Frequently Asked Questions

Get the answers to your questions

We know there's a lot here. We also know that this process requires lots of questions. We're here to help. Explore some of the most common questions we're asked throughout the dental transition process.

• Why Do I Need a Broker?

  Practice brokers are essentially the quarterback of the transaction process. Many players are involved, including the seller, buyer, accountants, attorneys, and potentially a landlord or real estate broker. Each of these individuals have their own parochial interests and skill sets. They are not, however, monitoring the overall process nor taking a holistic view of the transition process. A dental practice broker helps ensure parties are communicating and will, among other things, prepare to take the dental practice to market, interview and vet candidates, identify buyers, assist in the negotiations, and coordinate among the advisors.

• What Is My Dental Practice Worth?

  The age old question, and the one at the very top of selling dentists’ minds. While the answer to that question depends specifically on the practice and involves consideration of numerous variables, the typical range is usually 70% of the previous year’s gross collections. But the variables vary and can be quite meaningful; for example, the type of practice (e.g., specialist, GP, etc), location (rural v. urban), patient base (medicaid v. fee for service), building type (standalone v. old medical building), and overhead (+/- 60%) can all impact that typical range. Unfortunately, oftentimes there is a broad valuation range and what to ultimately list a dental practice for depends on the selling dentist’s strategy, e.g., seller desires a quick sale, seller is willing to wait and let practice sit for the right price, and the local prevailing market.

• How Do We Ensure Correct Valuation?

  At DDS Practice Transitions, we use a third-party valuation expert, known as a Certified Valuation Analyst, to assist us in valuing dental practices. With this third-party report in hand, we use our industry experience and apply a qualitative overlay to the valuation (value is not all just dollars and cents based on historical revenue numbers). At the end of the day, we will arrive at a valuation and asking price that is fair and will stand up in the marketplace.

• What Will It Cost Me To Use A Practice Broker?

  Similar to how commissions are paid when you sell a home, most of our fee is in the form of a commission that is only paid upon the successful consummation of a dental transaction. The market rate for dental practice brokers is around 10%. As a boutique dental practice broker with less overhead than some of the larger dental brokers, DDS Practice Transitions charges less than 10% and utilizes a tiered cost structure depending on the size of the dental practice.

• How Do I Start The Process Of Selling My Dental Practice?

  The first step is to sign an exclusive listing agreement with a dental practice broker. This agreement commits the dental practice owner to selling the practice. The listing agreement is among the foundational documents that acts as a mental switch for the dental practice owner. Selling a dental practice can be an emotional experience and this document helps to trigger that switch. The listing agreement officially launches the sales process and includes key details regarding the process, including the time period the practice broker will have the exclusive right to market the practice and the broker’s transaction fee.

• How Long Will It Take To Sell My Practice?

  This depends on the circumstances, including, among other things, the market the practice is located in (metro or rural), the size of the practice, the asking price (hyper aggressive or fair listing price), and the type of practice (e.g., specialty, general practice). The typical sale timeline in a major metropolitan market is three to six months.

• Is It True That DSOs Or Private Equity Will Pay A Premium For Dental Practices?

  The devil is always in the details. While it is true for certain dental practices with higher annual revenues (typically $1mm+) a DSO may pay more for a dental practice than an individual buyer, the transaction structure is markedly different. In a private sale to an individual, the selling dentist usually stops practicing dentistry at the practice soon after the sale (if at all after the sale). In a sale to a DSO, however, the selling dentist often must continue practicing dentistry for two or more years. In return for the purchase price premium, the DSO expects the selling doctor to ensure the business continues to operate at a high level and may have certain milestones that must be met before the selling dentist obtains the full sale price.

• Can I Continue To Own A Portion Of My Practice After The Sale? How Does That Work?

  If you sell to a dental service organization or private equity, you may be able to negotiate for a piece of the equity of the management company or acquisition vehicle. In return for a potential equity upside of the DSO or private equity company at the next recapitalization event, a portion of the sales price will be put towards owning the post-closing equity. In agreeing to do this, the selling dentist is hoping that with the synergies of the new co-owner, economies of scale, and industry expertise, the new co-owner will grow the practice. A selling dentist can expect the new co-owner to look to sell or recapitalize in three to five years, at which time, there could be a substantial payout.

• Do I Have To Stay On, Or Can I Just Sell And Walk Away?

  Depends on the transaction. If you’re selling to private equity, you’ll very likely have to stay on for two or more years; if you’re selling to an individual, oftentimes you can walk away.

• Do I Really Need A Professional To Help Me Sell My Practice? If So, Who?

  Short answer, yes. This will likely be the most important transaction of your career. To maximize value and ensure you understand your options for your dental practice, having a team of experienced advisors is critical. In any M&A transaction of moderate size in the United States, buyers and sellers always have a full suite of professionals for a good reason: the seller simply does not have the experience to facilitate a transaction as that is not what they do day to day. While it is easy for us to say, foregoing professional advisors to save money is a mistake. Even a modest increase in the overall purchase price of your dental practice will cover your dental advisor fees (even a very modest 5% increase purchase price on a $700,000 practice equates to $35,000).