How to Transition a General Dentistry Practice
Transitioning a General Dentistry practice requires the consideration of many factors, including an understanding that each general dentistry office is unique. NDP has the tools to ensure your transition success. Through our contacts with most of the 66 dental schools in the U.S., including Advanced Education in General Dentistry (AEGD) and General Practice Residency (GPR) programs, and advanced understanding of the field, we have the tools to ensure your transition success. And, our relationships with countless vendors and practice management consultants often result in a much faster match of potential buyers to a potential seller. Approximately 6,000 graduating dental students enter the field each year. Candidates who have a few years of experience, a drive for success, and passion to become a business owner sooner rather than later are the best prospects for a General Dentistry practice. Whether looking to add an associate or seeking a potential buyer, here are some key points to consider:
- How up to date is your tech? The majority of buyers expect the latest and greatest, so a practice that has been upgraded in the past 5-7 years is a plus.
- What to expect from a candidate in your practice? A general dentist should exceed production of $50,000 per month by their 24th month in practice.
- Is student debt an issue? The massive debt commitment dental students face causes hesitation on borrowing more money for a start-up or acquisition, but NDP can show the buyer how buying a practice can actually help pay off their student debt.
- Will banks lend money to these students and residents? The answer is yes. We work with most of the major banks specializing in dentistry and know how to secure funding.
General Dentistry Practice Valuations
Location, equipment and finish out, type of patients and the proposed transition plan are the major components contributing to the valuation, but cash is king. A General Practice running efficiently with well-controlled staff and operating costs, solid profit margins and good cash flow will have increased value. Factors in determining value:
- Overhead – Overhead costs and how closely those costs are controlled directly impact profit margins and cash flow. The average general practice has an overhead of 55-60%. Practices with lower overhead will value higher and those with a higher overhead will value lower.
- Assets – Assets are key to a potential 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 or an urban area will value higher than the rural Southeast simply because of location.
Interested in understanding how to plan for a practice transition? Want to know what your practice may be worth in today’s market? For a complimentary review of your practice please contact our offices, or fill out a short contact form. Once we hear from you, we will request some 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 most importantly, what buyers are expecting from you.