High Collection Practice Transitions

Many of these high collection dental practices will play the revolving door game with associates and then try to offer partnerships after the good associates keep giving their notice. After 20 years, and 300+ dental transitions in the books, I am not a fan of partnerships. I have seen too many partnerships come unraveled due to divorce, drug addition, gambling, and personal issues that no one could have foreseen. There is a saying in dentistry about partnerships that I believe to be true….” there are those partnerships that have failed and those partnerships that will fail.” Of course there are a few exceptions, but why take the risk and jeopardize your retirement.

And another problem for the seller of this type of dental practice occurs in how to bring in an associate or partner: the value is too high for most single dentists. For example, the usual value would be 70-80% of the last 12 month’s collections or 1.5-2 times the net, but waiting too long to sell means that no single dentist can afford to purchase it.

Believe it or not, there are dentists out in the market place that can produce $1.5 – $2 million+ and are looking for just this type of dental practice. Again, it’s knowing where to look and who to call. There are also larger regional groups who would pay a strong value for the dental practice (90-100+% of 12 months revenues), but the caveat is typically a 2-3 year associate period and a 20%+ seller note paid out in installments. That’s a non issue for some dentists if the price paid is too good to pass up.

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