As a dental broker, of course, every year is the best year to list your practice! All kidding aside, most of us in the transition business saw a reduction of activity due to the economic downturn several years ago. However, the economy seems to be booming and we had our best year for practice sales in 2017! Values and revenues have stabilized from the past downturn in the economy. Interest rates are still at historic lows and 100% financing is still available in most transitions.

 

So why is NOW a better time than usual to consider selling your practice?

 

• Inventory has been consistently low for several years, therefore values are up. We do not expect this to continue as the “baby-boomers” are expected to retire in just a few short years.
• Interest rates are still at historic lows. Financing is also readily available at 100% for most transitions. As the economy begins to improve, we expect interest rates to increase. Most financial analysts believe that inflation has to kick in at some point due to the printing presses running at the Fed.
• Quality practices in the cities are getting record prices. This is great for you city folks, but not so great if you are outside the city. It will definitely take a little longer if your practice is outside the city, you might consider starting the process a little earlier.

 

I also believe that the inventory and interest rates will start to inch higher in the near future. Higher interest rates and more inventory will definitely put downward pressure on practice values.

 

As a dentist first, I always finish my lectures stating that I do not believe sellers should “time the market”. While taxes, interest rates, inventory and local market forces influence pricing, I believe that you should retire when you are ready to. If you are contemplating retirement in the near future, NOW is a good time to consider making the move! So, stop asking your self, “should I sell my dental practice?” and instead talk with an expert about it. It is certainly worth a call to your accountant to look at the current trajectory of your practice and determine if retiring sooner might be in your best interests!

 

Have questions on the best way to sell a dental practice? Visit our Contact Us page to submit any questions you might have.

Franklin D Roosevelt finished this phrase in 1932 with “Fear Itself”. As a dentist looking at the current trends in dentistry I might finish this off with three things:

1. Corporate Dentistry

2. Massive Debt for Young Dentists

3. Delta Dental

I do believe that these three issues have affected dentistry and the normal transitional process of buying a practice and selling a practice when retirement arrives.

 

My company is normally involved in about 80 to 100 dental transitions each year. While 2017 was a very good year for us, we are definitely seeing a change in the marketplace for dentists that are buying and dentists that are selling practices. Practices are still changing hands, but the amount of interested buyers seems to be lagging behind. Our practices in the metropolitan areas will almost always sell at expected valuations, but our practices outside of the large cities will take much longer than normal. Even the practices in the city that do sell are garnering fewer buyers than in the past, and many times the buyers in the city already own multiple practices. In the past, most of our practice transitions were simple solo practitioners selling to another would-be solo practitioner. What is the reason for this new trend?

 

Buying a Dental Practice and Fear

“FEAR ITSELF” is my explanation for this recent phenomenon. Young buyers are fearful of the current economics of dentistry. They have massive debt from dental school, sometimes approaching $450K. They are concerned about buying a practice and having Delta cut their fee schedule if they are considering a traditional practice model. They look at Corporate Dentistry as a safer play. Looking for advice on buying a dental practice even if considering going corporate could be worth while.

 

Cost of Buying a Dental Practice

You’re probably asking yourself, should I buy a dental practice or go corporate? The truth is that the best way to pay off your debt is to own your own successful practice! The multiple practice owners know this. Owners are supposed to make a profit from owning a business. Of course, it has to be a well-run business with a decent practice base. The large debt of school loans and the cost of building a scratch start practice make buying an existing practice from a retiring dentist with a good patient base the best way to fight that fear!

 

Have questions? Visit our Contact Us page to submit any questions you might have.