6 Months Or 6 Years: A Successful Exit Plan Starts NOW

Dentistry demands unique skills that few outside the profession understand. Your ability to perform intricate procedures in a confined space takes energy, focus, and commitment. But at the same time, you’re running a business and managing staff. You’re complying with HIPAA and adopting new OSHA regulations. You’re trying to understand multi-platform marketing and membership plans.

In the heat of the battle, you’re juggling a full load. And if you’re a few years from leaving the profession your exit plan may not be part of the current scenario. But the secret to the most successful dental transitions lies in the preparation. And everything you’re doing today shapes the off-ramp into your next phase.

In a perfect world, you have a few years before you hang up the handpiece. Then again, you may be coming down the home stretch. It’s better to have more time, but your exit plan is forming no matter where you’re at now.

As a dentist, you invest years to learn technical skills that make lives better. And as an entrepreneur, you make strategic moves that create profitability now. But a holistic plan paves the way for a practice transition that pays off later.

Take Control With A Dental Practice Sale On Your Terms

Many dentists know that the profession is changing, but they don’t understand the complexity of current trends. Consider these two revealing facts and how they could influence your planning:

  • In 2005, just under half of dentists under 35 owned a practice. That number shrank to 30.7% by 2019. Post-pandemic, it’s continuing to fall.
  • Many thought leaders see the steady acquisition wave by DSOs continuing. It’s estimated that the current DSO market penetration of about 30% will maintain a steady march to 75-80% over the next decade.

These trends may influence the trajectory of your transition and open even more opportunities for you than in the past. While there may be fewer traditional buyers in the future, strong practices enjoy more exit options than ever before.

When you start planning your dental practice transition early, you have time to analyze your goals and strengthen your business. You’re less likely to feel forced to accept a situation that doesn’t fit a comprehensive life plan. And you’re more likely to maximize your practice value and a retirement nest egg when you’re ready to sell.

What Do Dental Support Organizations (DSO) Mean For You?

While the days of finding a young associate who becomes a buyer are becoming less likely, an intentional approach keeps every possibility on the table. A well-run, profitable practice offers a clear alternative for a young practitioner to consider. And if you have time to match with the right buyer, a timely turnover within a few months is possible.

But early planning gives you time to carefully evaluate if a DSO is your best exit option, too. DSOs generally require that the selling dentist stays in the practice for 3-5 years, and there are various conditions to the working arrangement. For example, most DSOs offer 60-80% of the practice value up-front with an earn-out structure or equity rollover for the remaining portion. You’ll need to continue to help the practice thrive for several years, but it can be a lucrative scenario, especially if you choose a deal structure that includes an equity rollover.

The DSO trend is one reason an exit plan starts now even if you’re a few years out. In a DSO sale, you’ll stay in the practice for a few years; you must consider each organization carefully before making a decision. You can take a proactive approach with competent advice when you’re not pushed into a quick decision or lured by an unsolicited offer.

A Complex Environment Brings Opportunities

The dental profession is in transition, and that can make your own transition more complex. No one should try a DIY approach or expect a young buyer to appear with the first listing. It’s possible, but it takes intentional focus on creating a viable brand and business.

There are many moving parts in a thriving healthcare business, and it takes a steady hand to balance all the pieces now while still preparing for the future. We know your practice may be your largest asset and a significant contributor to your next phase. Strategic management of every component can lead to timely transactions for maximum profitability. For example, if you own real estate tied to the practice, a detailed analysis helps maximize how it fits into a transaction.

Regardless of the stage you’re at, start the conversation with professionals that understand the current business environment and how to approach each option. The more time you have, the better. If you’re asking, “When should I sell my dental practice,” we can help.  At DDS Match, we partner with our clients to design a personalized exit plan that makes sense. Reach out and start the conversation even if you’re years away from making a final move.

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