Selling your dental practice to a dental service organization (DSO) can bring to light a conundrum. While DSOS of the past have appeared to have corporate interests, they’ve changed. Now, DSOs are here to stay and growing quickly as evident by the consolidation trend. But no matter your intentions for selling your dental practice, now is a good time to join a DSO. Here are the top reasons to sell your dental practice to a DSO.
Not ready for retirement
Some dentists love practicing and aren’t ready to retire but are prepared to release the managerial aspect of owning a business. DSOs can allow you to practice at your original location as long as clear lines are drawn. You’ll have more flexibility by releasing the office management and human resources aspects of your practice so you can focus on your patients and the clinical side of your practice with a professional office management to handle the billing, staffing and all the other components that go along with owning a business.
Work fewer hours
DSOs grant some dentists the freedom to work 32 clinical hours instead of six days a week with early mornings, which is appealing to both the younger and older generation. For those looking to ease into retirement, working for a DSO can offer an abbreviated schedule rather than the added stress of a transition to another dentist. Plus, the money made doesn’t go toward various expenses that come along with owning your own business. In fact, with multiple practices under one roof, equipment and supplies are usually sold for a better deal.
Chance to expand
Joining a DSO gives practices a chance to expand since DSOs are extending their reach to all types of communities – including those with a critical shortage of general dentistry to include specialty care, such as comprehensive orthodontic services, oral surgery, dental implants, oral hygiene services and pediatric care. Trends have shown patients these days are looking more toward the one-stop-shop model.
Higher valuation
Selling to a DSO can make financial sense for both the buyer and seller since, typically, a DSO’s valuation of a practice comes out higher than an individual’s. What’s more, you also have the option to stay on and earn a salary, unlike with a straight buy-out. DSOs already have financial backing versus the unknown of the underwriting process when an individual buyer is being financed through a bank. Private equity money, economies of scale, cost structure optimization and loan amount all contribute to a higher valuation.
Varying options
Since DSOs can acquire as few as five practices in their group or as many as 45 and depending on the burdens of the practice you are willing to let go of, there’s a DSO that will pick up those tasks. Before deciding to partner with one, it’s essential to explore other options beyond selling 100% of the practice to a traditional DSO. A professional broker will help you decipher your options, including a joint venture model, sub-DSO, equity roll, direct investment with private opportunity and competition-based model.