In our opinion, transitioning a Periodontal practice is the most difficult dental practice specialties to transition for numerous reasons. First and most important, is the trust and relationship that is necessary to work with the referring General Dentists or other referral source on the mutual cases the referring dentist and Periodontist are working together. The established Periodontist is the trusted referral and getting the referring dentist to know, trust and consider referring to the new doctor is a task at hand.

NDP sees this specialty struggle the most in the beginning of a transition, especially when the new dentist is brought in as an associate. A detailed plan on how to bring the new associate into your office is absolutely critical here. The established doctor has to have the skill set to transfer the goodwill of the referring doctors to the new associate/buyer and also train and motivate the staff to understand and be willing to begin shifting the doctor production on the new associate/buyers schedule.

New Periodontists have a huge range in their collections during the first twelve months of their private practice. In our experience at NDP, it is not until 9-12 months of private practice that we normally see the new Periodontist really gaining production and being “accepted” by the referral sources and staff and the successful transfer of relationships from the established dentist to the new dentist.

In the transition of a Periodontal practice, marketing is key! Many times a consultant is needed during this early stage to ensure the most appropriate plan and successful transfer these relationships. The marketing plan is not to create or improve the resident, their technical skill set is solid coming out of residency, the marketing plan is to gain the “stamp of approval” from the staff and referring doctors so the community knows they are an excellent specialist. Although an established doctor generally doesn’t want to hear this, without a plan and support of the established doctor, they are usually what is holding the success of the transition and the new Periodontist.

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

  • Approximately 4,000 Periodontists are practicing in the U.S. and a limited number graduating from Perio programs annually.
  • Residents are facing $250,000-$600,000 of student debt with interest rates of 6.8%-11.0% thus causing hesitation on borrowing more money with a start up or acquisition;
  • Because of this debt and the general rule that it can take 6-7 years before a new Perio practice collections exceed $700,000, we are rarely seeing Periodontal start-ups.

Another major factor that must be considered in a periodontal practice is location! In a transition, major metropolitan areas of the US will be more attractive to potential buyer than rural areas (or those further than 75 miles to a major metropolitan area). NDP has worked with Perio practices located in non-major metropolitan areas have taken up to 24+ months to find the right buyer and for periodontists practicing in markets with less than 200,000 populations you may require some special assistance to locate your buyer. The key is searching all avenues and finding both a doctor and a spouse who have the desire or who are willing to move to your community and put down roots.

One of the reasons that you will want to work with NDP is the direct connections and relationships we have built with the 56 residency programs in the US and the Periodontal residents graduating each year across the country. We have also developed connections to implant companies and have a partnership with the Seattle Study Club ©.

We truly understand the field of Periodontics and can assist you in the transition or valuation of your Periodontal practice.

Periodontics Practice Valuations

Periodontal practices are valued similarly to other dental practices, but there are distinct areas that make a Perio practice valuation vary. The first and foremost factor is cash flow. Cash is king! The level of overhead and how closely those costs are controlled will directly impact profit margins and cash flow increase resulting in an the valuation.

What is Overhead?

It is rare to see a Perio practice with overhead rates outside of the 50-62% range, and obviously a practice with an overhead rate closer to 50% will value higher than one with an overhead rate above 60%.

What about the Assets?

Similar to other specialties, the valuation of a Perio practice will often times vary due to the level and value of assets. Because assets are key to a potential Perio 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 will obviously increase the value of the practice almost dollar for dollar.

Just as in dentistry, each case will have different factors, which will affect the ability of the potential buyer to pay and seller’s willingness to sell for a fair asking price. Read more about our valuation services here.

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

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 a seller can expect, but most importantly, what new buyers are expecting from you! NDP only works in the field of dentistry and understands what is necessary to ensure the success of a your periodontal practice transition!

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.