What Makes Transitioning an Orthodontic Practice Unique?

Understanding your true value in a seller’s market.

Finding a buyer for an orthodontic practice is not difficult in what is the epitome of a seller’s market. The trick is finding the right kind of buyer and structuring a transition in the way that makes the most sense for the seller. NDP has an established track record in finding qualified buyers for orthodontics practices and creating a smooth and profitable transition for the buyers.

Factors driving orthodontic practice demand:

  • More residency programs mean more graduates
  • Orthodontists retiring later means fewer established practices hit the market
  • Orthodontic practices are the hardest start-up due to the time it takes Contracts Receivable to catch up to production

While demand may be high that doesn’t mean qualified buyers just show up at your door:

  • Residents are typically saddled with $250,000 to $600,000 in student debt at anywhere between 6.8% to 11% interest.
  • They are understandably hesitant about borrowing more money for an acquisition or their own startup.
  • Many new orthodontists associate for their first few years in the business, but that’s not actually in their best interest. Practice ownership is one of the smartest paths out of student debt.

Our relationship with 67 of the top residency programs across the country puts us in contact with some of the best new talent in the field. We have attended Graduate Orthodontics Resident Program (GORP) since 2007 and the American Association of Orthodontists (AAO) since 2004. Our partners across all fields work with hundreds of orthodontists across the nation, giving us a network of potential buyers and sellers to connect.

Before you can find the perfect buyer or partner, you have to have a clear assessment of the practice’s value.

Orthodontic Valuations

Orthodontics practices are valued similarly to other dental practices but of all the specialties, orthodontics will tend to value slightly higher due to the demand and nature of the production. Here’s what to expect:

  • Case Starts – A review of the trends in phase I and phase II starts over the past 12-18 months will be reviewed.
  • Observation Cases – These cases can positively impact value with new growth expected as cases age and develop.
  • Contracts Receivable – Reviewing trends over the previous 3-5 years will show the consistency or growth of the practice.
  • Overhead – Overhead costs and how closely those costs are controlled directly impacts profit margins and cash flow.
  • Assets – Assets are key to a potential orthodontic buyer so the detail and accuracy of equipment appraisals and any potential upgrades in the immediate years prior to transition are crucial.
  • Location – A practice on the west coast, west of Interstate 5 will value higher than the rural Southeast simply because of location.

While no two orthodontic practices are the same, the seller’s market and demand from buyers have definitely elevated the transition and valuation process industry wide. Read more about NDP’s valuation services here.

Interested in understanding how to plan for an orthodontic transition? Want to know what your practice may be worth in today’s market?

For a complimentary review of your practice, please contact our office or fill out a short contact form. To get started, we request basic financial and operational information and set up a one-hour review of your practice to give you real expectations of what you can expect as a seller, and what buyers are expecting from you.

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