Options for Dentists Who Need To Sell Their Practice
Dentists are usually excited to open their practices. After all, there is nothing like building something truly yours as a professional! However, sometimes, selling your practice becomes the next best thing to do. Maybe you feel burned out, or perhaps it is time to retire. Whatever the reason, there are two ways to move forward: private owner-user sales and corporate group sales.
At 2740 Consulting, we help dentists who need to sell their practice figure out the right choice.
Sell to a Private Owner-User
Selling your practice to an individual buyer is the traditional path. When you take it, you do not just hand over the business you started but pass it along.
Private owner-user transactions guarantee smooth transitions. You can keep working in the same office until you are ready to step away. Moreover, the size of the buyer pool is reassuring. Many dentists are searching to own their own practice. That means you can expect many offers and choose someone you believe will care for your patients, teams, and culture the way you do.
Regarding pricing for private owner-user sales, it will depend on your location, specialty, and the overall business performance. General practices often sell between 75% and 90% of their annual collections.
Most deals do not involve complicated financing arrangements where you have to “carry” part of the loan. You receive the full purchase price in cash at closing.
How To Do Private Owner-User Sales
Does selling to a private buyer sound good? Here is how you can prepare for it:
- Study Your Performance: Pull up the numbers and identify areas where you can improve consistency and profitability. Buyers will most likely want a business that is already doing well.
- Update Your Space Strategically: You do not need a full renovation, especially in the final few years before selling, but you can invest in fresh paint, new seating, or minor cosmetic improvements for a strong first impression.
- Take Care of Your Team and Patients: Buyers will be investing in relationships, too. As such, while you are still the owner, aim for strong employee retention and loyal patients.
- Keep Your Momentum: It can be tempting to slow down when you know you are about to step away. Fight it! An excellent practice will inspire buyers to step in and continue the growth.
Sell to a Corporate Group
Over the past several years, corporate buyers have become a major presence in the dental world, including private equity-backed groups, dental service organizations (DSOs), and dental partnership organizations (DPOs). For dentists who need to sell their practice, transacting with them can be financially wise.
In corporate sales, it is not unusual to see offers ranging from 100% to 120% annual revenue. That premium is hard to ignore, but note that at closing, you will receive only 60% to 70% of it. The remaining portion will come over time.
Unlike private buyers who typically allow you to walk away anytime you wish, corporate groups expect you to stay for three to five years. Consider that if you are planning an immediate exit. Some also offer partnership opportunities, letting you retain partial ownership and benefit from future growth. Others are more straightforward buyouts with less involvement after the sale.
The level of autonomy can vary as well. Some groups give dentists a lot of freedom, while others are more structured.
How To Do Corporate Group Sales
Selling to corporate groups requires a slightly different mindset than selling to private buyers. Ideally, you should take a hard look at your revenue because most corporate buyers are seeking practices that generate at least $1 million annually.
Also, there will be layers of financial and legal details. That said, work with an experienced advisor to evaluate offers and negotiate terms.
Which One Is the Better Route?
Ultimately, there is no “better” option for dentists who need to sell their practice. There is a “right” one, though, and it depends on your goals and timeline.
At 2740 Consulting, we focus on guiding clients like you as you navigate such decisions. We understand that you are not simply trying to close. You are ensuring long-term success. Our expert team has systems for growing, buying, and selling. We consider economic factors and personal objectives. Rest assured, we will determine what is best for you.
Should you sell to a private owner-user or a corporate group? Start with a professional appraisal! Call (602) 540-8808 or contact 2740 Consulting online to find out your practice’s current value and maximize it if you want to “sell my dental practice“.