three months to make sure it is still up to date.
  4. Start a spreadsheet with all of your assets, including account numbers. If you have a safety deposit box, write down the bank name and address and the place you keep the key. If you have any debt, please include a section with bank names, account numbers and amounts. Mark your phone to review and update this list yearly and tell your spouse or eldest child where to find this list.
  5. Gather the information needed for a practice appraisal: 3 years tax returns, staff payroll data, office lease or building appraisal, etc. Update it yearly.

Although your dental practice may not be the largest asset you own, the sale of your practice will help your loved ones to start moving on. Obligations to patients for completing treatment and record maintenance do not end with death. Payroll, rent, and other office debts will continue to accrue, and the additional burden of office management is highly stressful to surviving family members.

I hope you have a long and happy life. However, it surely would help if you took just a little time to prepare for the worst.

Preston Lovelace, JD., MS. is president of ADS Lovelace and Associates and is a member of ADS Practice Transitions

Dentist shaking hands with another person

Many of us have probably heard from individuals who think sellers don’t need a practice broker to sell their dental practice. That is one side of the story, but in this case, it really pays to hear both sides. To that end, let’s look at the advantages of using a practice broker.

  1. Brokers have the best insight into the true value of a practice. I’ve seen university professors use calculus and involved formulae to value a practice. They have never sold a practice and did not know at what price it sold, if it sold at all. Brokers have to back up their valuations by bringing that amount of cash to the table, and it doesn’t help to overvalue a practice only to not have it sell, or to undervalue it and leave money on the table. Brokers will have the best estimate of a practice’s true value.

  2. Brokers can inform your accountant as to how to best structure a sale to get the best tax benefits. I have shown several accountants a legal method for saving tens of thousands of dollars that they were not aware of, savings which were much more than my fee.

  3. Brokers can help sellers avoid lawsuits. Knowing what has resulted in lawsuits in the past gives brokers insights that they can share with sellers’ attorneys and key language that will prevent legal losses from frivolous actions.

  4. Brokers protect your confidentiality. They can provide and explain volumes of financial and other sensitive information to prospects who don’t know your identity. Only when qualified prospects understand and agree to terms and sign a confidentiality agreement would your identity be revealed.

  5. Brokers can help make you money. Instead of spending weeks of effort in doing a task you probably have no experience or expertise in, brokers can handle the process while you treat patients and make money.

  6. Dentist having a discussion over paperwork

  7. Brokers help prospects understand the facts of the deal. Buyers cannot look at a tax return and see what is really happening. We know your tax return was designed for one purpose – to compute the tax you owe – and not to show what a practice net income actually is. Without this understanding, many practices may be overlooked or purchased far below market value.

  8. Brokers know where the cash is and how to get a practice financed. We know the lenders personally and the best matches for practices and lenders. We work with lenders to get full financing quickly and help find the best rates for buyers and don’t waste time and effort where loans don’t get made.

  9. Brokers provide the maximum market exposure for your sale. The more prospects there are, the more likely you are to get your asking price. Through proprietary websites and the many venues that brokers have developed, your practice will be discovered by the most prospects possible.

  10. Brokers bring legitimacy to your sale. Buyers can discern that brokers inspect, value, and investigate a practice thoroughly before bringing it to market. We show owners how to increase their practice marketability, value, and financeability. It is the difference between buying a certified used car from a dealer versus a used car in someone’s driveway on a dark night. This added credibility gives buyers the confidence to decide to buy and to pay a fair price.

  11. Brokers get it done. I listed a practice for a seller who had tried unsuccessfully for two years to sell his practice. In three weeks, I had a full-price offer, and it quickly sold. The seller told me that he made more from the sale, even after paying my commission, than he would have by selling it himself. Then the buyer told me that the seller offered the practice to him a year earlier at a lower price but that he didn’t see that it was worth it. But through my explanation of the cash flow, the risk assessment and other factors he hadn’t thought about, the buyer decided it was worth the higher price.

Before you decide to sell by owner, remember the money, time, security and expertise that brokers bring to your sale.

Earl M. Douglas, DDS is the founder of ADS South and is a founding member of ADS Practice Transitions

Bar chart showing growth

The pandemic’s impact on the dental industry and business as a whole has been severe, but it has revealed some unexpected opportunities for many dental practices. You’re most likely well into the recovery of your practice because of one simple truth…people need dental care. That fortunate fact means your profits, while taking a hit in 2020, are on track for a rebound in 2021. So, what does this mean for dentists thinking about whether or not it’s time to sell their practice? It means now may be the time you’ve been waiting for, especially if transitioning has been on your mind.

Dentist holding up a chartThe pandemic was a trial by fire. But, many practices emerged from it with a greater potential for profitability. For others, the pre-pandemic trend within the industry of consolidation, plus the burden of reduced revenue and increased overhead expenses due to the pandemic, has them looking into the possibility of cashing out and selling their practice.

As a result, the pandemic has encouraged, if not created, opportunities for both buying and selling a practice. A recent article in Dentistry Today explains why dental practices are viewed as a valuable opportunity.

“…Investors consider dentistry a “recession-proof” business for good reason. It’s not possible to defer dental services forever.”

Dentist having a conversation with a patientPeople need dental care and that means there will always be a demand for dental practices. The pandemic only made that fact painfully obvious and in doing so, created a post-pandemic opportunity for sellers.

For more insight into whether now is the right time for you to buy or sell a practice, contact an ADS Transitions broker today. From valuations to successful transitions, they are ready to discuss how you can benefit the most in your current situation in order to achieve your end goals.

Stay, Grow, or Go Circles

Life is like a record album for those who remember what that actually is. It spins around and around, and once it gets to the end, it starts back at the beginning. Like the 70’s Rock Band, The Clash simply put it in the 1982 top 40 hit, “Should I Stay, or Should I Go”? The lyrics to the song could be how you see yourself in your practice. A lot of give and take and one day it is fine and the next it’s not. The business of Dentistry is very cyclical and almost everything we have experienced in the past 40 years has presented itself previously in some form or fashion. We always prevail, but do we have the time and energy left to do it again.
Man playing electric guitar

Do I stay? Keep everything as is and hope that the current pandemic is in the past. Will the new administration have my best interest in mind? Is my retirement plan fully funded and protected? Do I have the necessary resources available to make some modest investments into my business to maintain my year-over-year production and collections? These are just a few questions that you should be asking yourself.

Over this past year, due to Covid rules and regulations, offices were forced to clean up. For some, this was a bigger undertaking than others. Decades of clutter, dust and grime made it to the dumpster. Some offices got fresh paint, flooring, and some new equipment. Going to the office for some became a bit more exciting now that the office was feeling fresh.

Do I grow? In addition to the above, maybe you hire an associate if your practice can support one. Expand the facility if possible. Acquire an additional location. Build a new office and relocate the current office into that facility.

Now is a great time to take a deep dive into your numbers. Most practices monitor production, collection, new patients, and the accounts receivable. What is your practice mix? Most general dentists perform around 90 unique clinical procedures. The more procedures you offer, the less dependent you become on new patients. What about your insurance plans and fee schedules? Are you taking advantage of alternative patient financing? Are you coding correctly?

Take advantage of the current lending rates. Interest rates are currently at an all-time low. A ten-year loan for $100,000 at a 4% interest rate is only $1,013 per month. Depending on what you utilize the proceeds for, there can be some significant tax benefits as well.

Do I go? If you’ve been saying 5 more years for several years, and just when things go bad, they soon start to recover, and then they go bad again. There will always be something around the corner. As you and your practice age, the profitability, marketability and transition ability all slide up and down.

Chair in a dental office

Keep in mind that a transition typically takes up to a year to complete. The location may greatly affect that timeline and if you are a specialist or if you do a good percentage of specialty procedures, that may not only affect the timeline but also the market value.

Before you choose any path above, you should consult with one of our ADS Dental Transition Brokers. With the experience and expertise we have from coast to coast, you’ll be well informed and advised to make that very important decision.

Doug Sellan is a transitions consultant with PMA Practice Transitions and a member of ADS. He began his commercial banking career in 1987 and has over 30 years of experience in the healthcare industry.

Three dentists training in a classroom

Using your practice as a Dental Assisting School

The U.S. Bureau of Labor projects that employment of dental assistants will “grow 25% from 2012 to 2022.”1 You’ve probably already witnessed the growth and demand for quality-trained dental assistants. But have you ever considered how you could utilize your practice as a training facility?

Depending on the actual physical size of your practice, you may have an additional income opportunity staring you in the face. Imagine using your facilities after hours, one day a week over 10 to 13 weeks to train potential dental assistants? For many dental professionals, it’s an easy way to generate more income from their dental practice.

Once again, if you physically have a large enough practice, opening your own dental assistant training program makes a lot of sense. That’s because your dental facility probably already has a lot of what is needed to train dental assistants. And, perhaps best of all, you don’t even need to be there. With the right program materials, your experienced hygienist or dental assistant can teach the class. In addition, depending on the accreditation of the program you use to start a dental assistant training school, you, your faculty and your students may be eligible to receive CE credits for your efforts.

Obviously, starting a training program requires training materials, curriculums, and more. Fortunately, a variety of resources exist to help dental practices quickly get up to speed in offering dental assistant training. If you’re interested in learning more, a great place to start is an article in Dentistry iQ.

Starting your own dental assisting school can be a viable way to utilize space and equipment you already have, in a way that doesn’t detract from your current practice while generating more income for your overall bottom line. It can be a smart and rewarding move that helps satisfy a need for quality-trained dental assistants.

Reference:
1U.S. Bureau of Labor Statistics, Occupational Outlook Handbook

Empty dental chair with other equipmentThe classic definition of a dental practice transition is when a doctor sells all or part of their practice to another dentist. The seller either retires shortly after, or phases themselves out over a period of time. Other names to describe a practice transition include: buy-out, associate buy-in, partnership, or practice sale. But, the transition that is the best deal in dentistry is the practice merger.

Just like a traditional transition, the merger can be structured in many different ways. Two of the most common are:

  1. It can be an outright sale, where the seller retires immediately.
  2. It can be a phase-out, where the seller merges their practice into the buyer’s and works for a period of time as the associate. This can be as short as a few weeks, or it can be a long phase-out over years.

So why would a buyer want to purchase a merger? Big business figured this out long ago: The quickest way to grow a business with the least amount of risk is through acquisitions.

You have heard the term “mergers and acquisitions.” Bank of America, Chase, and JP Morgan didn’t become massive banks through organic growth, they did it by buying and merging other banks. There are two main economic theories for this operation. First, there are synergies that are gained when you combine two similar operations. Redundant expenses and staff can be eliminated. The result is two gross incomes with one overhead.

Second, the immediate increase in number of patients.

Let’s take a look…

Buyer’s Practice – 1800 active patients   Seller’s Practice – 800 active patients
Gross Income 600,000   Gross Income 384,039
Wages 180,000 Wages 136,135
Taxes 10,415 Taxes 13,518
Rent 36,000 Rent 24,000
Legal & Professional 3,000 Legal & Professional 1,935
Insurance 4,500 Insurance 3,208
Office Expense 15,000 Office Expense 2,412
Repairs 4,500 Repairs 2,169
Utilities 12,000 Utilities 5,269
Telephone 2,400 Telephone 2,819
Dental Supplies 36,000 Dental Supplies 24,000
Labs 30,000 Labs 29,051
Bank Charges 5,000 Bank Charges 3,758
Marketing 15,000 Marketing 3,000
Dues & Subscriptions 1,500 Dues & Subscriptions 1,500
Total Expenses 355,312 Total Expenses 252,774
Net Income 224,685 Net Income 131,265
Overhead 59% Overhead 65%

When a merger happens, all of the highlighted areas of the purchased practice go away. When you merge the practice into the buyer’s practice, you are only paying one rent, not two. You are only paying one accountant, not two. And so on.

Buyer’s Practice – 1800 active patients   Seller’s Practice – 2600 active patients
Gross Income 600,000   Gross Income 984,039
Wages 180,000 Wages 225,000
Taxes 10,415 Taxes 11,502
Rent 36,000 Rent 36,000
Legal & Professional 3,000 Legal & Professional 3,000
Insurance 4,500 Insurance 4,500
Office Expense 15,000 Office Expense 15,000
Repairs 4,500 Repairs 4,500
Utilities 12,000 Utilities 12,000
Telephone 2,400 Telephone 2,400
Dental Supplies 36,000 Dental Supplies 59,000
Labs 30,000 Labs 59,201
Bank Charges 5,000 Bank Charges 8,000
Marketing 15,000 Marketing 0
Dues & Subscriptions 1,500 Dues & Subscriptions 1,500
Total Expenses 355,312 Total Expenses 458,850
Net Income 224,685 Net Income 525,189
Overhead 59% Debit Service on the loan 15,776
Net Income 509,413
Overhead 52%

When you look at the before and after of the combined practice, it’s like magic! The buyer picked up an additional 800 patients overnight. If you’re getting 10 new patients a month at your practice, it would take almost seven years to reach 800 new patients.

Chart showing 800 patient increaseWe have completed many “merger” deals and the buyers almost unanimously tell us they were successful. A few patients that once lived in the neighborhood and now travel, may take this opportunity to find a dentist closer, but the vast majority of patients transferred to the new office. As the “new” dentist, you have the opportunity to make a great impression on new patients and give them a good experience that will keep them as patients.

Once a dentist does one of these transitions, it’s not uncommon for them to call us a year later to inquire about other nearby deals and be put at the top of the list to call if any become available.

There is no better feeling, knowing that a transition was a win-win for all involved.

James Ackerman is a dental transitions broker with ADS Midwest. He can be reached at jim@adsmidwest.com or (314) 449-4517.