Volume 39: The Investing Dentist Phenomenon

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Over the last several years many of our practice sales have been to Investing Dentists. This trend is growing and with the recent decline in global equities, we are seeing even stronger demand from Dental Practice Investors. This is not a solution for everyone but certainly provides a viable option for many. In this article I will answer the top ten questions we are asked about Dental Practice Investors.

1)     Who are Dental Practice Investors?

There are a wide range of Investing Dentists that we work with but many share the following traits;

They enjoy the business side of dentistry as much or more than the scientific side.

They recognize the investment potential in dentistry and consider it as good or better than other places they can invest and feel their knowledge gives them an advantage.

They have achieved a certain measure of success in their own practice and want to leverage that success.

Many have joined together to form small investor groups (2-3 dentists) in order to further leverage their respective strengths. This also provides with better access to capital.

Large businesses have been created to buy practices and brand them under a corporate banner. This is a different strategy than the Investing Dentists discussed here.

What changes would they make to my practice?

Investing Dentists generally look for practices that are performing well and that do not need significant changes. They want you and your staff to continue to do what you have been doing for your patients. You will use the same materials, work the same way and generate the same or greater revenue. They may tweak some of the business processes to be more efficient, implement programs to ensure maximum patient retention and centralize some administrative procedures.

3) How long do I stay?

You are the central element in their decision to purchase. They will want you to stay for as long as possible with 5 years being average.

What’s in it for me?

Many dentists whose practices have been purchased by Investing Dentists over the last few years report the following benefits;

      ·        Less stress because the burden of owning and managing the day-to-day affairs of the office now falls to the owner.
      ·        Higher level of enjoyment of dentistry because that is the entire focus of your day.
      ·        Most investors will allow longer consecutive holidays (a month!) as they will arrange to fill in for you with an associate. This is not possible as an   
     owner and can be very healthy and rewarding.
5)     How will my staff be affected?
In most cases there will be no impact on staff provided your practice was run with reasonable staff levels and you were paying them reasonable wages. The investor will need one key contact person such as an office manger in order to facilitate communication. The office manager will generally feel a higher level of fulfillment as their role increases in responsibility with absentee owners.
6)     How will this affect my patients?
Generally the patients will not even be made aware that there has been a change in ownership. The Investing Dentist will want the patient to receive the same level of quality care that you have been providing to them for many years.
7)     Who hires new staff?
Investing Dentists recognize the need for good working relationships among the entire dental team. They will suggest it is most beneficial for you to have the final say on any new employees for your office.
8)     Do I have to sell 100% of my practice?
Investing Dentists have different philosophies on this question. Some like you to retain a small piece, 10% for example, in order to make sure your interests and their interests are aligned. Others find it simpler to purchase the entire practice.
9)     Will I have to take back a note from the purchaser?
Investors are generally well financed and have a good relationship with their financial institution. It would be highly unusual for you to be required to provide a vendor take-back note in order to complete the deal.
10)   What are the pitfalls of selling to an Investing Dentist?
Factors to consider to ensure you avoid any drawbacks include;
      ·   Can you actually see yourself giving up control? The idea of acting as an associate in your practice and focusing on patient care is very appealing, but
can you really let go?
      ·   Make sure there is alignment of practice philosophy with the Investing Dentist.
      ·   Gain an understanding of the Investors long term goals. 
Investing Dentists are here to stay. They represent a viable option for those dentists considering a sale, particularly if you want to keep practicing. Could it be the right answer for you?
  • More time to do things outside of the office.

The Professional Advisory

  1. One Year Later

  2. Dealing with Unsolicited Offers

  3. Covid-19 Practice Sales Update

  4. When is the Right Time to Sell Your Practice and Why?

  5. Partnership Pitfalls

  6. The Real Cost of a Dental Practice Set-up

  7. Smaller Practice Realities

  8. Dental Market Update - 2019

  9. Creating Your Own Most Valuable Practice (MVP)

  10. Small Practice Economics

  11. The Market is Very Efficient

  12. How Can Dental Practice Values be Rising and Declining?

  13. Hygiene as a Value Driver

  14. The Value of a Good Team

  15. Is it Time to Move?

  16. Staging A Dental Practice

  17. The High Cost of Dying

  18. Deal-Busters

  19. Patients - Attract and Retain

  20. Should I Stay or Should I Go?

  21. Is There a Buyer for Every Practice?

  22. Good, Better, Best - The Market has Spoken

  23. Smooth-Sale-ing

  24. Buying Time

  25. Patients, Patience, Patients

  26. A Real Patient

  27. Why Do a Practice Valuation? I'm not Selling

  28. Irrational Exuberance or The New Normal?

  29. Do dental equipment and dental technology affect a practice value?

  30. Finding and Being a Mentor

  31. Bigger is Better

  32. Dave's Top Ten List for Buyers (Vendors should read this too!)

  33. How Well Do You Know Your Practice?

  34. Dave's Top Ten List for Vendors

  35. What will happen to dental practice Values in the next 10 years?

  36. Your Premises Lease is an Important Asset

  37. What are Associates Thinking?

  38. There is Life Outside the GTA

  39. When Is the Right Time to Sell My Dental Practice?

  40. Mergers are a Viable Option

  41. Is Your Associate an Asset or a Liability?

  42. Has your Practice Facility Kept Up With Your Billings?

  43. The 100 per cent of Gross Myth

  44. The Past, The Present and The Future

  45. Caveat Emptor

  46. Overpaid Long Term Staff

  47. Selling your Practice in Stages

  48. A Potential Pitfall of Selling Shares

  49. Value in Your Practice Through Balance

  50. Only Trusted Staff Can Defraud You

  51. To Own or Not to Own Practice Real Estate? That is the Question.

  52. Coping With A Large Patient Base

  53. Successful Dental Practice Transitions

  54. Taking Care of Business

  55. The Investing Dentist Phenomenon

  56. Two areas to focus upon that could negatively impact the value of your practice

  57. Organize your Debt in Order to Sell your Practice

  58. Having a Better Team

  59. How Do I Prepare My Practice For Sale

  60. How Do I Prepare My Practice For Sale? Part 3

  61. How Do I Prepare My Practice For Sale? Part 2

  62. How Do I Prepare My Practice For Sale? Part 1

  63. Advice to My Son or Daughter Graduating from Dental School

  64. Transition - What to Expect

  65. Discussion on Digital X-Rays

  66. Partnerships and Shotguns

  67. Strategic Planning - How to Get Started

  68. Calling All Vendors - Practices have Gone Up in Value

  69. Purchasers: Expect to Pay More for a Practice because of Lower Professional Corporation Tax Rates

  70. Matrimonial Practice Valuations

  71. Purchaser's Guide to Affording a Practice

  72. Location Improvements Throughout Your Career

  73. Small Practice Valuations

  74. Partnerships – The Best and The Worst

  75. Changing Location When the Opportunity Comes Along

  76. Visual Presentation of Your Practice

  77. Presentation of Charts

  78. Your Premises Lease Can Be Your Worst Enemy

  79. How to Select an Appraiser for Your Practice

  80. How Are Your Billing Ratios?

  81. It Pays to Invest in Your Tangible Assets

  82. The Importance of Separate Financial Statements

  83. Five Time Frame Levels to Sell a Practice

  84. 12 Suggestions to Safeguard Computer Data

  85. How to Buy a Visible Practice

  86. Why is there a shortage of good practices today?

  87. The Importance of Equipment in the Purchase of a Practice

  88. The Balanced Practice

  89. Will My Practice Be Saleable in The Future?

  90. Buyer Be Aware

  91. Excess Profit - The Second Key

  92. Patients and Profits are the Keys

  93. Plan Ahead