Oral & Maxillofacial

Oral & Maxillofacial Transitions

Transitioning an Oral & Maxillofacial Practice requires the consideration of many factors and an understanding of the uniqueness of your field. NDP has the tools to ensure your transition success.

There are  102 OMS residency training programs in the country producing approximately 260 OMS graduating residents each year. This means the pool of surgeons available to purchase a practice is a relatively small number comparable to other specialties, and knowing how to reach residents, military surgeons who have completed their obligation, as well as surgeons who are looking to own vs. associate is critical as you begin to think about a transition. Through our network of relationships within the oral surgery industry and relationships with trusted partners, NDP has contacts and access with each of the OMS programs enabling a faster match of potential buyers to a potential seller and thereby taking the first step towards a successful transition.

Whether looking to add an associate or looking for a potential buyer, here are some keys to consider:

  • Oral Surgeons are one of the highest demand specialties in dentistry thus making it a buyer’s market;
  • There are approximately 3,500 of OMS practices in the U.S. with approximately 260 OMS residents graduating each year;
  • The level of equipment in your practice will be key in a transition, especially if your buyer is fresh from residency. The majority of buyers have trained with the latest and greatest technology. We see that in their opinion, it’s the industry standard to have state of the art equipment and technology for patients and referral sources;
  • In our experience, Oral Surgery residents are exceeding $100,000 of monthly collections by their 12th month of practice, so their ability to produce at a high level in a short period of time makes them extremely valuable;
  • Though valuable, residents are facing $250,000-$500,000 of student debt with interest rates of 6.8%-11.0% thus causing hesitation on borrowing more money with a start up or acquisition – NDP can show the buyer how buying makes sense.

Oral Surgery Practice Valuations

Oral Surgery practices are valued similarly to other dental practices, but there are distinct areas that make an Oral Surgery practice valuation different. Number one is the cash flow of the practice. Cash is king! Oral Surgery practices have the ability to have a very low overhead, so if staff and operating costs are controlled, profit margins and cash flow increase resulting in an increased valuation.

What is Overhead?

While it’s rare to see an Oral Surgery practice with overhead rates outside of the 30-60% range, we have seen Oral Surgery practices maintain an overhead as low as 35% and obviously these practices will value higher than one with an overhead rate above 60%.

What about the Assets?

Similar to other specialties, the valuation of an Oral Surgery practice will often times vary due to the level and value of assets. Because assets are key to a potential Oral Surgery buyer, the detail and accuracy of the appraisals of equipment and any potential upgrades in the immediate years prior to transition will be crucial to the selling doctor. A practice that has just invested in a 2014 Carestream x-ray valued at $125,000 can increase the value of the practice almost dollar for dollar.

If cash is king then location is queen – generally location of a practice will set the demand. A practice on the west coast, west of Interstate 5 may value at a premium compared to a rural southeast or mid-west practice. This is for the obvious reasons, but also because, while not a universal rule, most Oral Surgery residents are married and it takes two decision makers versus one to make the commitment or move to a certain climate or city.

With regards to the value of an Oral Surgery practice there are some high level expectations, but in general, Oral Surgery practices have valued in the 70% of collections range for decades. Obviously, valuations are complex and there are several factors that can cause the resulting value to vary. NDP’s valuation of your Oral Surgery practice will use the industry standards present in the valuation world while taking into account the factors that make your business unique. Read more about our valuation services here.

Interested in potentially transitioning your Oral Surgery practice or just want an idea of what your practice may transition look like as you begin thinking of the next phase?

For a complimentary review of your practice please contact our offices, or fill out a short contact form and we will contact you! 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 as an Oral Surgeon seller can expect, but most importantly, what Oral Surgery buyers are expecting from you!

Overhead is the operating expenses of the practice. Typically, this will be the total expense of the practice minus any of the following expenses:

  • Owner Doctor’s & Associates Salary (including applicable payroll taxes)
  • Financing Costs (Interest Expense, if applicable)
  • Non- Cash Charges (Amortization, Depreciation)
  • Owner Discretionary Expenses – Travel, Continuing Education, Automobile Expense, Cell Phones, etc.)
  • Excess or additional rent if owner also owns building and are paying themselves a rent above or below the market rate
  • Retirement or Pension Expense

Whatever is left divided by the collections of the practice will equal the overhead rate of the practice. This typically falls between 30-60% in dentistry, the lower the percentage, the better.

Assets are the items in your practice that help you generate your cash flow such as supplies, equipment and the furniture and fixtures of your office.

  • Supplies: To understand the value of your supplies, we aren’t asking you to count gauze pads or gloves, we will typically take two months of your normal supply expense to estimate the value of the supplies you have on hand. This will vary by specialty – but typically Oral Surgeons or Periodontists who work with implants will have higher supply expenses due to implant or bone grafting costs.
  • Furniture and Fixtures: You will want the estimated value of the assets that are not dental related (waiting rooms chairs, break room, decorative pieces that will stay in the practice, etc.) to be accounted for in the final estimate of asset value. This can be as detailed as a piece-by-piece inventory or estimated by room.
  • Oral Surgery Equipment: Generally in a valuation of your practice, a third party will be required to come in and provide you an independent third party appraisal of your equipment value. Alternatively, if you have the original invoices of the equipment of your practice, we can use these as a basis for an estimate of value. X-ray units, dental chairs, cabinetry, sterilization equipment, Lasers, Intra-Oral Cameras and computer systems and other similar equipment will be included here.