The Practice Buyer's Corner - Random Musings from the Buy-Side
The Practice Buyer's Corner - Random Musings from the Buy-Side
The purpose of this blog is to share current, real world, experiences on the topics of practice valuation, practice transition, retirement planning, and building equity value - over time - in your dental practice.
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seanepp
seanepp

Group Premiums - Reality or Yeti?

Group Premiums - Reality or Yeti?

4/21/2026 9:27:35 AM   |   Comments: 0   |   Views: 34
Group Premiums
 
A common topic of discussion revolves around how much more groups are willing to pay for a given practice versus an independent dentist - a/k/a the "Group Premium".
 
Group Premiums have nothing to do with fundamental value.
 
Group Premiums represent the incremental equity risk the group is willing to take to acquire a given asset.  

Captured in this premium is the opportunity cost of losing deals and slowing growth.  Also captured in this premium is ego, bragging rights, and a dash of Sunk Cost Fallacy.
 
Group Premiums tend to be situational and opportunity specific.  Groups generally do not walk around thinking, "Hey, we can afford to pay XX% or X.X times more than the next party."  Even if a group were to think that versus independent doctors, it certainly doesn't apply to other groups who typically serve similar boards of directors and investors.
 
So, while Group Premiums certainly exist it is really hard to set any standards or expectations around them.  
 
Group Premiums are also likely to be the first thing to lessen or disappear if/when the macro environment becomes more challenging.  I try to pay close attention to the health of the credit markets and consumer confidence.
 
It is starting to feel a little bit like 2007-2008 again.
 
I hope spring has sprung wherever you are!

Best,
 
Sean
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