5 Points to Ponder About a Transition in the New Year
We have been involved in practice transitions since the mid-1990’s. Our company has sold over 500 practices in 12 different states. Doctors have sold their practices for numerous reasons ranging from just being tired of owning and managing a practice to severe health issues forcing them to sell.
In all these years and transactions we have performed, not one doctor has come up to us and said “I wish I wouldn’t have sold my practice so soon”, or “I wish I still could own my practice”. In fact, most doctors whom we talk with months, or even years after selling their practice say “selling was one of the smartest decisions I made, I wish I would have sold much earlier”.
So, how do you know when is a good time to sell? Here are a few things to consider:
- The Current Sales Market – Is it a buyer’s or seller’s market? A buyer’s market is when there are a lot of practices for sale, interest rates are average to high and there is low demand. Currently, as of today, we are in a seller’s market. Interest rates are quite low. The economy is doing well. The demand for practices is high. Doctors and groups looking for practices producing over $1,000,000 per year is very high. That is attributed to the number of corporate buyers in the marketplace. The demand by corporate and other buyers is driving up the price of practices. In a few years, this will change, and prices will drop, possibly significantly. You want to sell your practice in a hot seller’s market versus a buyer’s market. Even if you sell 5 too early, you will make it up in the sales price you are going to receive versus the income you would make as an owner.
- Being Forced to Sell – There are certain things that are inevitable in life. Getting older is one of them. And that includes all the aches, pains and other health issues that go along with it. We have seen doctor after doctor, every year, sell their practice because of back, neck, hand, or eye site issues to name a few. We have also seen more serious health issues that forced a doctor to sell. Cancer in all its’ forms and other diseases can happen when you least expect it. There have been several doctors who every year told me they were ready to sell. Only when they were diagnosed with cancer did they decide to sell. One of them sold their practice and then passed away the next day. We have story after story of doctors who sold their practice expecting to enjoy retirement with their family only to report back that they or their spouse got sick, or worse yet, passed away. Enjoying retirement and life is something we should all have the opportunity to do. Selling when it’s the right time ensures us of this.
- Harvesting the Equity in Your Practice – This is one of our favorite strategies in selling a practice. And, selling in a seller’s market with higher practice values make it even a smarter decision. When you started or bought your practice, you probably took out a loan with the bank. As you have been in practice, you have paid your loan down and have built up your practice. The difference between the potential sales price of your practice and any debt you may have on your practice is called equity. Many doctors may have hundreds of thousands of dollars, if not millions of dollars, in equity. This equity does not do anything for you while you still have the practice. You cannot receive this money unless you harvest the equity. You do this by selling your practice. You put the hundreds of thousands, or million dollars into the bank, invest it, or pay off your house. Whatever you would like to do. You can then work back in the practice you just sold, or work in another practice. Or, you can even go buy a new practice, build it up and harvest even more equity. It’s a beautiful thing.
- And now for Something Completely Different – That was for the Monty Python fans out there. At times we all get tired of doing the same old thing, day in and day out. We are just tired of the monotony, tired of staff, tired of the patients and just ready to do something completely different. We have doctors who are ready to change course completely. We have had doctors sell and tell me they want to be a real estate agent, a barista, or they are going to run a surf shop in Hawaii. If you have reached that point and are tired of the same old routine, life is short, it is time to take action and do something different. You can always come back years later if you decide you have had a long enough break and are ready to return back to practice.
- Annual Production is Decreasing – For fun, go back and take a look at your last five years profit and loss statement or tax returns. Have your annual revenues gone down year after year over the past 5 years? How’s your income? Has it also gone done year after year? We frequently see this as practice owners start to get a bit tired towards the end of their career. They slow down their production, but the overhead stays the same, so their income goes down even faster. They then decide to sell and think that the price should be based on what the practice used to do, before the slide in production. It does not work that way. A practice’s value is what it is doing today, not five years ago when it was double the revenue. Using the Equity Harvesting strategy in number 3 above, would have given these doctors hundreds of thousands of additional dollars.
We are imparting this knowledge to you, not to get you to sell your practice as soon as possible. We are simply giving you some things to think about and passing on to you some wisdom from prior experiences of other doctors. Thinking about these five things in addition to taking action may provide you more time with your family if you sell a few years earlier. It may also give you more money to have a happy retirement.
Look at each one of the five items above and ask yourself if you want to sell your practice when you have to, or when you want to? As always, call us if you would like a free consultation.
Read More5 Points to Ponder About a Transition in the New Year
We have been involved in practice transitions since the mid-1990’s. Our company has sold over 500 practices in 12 different states. Doctors have sold their practices for numerous reasons ranging from just being tired of owning and managing a practice to severe health issues forcing them to sell.
In all these years and transactions we have performed, not one doctor has come up to us and said “I wish I wouldn’t have sold my practice so soon”, or “I wish I still could own my practice”. In fact, most doctors whom we talk with months, or even years after selling their practice say “selling was one of the smartest decisions I made, I wish I would have sold much earlier”.
So, how do you know when is a good time to sell? Here are a few things to consider:
- The Current Sales Market – Is it a buyer’s or seller’s market? A buyer’s market is when there are a lot of practices for sale, interest rates are average to high and there is low demand. Currently, as of today, we are in a seller’s market. Interest rates are quite low. The economy is doing well. The demand for practices is high. Doctors and groups looking for practices producing over $1,000,000 per year is very high. That is attributed to the number of corporate buyers in the marketplace. The demand by corporate and other buyers is driving up the price of practices. In a few years, this will change, and prices will drop, possibly significantly. You want to sell your practice in a hot seller’s market versus a buyer’s market. Even if you sell 5 too early, you will make it up in the sales price you are going to receive versus the income you would make as an owner.
- Being Forced to Sell – There are certain things that are inevitable in life. Getting older is one of them. And that includes all the aches, pains and other health issues that go along with it. We have seen doctor after doctor, every year, sell their practice because of back, neck, hand, or eye site issues to name a few. We have also seen more serious health issues that forced a doctor to sell. Cancer in all its’ forms and other diseases can happen when you least expect it. There have been several doctors who every year told me they were ready to sell. Only when they were diagnosed with cancer did they decide to sell. One of them sold their practice and then passed away the next day. We have story after story of doctors who sold their practice expecting to enjoy retirement with their family only to report back that they or their spouse got sick, or worse yet, passed away. Enjoying retirement and life is something we should all have the opportunity to do. Selling when it’s the right time ensures us of this.
- Harvesting the Equity in Your Practice – This is one of our favorite strategies in selling a practice. And, selling in a seller’s market with higher practice values make it even a smarter decision. When you started or bought your practice, you probably took out a loan with the bank. As you have been in practice, you have paid your loan down and have built up your practice. The difference between the potential sales price of your practice and any debt you may have on your practice is called equity. Many doctors may have hundreds of thousands of dollars, if not millions of dollars, in equity. This equity does not do anything for you while you still have the practice. You cannot receive this money unless you harvest the equity. You do this by selling your practice. You put the hundreds of thousands, or million dollars into the bank, invest it, or pay off your house. Whatever you would like to do. You can then work back in the practice you just sold, or work in another practice. Or, you can even go buy a new practice, build it up and harvest even more equity. It’s a beautiful thing.
- And now for Something Completely Different – That was for the Monty Python fans out there. At times we all get tired of doing the same old thing, day in and day out. We are just tired of the monotony, tired of staff, tired of the patients and just ready to do something completely different. We have doctors who are ready to change course completely. We have had doctors sell and tell me they want to be a real estate agent, a barista, or they are going to run a surf shop in Hawaii. If you have reached that point and are tired of the same old routine, life is short, it is time to take action and do something different. You can always come back years later if you decide you have had a long enough break and are ready to return back to practice.
- Annual Production is Decreasing – For fun, go back and take a look at your last five years profit and loss statement or tax returns. Have your annual revenues gone down year after year over the past 5 years? How’s your income? Has it also gone done year after year? We frequently see this as practice owners start to get a bit tired towards the end of their career. They slow down their production, but the overhead stays the same, so their income goes down even faster. They then decide to sell and think that the price should be based on what the practice used to do, before the slide in production. It does not work that way. A practice’s value is what it is doing today, not five years ago when it was double the revenue. Using the Equity Harvesting strategy in number 3 above, would have given these doctors hundreds of thousands of additional dollars.
We are imparting this knowledge to you, not to get you to sell your practice as soon as possible. We are simply giving you some things to think about and passing on to you some wisdom from prior experiences of other doctors. Thinking about these five things in addition to taking action may provide you more time with your family if you sell a few years earlier. It may also give you more money to have a happy retirement.
Look at each one of the five items above and ask yourself if you want to sell your practice when you have to, or when you want to? As always, call us if you would like a free consultation.
Read MoreA Tale of Two Vets
The following is a story about two veterinarians who had dreams of owning their own practice. While the story may seem a bit farfetched, it is based on true events. In fact, we have seen this story multiple times in today’s environment. Maybe this happened to you?
Shawn and Lilly graduated from the same veterinary school in 2010. They were good friends and always enjoyed talking about their plans after graduating from Veterinary school. Shawn had dreams of owning a practice in his hometown of Yakima, WA. Lilly had a goal of opening a large practice in Portland, Oregon.
Upon graduation, both had lined up associate veterinary jobs in their hometowns. Shawn worked for a veterinary clinic owned by a solo/single veterinarian. Lilly got an associate job working for Happy Pet, a corporate-owned practice with 25 locations on the West Coast. Shawn enjoyed his job working in his hometown. The doctor that owned his practice was a nice man, gave back to his community, and was fairly generous with Shawn as well. Lilly was not as happy as Shawn. Her corporate job required her to work weekends. She also worked on a lot of reptiles as the manager and one of the techs, whom they knew didn’t like her, also knew she didn’t enjoy working on reptiles. Yet, Lilly continued to go to work every day in the practice with a grin on her face. A fake grin, but a grin, nonetheless.
After three years, Lilly was asked to take the emergency calls for the rest of the summer. This was after Lilly had planned and paid for a two-week vacation in the Bahamas. Lilly went home and decided, enough is enough. “I’m going to buy my own practice, work when I want to work, and on what animals I want to work on.”
Lilly immediately went online and searched for practices for sale in Portland. Happy Pet wasn’t smart enough to have her sign a non-compete agreement, so she could buy a practice anywhere. Lilly saw three potential practices listed with Omni Practice Group. She called her local broker. They were very helpful and explained the pros and cons of each practice. They showed her each of the practices. Lilly loved one that was across town from Happy Pet. The broker represented the seller but still helped Lilly with due diligence, obtain financing, and referred her to a good veterinary attorney.
Within a few days of closing on the sale of her practice, Lilly’s love for veterinarian work returned. She loved seeing the pets that came in. She adored her staff. There was an assistant that mutually parted ways, but Lilly hired a new assistant who was friendly and amazing. Lilly also adjusted the hours to work a schedule that allowed her to also have a personal life. After a couple of years, the practice was doing so well, that she hired an associate in her practice and expanded hours. The associate actually enjoyed working weekends! Lilly ended up paying off her practice loan of $500,000 in under 5 years.
Meanwhile back in Yakima, Shawn is content working his job for the owner-veterinarian. Sure, the owner has told him he would sell him the practice “when that time came”. But the owner is only 52, so it may be another 10 or 15 years. Shawn had an opportunity to purchase another practice that came up for sale 7 miles away from the practice. But the owner was smarter than Happy Pet. The owner had Shawn sign a 20 mile and 5-year non-compete agreement. Ouch! Shawn’s salary when he started in Yakima was $60,000 per year. Over the past 5 years, he had worked up to $70,000 per year with medical benefits! Shawn, of course, had no equity in the practice.
At the 10-year class reunion, Shawn and Lilly ran into each other. Lilly asked Shawn how things were going? Had he achieved his goal of practice ownership in Yakima? Shawn told her, “No, but I’m hoping to buy the practice I’m currently in someday.” He told her that the seller had promised him he would sell it to him when he retires.
Shawn asked Lilly if she had purchased a practice in Portland? Lilly lit up. “Yes! I purchased a practice 7 years ago. I paid it off in 5 years. I have an associate working for me that enjoys doing those things that I don’t like. I have an amazing staff that we get along so well that we occasionally hang out together outside of work. I was recently offered $2.5 million for my practice from a corporate buyer. I’m not sure I’m going to accept the offer though. I’m taking home $175,000 per year, I’m loving what I do, love my staff and associate, it’s what I dreamed of when I wanted to own my own clinic…” Lilly quickly shut up as she realized she was sounding like a braggart and felt somewhat sorry for Shawn. She told Shawn that she would be happy to introduce him to her broker, who would help him find a practice of his own. Shawn said he would think about it.
Fast forward three more years. Lilly receives a “Just Sold” postcard stating that the practice in Yakima that Shawn worked at and had been told he could buy when the seller was instead sold to a corporate group practice. To make matters worse, the corporate buyer was Happy Pet – the same group that Lilly had worked for and didn’t enjoy their management style. Poor Shawn, Lilly thought. If only he would have taken me up on my offer to meet my broker at Omni. He would have gotten him into a practice right away and Shawn would be enjoying practice ownership.
Don’t let this story happen to you. Fulfill your dream of practice ownership. Give Omni a call today for a free practice purchase consultation.
Patient Retention and Its Importance in Dentistry
By Megan Urban
In today’s competitive dental landscape, retaining the patients you’ve already brought into your practice is more critical than ever. Strong patient retention not only boosts profitability and fosters loyalty but also enhances the value of your practice when you’re ready to retire or bring on an associate. A good benchmark is to maintain a patient retention rate of around 80%.
The Journal of the American Dental Association (JADA) reports that the average dentist retains just 41% of their patients—roughly 4 out of every 10—beyond their first visit. Retention rates can vary widely by region and depend on the services a practice offers. Studies have shown that retaining an existing patient is significantly more cost-effective than acquiring a new one—up to five times less expensive. Building loyalty and generating referrals starts with consistent, meaningful communication with your patients.
How to Calculate Patient Retention
The easiest method is to divide the number of hygiene patients seen in the last 18–24 months by your total active patient count. For example:
- If you performed a total of 1,500 adult and child prophylaxis appointments and PMRs in the last year (divide by 2, since most patients visit twice a year), and you have 1,800 active patients, your retention rate is approximately 42%, which exceeds the benchmark of 36% or higher. This indicates a healthy level of patient retention and positions your practice for strong growth and valuation.
Another approach is to analyze hygiene production as a percentage of total office production. If your total annual production is $950,000, for instance, hygiene should produce at least $342,000 (36%). A strong hygiene department and steady patient flow are especially attractive to potential buyers or associates.
How to Increase Patient Retention
To retain patients, ensure your team discusses their next cleaning or incomplete treatments during each visit. Patient communication systems like Weave or PracticeMojo can help with efficient follow-ups and reminders. Additionally, requesting reviews via email or text after appointments can enhance your practice’s reputation, which is a key consideration for buyers and associates.
By creating a superior patient experience and leveraging effective communication tools, you can not only strengthen patient retention but also increase the value and appeal of your dental practice. Take proactive steps today to refine your retention strategies and ensure your practice thrives now and in the future.
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