To buy or to sell your dental practice? That is the question

Are you thinking of selling your dental practice? Perhaps you’ve thought about expanding and growing your business into a multi-practice group? Here, we note some of the most common questions and concerns practice owners have when considering selling their business. 

“I am too busy running the practice to think about how to sell it!”

The priority, understandably, for any practice owner will be to focus on the day-to-day operation of the practice. However, the best exits are done in line with a clear and well thought out plan.

Similarly, if you are looking to acquire practices, it is useful to speak to professional advisors and financial institutions on structuring and funding in advance to allow you to explore the options. Given the increasing demand and competition in buying successful practices, you want to be ready to move quickly when that practice you’ve had your eye on comes to market.

“Who would buy my practice?”

The dental sector is ripe for consolidation. The sector is fragmented which provides an opportunity for small owner-managed groups, large consolidators and private equity firms to acquire practices. You may even look a bit closer to home at your existing team of associates and approach them about the possibility of a management buyout. 

“Are all buyers the same?”

The idea of consolidation in the dental market may conjure up stereotypical images of the small practice being swallowed up by a larger corporate machine and, for some, this fate may seem unpalatable. This is not always the case as not all buyers are the same and, indeed, consolidation by larger corporates can, and more often than not does, bring a successful outcome for the practice owners and patients.

It is a question for the individual practice owner of whether to sell to a consolidator or to a smaller owner-managed group. The answer to this question may be value driven or based on other terms such as a continuing role in the practice. Would you like to have ongoing involvement in the business after it has been sold? Could you go back to being an Associate?

Often, larger operators will insist that the outgoing owner remains in the practice for some time after the sale. This is to ensure continuity for patients and protect the goodwill of the practice for the buyer. A proportion of the consideration may even be linked to the previous owner remaining in the business for a period of time.

“The timing isn’t right for me to sell my practice”

Perhaps you are content with the status quo and see no reason to look into your options at this time. However, if you can identify an exit strategy you can then allow this to inform the ongoing decisions you take in the practice.

Good corporate governance is important whether selling to a corporate, passing the practice, through the more organic route, to the Associates, or dealing with the ever increasing regulatory and reporting requirements placed on the practice. Try to run the practice with an eye on the exit – consider what the potential buyer will be looking for when they take over. Value is only one aspect of an exit. Focusing on the right exit will drive value and make the practice a more attractive target for potential buyers.

MacRoberts' Corporate Finance team advises on all aspects of buying and selling a business, and regularly advises dental practice owners on buying or selling their practice. If you would like to find out more about how we can help you, please get in touch with a member of our team.

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