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Are Private Dental Practices Dead?

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DSOs and PE continue to shake up the dental industry

 

The dental industry is evolving, and a constant buzz has developed surrounding dental service organizations (DSO) and private equity (PE) firms.

The surge in popularity for the corporate sale feels insurmountable. Firms are approaching dental practices in attractive markets with elevated financial offers to buy, at multiples that even practice owners with no intention to sell can’t ignore.

Since DSOs and PE firms are acquiring dental practices en masse, doctors across the country are questioning if they should take this route instead of pursuing a private practice sale. They’re also wondering what the future holds for private practices.

The Popularity Behind DSOs and PE Firms

The corporate sale path has been made popular by the high financial offers doctors have received from DSOs and PE firms. Many doctors, especially young, recent graduates, favor this path to reduce risk and workload, while providing stable employment. For current practice owners, it’s a viable option if they don’t have many options for finding a buyer. The corporate sale also benefits financially set owners who want to finish their career with a firm transition plan that allows them to practice clinically and oversee their practice, while taking some of the load off.

While there are conditions that come with this decision—such as long work-back periods, loss of some control and a question of true long-term financial impact—the corporate sale option is becoming increasingly popular, and it appears that it’s here to stay.

If you decide to move forward with a corporate sale, a firm that specializes in this type of transition can provide the proper guidance and representation to assist you along the way.

Are Private Practices Going Away?

With the rise of DSOs and PE firms, the big question is, what’s at stake for private practices? Are they on the brink of going away forever?  

The fact of the matter is that a corporate sale is only one of several dental transition options. Numerous doctors still choose to buy or sell from an independent doctor, and they still want to be in charge of their own practices today. These doctors desire to have control over their time and money, and private practice ownership gives them that flexibility. Since the desire for autonomy will never go away, neither will the private practice.

Especially when we’re talking about selling a practice, the process becomes increasingly emotional because of what’s on the line: the life’s work of a doctor. The doctor has put a considerable amount of time and effort into building the practice, team and patient base. Therefore, doctors often favor selling to another doctor because of the opportunity to choose who will take over the practice, resulting in peace of mind that the practice will be in good hands.

With a huge buzz around corporate sales, it may seem like all practices these days are taking the DSO/PE route. In reality, there are a large number of practices choosing both corporate sales and private practices.

 “Whether considering DSOs or private practices, people are often stuck in each respective world, believing that’s the only transition option,” Partner Christy Ratcliff says. “The truth is the number of private practice transitions are still incredibly high, and we don’t see either option going away anytime soon.”

Know Your Dental Transition Options

Prior to making a decision in any dental transition, it’s important to determine what’s driving your decision outside of the financials. Aside from the money, what do you want from this transition? Assess your short and long-term goals while also understanding your personal financial plan. Evaluating the opportunity with extreme diligence and determining how the sale both positively and negatively impacts you will steer you in the right direction.

You have a variety of paths to choose from when it comes to buying or selling a dental practice. The important piece is to understand which one is right for you. By listening to your goals and financial needs, NDP can help you discover your specific transition route. Reach out to our team for a complimentary call today.

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