What are Buyers Looking For?
By Marie Chatterley
The dental market is hardly suffering from a shortage of dentists in more populated areas of the country; however,
the increased supply of dentists does not equate to a profusion of ideal opportunities. Most dental school graduates
prefer to live in cities and suburbs, not in rural America, resulting in greater competition in the more populated
parts of the country, and thereby making location the number one priority in the dental career decision process.
Beyond location concerns, the availability of associate positions, buy ins and buy outs in many areas of the country
is not keeping pace with the demand for those positions. With fewer opportunities to join an existing, traditional
practice, the number of start ups has increased in high growth areas. Currently, the number of new dentists
entering the market in more urban areas exceeds the number of dentists retiring or moving away, making those
areas more competitive.
Consequently, the much talked about projected "shortage of dentists" in America is not to be found in the more
populated areas of the country, but is becoming more profound in rural areas. Moreover, as the demand for viable
practices in preferred cities has gone up, so has the purchase price for those practices. By contrast, in rural areas
(viz., cities with a population less than 20,000), a lack of interested purchasers is driving prices down.
Ancillary to the issue of practice availability are changes in the dental market occasioned by insurance companies
and "corporate dentistry" (sometimes called Dental Management Service Organizations or DMSOs). Consumers and
their employers, seeking ways to save money, are choosing PPO type dental insurance plans and seeking care only
from in network dentists. Subsequently, patient loyalty often follows the dollar, not the dentist. DMSOs and group
type practices are growing due to their wide acceptance of and participation in these plans, as well as their
extensive investments in marketing, advertising and promotion.
With more practices doing external marketing, and more patients looking for in network providers, traditional fee
for service practices are feeling the pinch in the form of decreased patient flow. Fewer patients are choosing to
stay with and be treated out of network by their current dentist on a fee for service basis, especially when the
economy is slow. While some may decide to return to their fee for service dentist over time, the fact remains:
more and more consumers are choosing providers who accept their insurance plan as in network providers. As a
result, traditional fee for service practices are decreasing, and PPOs and DMSOs are taking over their share of the
market. Without a patient base sufficient to support an associate which is true for many solo practices in the
country it is more difficult for these practices to offer traditional associateships that could lead to a buy in or buy
All of these elements combined are limiting the career choices of new dentists to either an immediate, outright
practice purchase (if available); a position with a DMSO; working for public health or the military; or starting a new
practice from scratch.
So, in light of these market conditions and the challenges they represent, what are buyers looking for? Those
dentists who choose to pursue the acquisition of a practice as opposed to the other options available, will be
primarily interested in the following:
Is the city appealing to live in? Does the building have “curb” appeal? Where is the practice located in the city and is
there potential for growth in that location? Most available practices are located in more established
neighborhoods, which may give rise to concerns over the potential for growth and expansion. In order to be
appealing, the potential for neighborhood renewal and expansion are important to prospective purchasers, as is
the aesthetics of the location in order to attract and retain patients.
Practice facility and equipment
Is the practice up to date on technology, software and equipment, including a digital x ray system? Does it have
four or more operatories? Are the tenant improvements up to date? As mentioned above, the way the office