Buying or selling a practice is one of the most significant financial events in a dentist’s career – with only one chance to get it right.
EMA is Now ADS MidAmerica Dental Practice Sales
EMA Dental Practice Sales has changed our name to ADS MidAmerica Dental Practice Sales – in recognition of our longstanding relationship as an independent affiliate of ADS Dental Practice Transitions. We’re proud of our relationship with this group – whose members have worked with over 38,400 dentists and managed more than $2.8 billion in practice transitions. Our name- along with our URL and email addresses – is the only thing that’s changing. We look forward to working with you!
In the coming weeks, we’ll be tweaking this website and marketing efforts – including a URL switch, new business cards, etc.
In related news, we’re pleased to be the MDA’s (Missouri Dental Association’s) Endorsed Broker in western Missouri.
We share this honor with our colleague in St. Louis, Mr. Guy Jaffe of ADS Midwest, who will be serving the eastern half of the state. We are excited to receive this endorsement and look forward to being of service to MDA member dentists in their transition planning, practice valuation and sales.
Happening at ADS MidAmerica. . .
Announcing the “Official” arrival of Dr Brad Babcock: We’re delighted to announce that Dr. Brad Babcock – who has worked with us on a limited basis for two years – has joined the team full time. Brad was a 1977 graduate of the University of Nebraska College of Dentistry, and spent most of his private practice career in Independence, MO. He was a clinical instructor at UMKC from 2007 to 2012, and was voted instructor of the year by students three times. His relationships and credibility with the students will be of particular value to EMA and our clients. Welcome, Brad!
Practice Ownership and Student Loan Debt (A new blog post from Dr. Steve Wolff)
A recent article in The McGill Advisory entitled The Hidden Threat of Student Loan Debt brings to the surface an issue we just can’t seem to get around. While the recent grads understand all too well the effects of their indebtedness, doctors seeking to transition their practices – for the most part – remain clueless on how this liability does (or does not) impact the process. Not a week goes by that someone fails to point out to me that “buyers can’t get money to buy my practice” because of their student loan debt. I’m sure that is disappointing for all of the industry lenders to hear in the face of their marketing efforts so let’s set a few things straight:
- I can get a qualified buyer 100% financing for a practice purchase PLUS operating capital for cash flow expenses through a number of sources at very competitive rates.
- A “Qualified Buyer” does not mean someone without debt. Student loan debts are a fact of life and virtually ALL buyers will have some. Nor does it mean that they have piles of cash in savings. The opposite is the norm.
- A buyer’s credit score and work history is more important than their net worth.
- Unlike the good old days of the ‘70s and ‘80s, only a very small percentage (<5%?) of graduating students will go directly into practice ownership.
- One of the effects of student loan debt is the need for immediate income. The first installment payment is due in November after graduation. Consequently, start-ups or opportunities with minimal cash flow but “great potential” are not attractive.
- If your practice does not collect enough revenue to pay the overhead, Acquisition and student loan debts and still have money left over to provide a reasonable standard of living, it will not be a very attractive opportunity, regardless of location.
- In our market, the buyer will probably need a working spouse to qualify for financing if practice revenue is less than $400,000.
- The cost of money (interest rates) is at an all-time low and this is having a positive effect on practice values. This will NOT last forever. Raise your hand if you remember borrowing money in the ‘80s at 20+%!
- Good news for potential sellers; young doctors will eventually need to own their own practice if they aspire to your lifestyle. Over the long haul, practice ownership affords a better standard of living, both financially and in personal freedom.
- To be fair to those doctor’s comments I referred to earlier, in some parts of the country, monstrous student loan debts are having a serious impact on the ability of a buyer to acquire a practice. $250,000 is not unusual here but some areas are creeping up over $400,000. So far we have been able to make it work but simple math suggests that market values and access to capital could be in for some tough times if this becomes the norm.