The Perfect Listing? Not Yet!
I have always felt that one of the real blessings and privileges of holding a license to practice dentistry was the ability to control your work environment. You can practice where you want, with whom you choose, at the pace you prefer, doing procedures within your comfort zone and for patients you enjoy treating. Believe me, not many other types of employment allows this sort of flexibility. When you combine this with the lack of oversight (my barber is subject to annual unannounced state inspections of his shop), the practice of dentistry creates a lot of business diversity.
The flip side of this is that very few practices are the same, and from a marketing standpoint, that presents some challenges. While sellers are understandably proud of their businesses, they have created practices for their personal benefit, style and performance level, and prospective buyers often have a different vision. The result is that when the young doctor tells me they are looking for the “Perfect Opportunity”, the sad fact is that I don’t have any in our inventory. Truth be known, I have yet to have a listing without some sort of flaw when compared to the buyer’s wish list. Whether it is the location, staff, revenue, procedure mix, insurance participation, Medicaid, parking lot, bridge construction, curb appeal, lease, technology, geography, equipment, or patient base, something is always at issue. Surprisingly, if properly appraised, price is usually way down the list of concerns.
So what is the perfect practice in the mind of a young prospective buyer? Recently a fairly new grad was willing to share his list and I believe it would be helpful to our retirement-aged docs to know what dentists in this age group are thinking. It does not mean a practice cannot be sold if it doesn’t meet all of the criteria but hopefully serves as a reality check regarding the sale and transition of their businesses.
The original list (My comments in red)
- 4-5 operatory stations; updated equipment would be nice (Digital Radiography is almost a given)
- Collections around $600K+ (The” Sweet Spot” in the Midwest)
- Low overhead (60-65%) (55-60% even better because of student loan and acquisition debts)
- 1300+ active patients (within the last 18 months)
- 2000+ sq. ft.
- We would be open to owning the building depending on the location/cost (Generally no interest)
- 2-3 Hygienists
- 20+ new patients per month
- Transitioning from someone with a similar dental philosophy (I’m never sure what this means)
- Ability to grow the practice in new areas (implant dentistry, molar endo, pedo, - I do not do ortho at this point) (endo and pedo revenues are almost always available)
If every listing we took had to fit these requirements to be sold, we would be out of business. All of them are good things to aspire to and work towards but most buyers soon learn that the power of a dental license has created a lot of unique opportunities and that some flexibility will be required in order to ever find something to purchase. Some things are harder to work around than others (revenue below the level of sustainability and bad buildings, for example) but most will eventually find a match.
Should all potential sellers change their model to fit this list? No. There will be buyers that have a different plan. Just be aware that what has been a perfect fit for you may not suit every buyer. If you would like some help in making the pieces fit, please do not hesitate to give us a call.
Steve Wolff, DDS
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