Dentistry demands a careful mix of skills different from many small businesses. At one level, your practice reflects your personality; on another, it showcases your managerial and entrepreneurial acumen. Your practice holds a value you deserve to capture when the time comes.

Many dentists have taken a sharper interest in moving beyond clinical care recently, especially since the pandemic. Practice listings and sales continue a robust trend that many owners find intriguing. And it’s always valuable to consider the options for the brand you’ve created serving your patients, employees, and community.

If your practice produces over $1 million annually and has a desirable net income, your practice may appeal to Dental Service Organizations (DSOs) and Private Equity Groups (PEGs). They’re actively looking to acquire practices and build their portfolio in today’s market. They enjoy some success simply by making an unexpected offer to surprised practice owners.

Don’t take an unsolicited offer and leave profits behind.

DSOs have specialized teams that analyze financial models and look for reactive buyers that may find an unsolicited offer appealing.  But accepting this kind of offer comes with hidden dangers. These offers are not weighted in the seller’s favor; they’re designed to capture extra value for the DSO.

It’s safe to say that those who accept an unsolicited offer leave significant profits on the table. In fact, I’ve seen one sale that ended up being over $1 million more than the original offer. Regardless of the discrepancy, you deserve to enjoy every dollar of value you’ve created.

It’s too easy to overlook critical details until it’s too late. DSO offers usually include the condition that the seller stays as an employee and earns up to 40% of the value. You move from owner to employee and relinquish your control over your practice, employees, culture, and strategies. For some doctors, misalignment results in a frustrating end to their careers.

An unsolicited offer opens the door to vital questions.

DSOs may be the right fit for some dentists ready to move towards an exit, but due diligence is critical to creating the best opportunity. Mergers and acquisitions with corporate entities can confuse the savviest small business owner, and many PEGs use that to their advantage. As you approach a crucial moment in your practice journey, you want to consider factors like:

  • Does the proposed contract make sense for me? Can I earn out the remaining value?

  • Are all my value and exit options on the table?

  • Will the practice culture change, and can I tolerate that as an employee?

  • Is my reputation at risk in my community?

  • Do I understand the implications of all legalities?

  • How accurate is the value we’re basing it on?

The value of your practice reflects more than just a significant chunk of your retirement assets: it reflects the brand you’ve built over the years and deserves full attention. If a DSO or PEG puts a number on your practice, you should do the same. Corporate teams include accountants, attorneys, and practice analysts who aim to acquire practices at discount prices. They’re also professional negotiators who can skillfully steer sellers to act on their offers.

Consider the mission of a PEG. Their strategy includes selling a bundle of practices to a DSO and banking a nice profit. If they find sellers willing to accept the first offer that comes across their desk, they create instant equity by buying practices for less than full value. Their offers may look enticing on the surface, but they’re likely on the low end of the spectrum.

Start the conversation.

You may work with an outstanding dental CPA or see ads from national brokers, but most don’t grasp the changing acquisition markets. Details of the current market change regularly and demand constant monitoring. While the demand grows for quality practices, sellers that methodically enhance their businesses enjoy more exit options.

You may not know when it’s time to sell or how much time you need to prepare for your exit. But now is the time to gather information about the market, your practice, and the best way forward. Dentists sometimes discover that selling a few years earlier can add more profits than waiting until later. Explore multiple scenarios with dental practice transition specialists to find what makes the most sense for you.

An unsolicited offer should start a deeper conversation about your future plans. It doesn’t matter whether you’re ready to transition fully or not; you can arm yourself with deeper insights to help secure your future.

Reach out and take the next step.

I specialize in working exclusively with sellers to attract a buyer that fits their vision for the next stage of life. An unsolicited offer may work out, but it’s far more likely you’ll simply give away dollars that belong to you. A thorough analysis of your practice sets the stage for a smoother transition with the value you deserve.

Reach out and start the conversation today. I’m passionate about helping dentists find their way into the next stage of their journey, and I’m here to listen to your goals.