After 22 years of facilitating dental practice transitions, we’ve gained a unique perspective on the evolution of this market. The landscape today presents both new challenges and persistent realities compared to when we first began. We wanted to share some key insights into what has changed and what surprisingly remains the same for those considering a practice sale.
Interestingly, despite the significant shifts we’ve observed, some fundamental aspects of practice sales endure. We consistently find that practices delaying their sale often experience a gradual decline in collections, underscoring the importance of proactive planning and timely decision-making. Furthermore, once a qualified buyer is secured, the closing process typically remains efficient, generally taking between two to three months from start to finish. The intrinsic value of a dental practice continues to reside predominantly in its goodwill and patient relationships, often far outweighing the tangible assets.
It’s also noteworthy that 100% bank financing has remained a consistent option throughout our two decades in the industry. For general practitioner practices, a common scenario both then and now involves the owner’s departure shortly after closing, with minimal or no extended transition period. Finally, a misconception that persists is the simplistic valuation of a practice based solely on a percentage of collections, a notion that overlooks the numerous other critical factors at play.
However, the differences in today’s market are significant and warrant careful consideration. We’ve observed a trend of declining bottom lines for many practices, often influenced by factors such as increasing overhead costs and evolving insurance landscapes. The prominent wave of consolidation, particularly involving Dental Service Organizations (DSOs), has reshaped the buyer pool and competitive dynamics. Consequently, a greater number of practices today face challenges in finding suitable buyers compared to two decades ago, leading to what is now largely a buyer’s market with more sellers than available purchasers. As a result, the timeline for selling a practice has generally lengthened, requiring patience and a strategic marketing approach.
A 3-operatory practice, once a standard and readily marketable size, now often presents more of a selling hurdle as buyers increasingly seek larger, more modern facilities. The shift in urban landscapes has also impacted practice viability, with fewer practices thriving in central business districts compared to the past. Geographically, practices located outside of major metropolitan areas often encounter greater difficulty in the sales process. Perhaps most notably, practice valuations have become more complex, exhibiting a much wider range based on a multitude of factors, leading to a greater disparity in prices compared to the more consistent valuations of the past.
Despite these evolving market dynamics, our experience and in-depth understanding of the current environment enable us to continue facilitating successful transitions. We are proud to have recently closed on five additional practices in the last six weeks, demonstrating our ability to manage these complexities effectively. Navigating the intricacies of today’s dental practice market requires informed guidance and a strategic approach. If you have any questions about practice transitions in general or would like to discuss the specific circumstances of your practice, please do not hesitate to contact us. We are here to provide clarity and support as you consider your next steps.