Each year brings its own opportunities, challenges and trends. With new reporting requirements for business owners, unsteady lending conditions and a constant buzz around corporate sales, NDP wants to ensure doctors have the guidance and reassurance to reach their dental transition goals.
If buying or selling a dental practice is on the horizon for you, here are a few things to know for your dental transition.
NEW: The Corporate Transparency Act
Congress passed the Corporate Transparency Act (CTA) to mitigate bad actors from hiding their illicit gains through shell companies and “opaque” ownership structures. The law attempts to close a loophole in corporate regulations that enables criminals to hide their identities using these structures.
What does this mean for dental practice owners?
Going into effect on January 1, 2024, businesses will be required to report information about beneficial owners—those who own at least 25% or exercise substantial control over the company—to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
This will impact newly created entities immediately. Entities created on or after January 1, 2024, must report beneficial owner information within 30 calendar days of creation. Existing entities have until January 1, 2025 to report unless they undergo ownership changes, such as those triggered by a sale. In this case, they have 30 days from the date of the change.
Practices will be required to report their company’s beneficial ownership information electronically through a secure filing system available via FinCEN’s website.
Get More Insight:
NDP ensures you have the tools and resources needed through the journey of practice ownership. We are monitoring the actionable requirements as updates are released. If you’re seeking additional guidance, reach out to our team with your questions.
The Silver Lining in Lending
In search of the best interest rates, many borrowers have found their efforts to be discouraging. While the financial landscape has changed, it’s important to remember that it’s also cyclical, and rates will cycle from low to high.
The bright side is that banks will adjust their dynamic based on the landscape, and they’re going to provide options to accommodate buyers.
In fact, these days, lenders are seeing many first-time buyers purchase early in their careers. Despite their “young” financial statements and lower amounts of liquidity, lenders are still able to get loan approvals for these buyers. Lenders are willing to work with the buyers and offer variable options as their businesses grow.
Overall, banks understand that dentistry has proven itself to be a resilient industry through times of volatility. Dentists will still be able to receive lending despite the status of interest rates.
Get More Insight:
NDP works closely with several experienced vendors in the dental industry, including lenders and financial advisors. If we don’t have the answer, we know experts who do and can guide you to the best possible solutions. Contact us to learn more about the specialized providers we partner with to ultimately help you as a dental professional.
Private vs. Corporate
With the popularity surrounding corporate sales, it may seem like all practices these days are taking the dental service organization (DSO) or private equity (PE) route. In reality, the DSO/PE market is only 20-25% consolidated, so there are still a large number of private practices and buyers that comprise the other 75%.
There are certain practices that fit the DSO/PE criteria, and there are certain practices that don’t. Even if they fit, many sellers still choose to sell to an independent doctor, and many buying doctors want to be in control of their own practices.
The opportunity and risks that come with a corporate sale vary from a private sale. Whether it’s the financial impact, workload, control or stability, there are pros and cons when choosing between the two sale types. The fact of the matter is that a corporate sale is only one of several dental transition options, and private practice is still an advantageous option for many.
Get More Insight:
With over 20 years of experience guiding doctors through private practice sales, NDP strives to give you as much information as possible so that you can make the best decision for yourself. If private practice is in the cards for you, we ensure you can picture life after the sale and know what this path looks like for both you and your practice.
If you’re considering a corporate sale, 7 Pillars is a trusted resource who can help you decide if this is the appropriate route for you. Through their advisory and broker services, they keep your best interest in mind by helping you understand the market conditions, navigating corporate offers and walking you through the process. Their objectives are to maximize your practice value and meet your transition goals with a corporate or DSO partner.
The Big Picture
With the help of our partner companies and resources, NDP believes in providing support for the full lifecycle of your dental career. From purchasing your first practice, growing your business to transferring ownership of your life’s work, NDP and our affiliate companies can guide you on this journey.
