Volume 8: Why is there a shortage of good practices today?
If you are considering purchasing a dental practice you may have noticed that there is a shortage in the supply of good practices. I believe that this is directly related to the value of the nest egg that the typical vendor has been able to set aside for his or her retirement. Since stock market valuations have declined over the past few years, the typical vendor is saying to themselves “I will work a couple of more years to put more money aside and those same years will not have to be supported by the funds I have already put aside.” This is a very logical approach to the economic turndown in the stock market.
The current impact of such thinking, however, is that buyers looking for practices may be out of luck. This in turn may mean that those who would normally be purchasing an existing practice are now starting from scratch in a brand new practice which will take a number of years to develop. For the vendors, it means that they will work longer than they had previously planned to do.
This current economic cycle will actually have a greater impact on the availability of practices than retiring baby boomers wanting to sell their practices in the years to come. The practices which did not come up for sale between 2001 to 2003 will come on the market when the economy is stronger. In addition, the practices which one would expect to come up for sale because of the vendor’s age will also come up for sale. This means that there should be more practices available in the future to satisfy the demand.
Advice for buyers
While you are an associate, take the time today to improve your education skills and business acumen so that when the right practice does come available you will have the skills to take the practice to the next level. Most good practices have well-educated practitioners driving the resources. While I am not a big fan of starting from scratch, if you can find a great location and you can live inexpensively, you could try to develop a practice away from your current associateship. With this option, you’re building a valuable patient base while still retaining your associateship as your main source of income.
Advice for sellers
If you cannot afford to retire, continue your present course. Any fluctuation in the value of your practice will be more than made up by the income as you continue to practise. Use these years to improve your practice to make it more appealing to a purchaser when you feel that is the time to sell.
The Professional Advisory
- One Year Later
- Dealing with Unsolicited Offers
- Covid-19 Practice Sales Update
- When is the Right Time to Sell Your Practice and Why?
- Partnership Pitfalls
- The Real Cost of a Dental Practice Set-up
- Smaller Practice Realities
- Dental Market Update - 2019
- Creating Your Own Most Valuable Practice (MVP)
- Small Practice Economics
- The Market is Very Efficient
- How Can Dental Practice Values be Rising and Declining?
- Hygiene as a Value Driver
- The Value of a Good Team
- Is it Time to Move?
- Staging A Dental Practice
- The High Cost of Dying
- Patients - Attract and Retain
- Should I Stay or Should I Go?
- Is There a Buyer for Every Practice?
- Good, Better, Best - The Market has Spoken
- Buying Time
- Patients, Patience, Patients
- A Real Patient
- Why Do a Practice Valuation? I'm not Selling
- Irrational Exuberance or The New Normal?
- Do dental equipment and dental technology affect a practice value?
- Finding and Being a Mentor
- Bigger is Better
- Dave's Top Ten List for Buyers (Vendors should read this too!)
- How Well Do You Know Your Practice?
- Dave's Top Ten List for Vendors
- What will happen to dental practice Values in the next 10 years?
- Your Premises Lease is an Important Asset
- What are Associates Thinking?
- There is Life Outside the GTA
- When Is the Right Time to Sell My Dental Practice?
- Mergers are a Viable Option
- Is Your Associate an Asset or a Liability?
- Has your Practice Facility Kept Up With Your Billings?
- The 100 per cent of Gross Myth
- The Past, The Present and The Future
- Caveat Emptor
- Overpaid Long Term Staff
- Selling your Practice in Stages
- A Potential Pitfall of Selling Shares
- Value in Your Practice Through Balance
- Only Trusted Staff Can Defraud You
- To Own or Not to Own Practice Real Estate? That is the Question.
- Coping With A Large Patient Base
- Successful Dental Practice Transitions
- Taking Care of Business
- The Investing Dentist Phenomenon
- Two areas to focus upon that could negatively impact the value of your practice
- Organize your Debt in Order to Sell your Practice
- Having a Better Team
- How Do I Prepare My Practice For Sale
- How Do I Prepare My Practice For Sale? Part 3
- How Do I Prepare My Practice For Sale? Part 2
- How Do I Prepare My Practice For Sale? Part 1
- Advice to My Son or Daughter Graduating from Dental School
- Transition - What to Expect
- Discussion on Digital X-Rays
- Partnerships and Shotguns
- Strategic Planning - How to Get Started
- Calling All Vendors - Practices have Gone Up in Value
- Purchasers: Expect to Pay More for a Practice because of Lower Professional Corporation Tax Rates
- Matrimonial Practice Valuations
- Purchaser's Guide to Affording a Practice
- Location Improvements Throughout Your Career
- Small Practice Valuations
- Partnerships – The Best and The Worst
- Changing Location When the Opportunity Comes Along
- Visual Presentation of Your Practice
- Presentation of Charts
- Your Premises Lease Can Be Your Worst Enemy
- How to Select an Appraiser for Your Practice
- How Are Your Billing Ratios?
- It Pays to Invest in Your Tangible Assets
- The Importance of Separate Financial Statements
- Five Time Frame Levels to Sell a Practice
- 12 Suggestions to Safeguard Computer Data
- How to Buy a Visible Practice
- Why is there a shortage of good practices today?
- The Importance of Equipment in the Purchase of a Practice
- The Balanced Practice
- Will My Practice Be Saleable in The Future?
- Buyer Be Aware
- Excess Profit - The Second Key
- Patients and Profits are the Keys
- Plan Ahead