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Protect Your Private Practice by Jay Geier

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Protect Your Private Practice 

by Jay Geier

I derive tremendous satisfaction from teaching independent practice owners the benefits of not selling their practices and the strategies for earning passive income from the day they retire for the rest of their lives (and even those of their heirs).

But not everyone chooses that route. If you decide that selling is the better choice, the key to successfully navigating that path is to recognize the pitfalls so you can avoid them, be in control every step of the way and be able to make well-informed, fact-based decisions. The alternative is to fall victim to a buyer’s pressure tactics that could cost you dearly, financially and emotionally.

Understand the value of what you have

If you’ve never paid to have a professional appraisal done on your business, you undoubtedly underestimate its value. You’re likely to think only in terms of what you might be able to sell it for today, but a quality appraisal will assess both current and future value from your standpoint—not the buyer’s—by factoring in a steady revenue stream and long-term growth potential.

I am especially critical of DSOs for using this fact to their advantage. They approach independent practice owners and offer to have an appraisal done for free, which is an inherent conflict of interest because it allows the buyer to set the price. That’s because the business model for DSOs is to essentially flip practices—buy as inexpensively as possible, cut costs and staff and resell for as much as possible.

Most DSOs are backed by private equity firms whose only objectives are short-term profit and maximum resale, typically within five to seven years. Their interests have nothing to do with patient experience, employee culture or community involvement. They won’t invest in improvements, and they will strip out many of the things that made you proud to own your practice and attracted patients to it.

Hence the double whammy—the financial hit of being lured to sell your life’s work for less than it’s worth, and the emotional hit of having to witness the dismantling of what you built. Even worse, because you’re likely to be kept on as an employee of the new business for several years, you will be made to feel all the negative changes are taking place with your blessing, even though you now have zero say-so in any aspect of practice management.

Keep your options open

My second-biggest criticism about DSOs is their attempt to lock practice owners into a relationship before they’ve have had time to do their homework or get legal advice. No matter how introductory a conversation may seem, a DSO may try to intimidate you into signing a confidentiality or nondisclosure agreement early in the discussion, as if it’s a requirement. But it isn’t—instead, it’s the DSO’s attempt to lock you in and eliminate your options before you’ve had the chance to explore what they are.

Every clause of these lengthy and daunting agreements is biased in the DSO’s favor. Once you’ve signed, lawyers will ensure you don’t shop around for other buyers or gather information, seek advice or compare notes with others to fi nd out if the DSO delivers on its claims and the financials play out as expected.

Keep all of your options open until you’ve done thorough due diligence and before signing any document without the benefit of legal counsel. If you decide to ultimately do business with a DSO—or any buyer, for that matter— you want to be in a position to control the process and be armed with data on which to base the biggest financial decision of your life.

Protect yourself against manipulation

DSOs continue to get more sophisticated and aggressive in their approaches to independent practice owners, especially those struggling to fully recover from the ramifications of the COVID-19 pandemic. In many instances, the business is actually recovering well but the practice owner is worn out and ready to throw in the towel. If that describes you, that makes you especially easy prey and you should muster your defenses before you’re manipulated into accepting pennies on the dollar.

Here are the most common misleading claims against which you need to protect yourself and your livelihood:

“Now is your only time to sell.” DSOs would have you believe that there won’t be buyers later on, so this could be your only opportunity to sell your business. There will always be other independent owners interested in buying practices that are profitable and growing. Wait for the time and circumstances that are right for you based on how long you need income, then make an educated, well-informed decision without succumbing to fear tactics.

“We optimize practice management.” DSO marketing materials claim to expertly handle all administrative functions, such as billing, marketing, recruiting and hiring, general business and financial management. They know many doctors would rather be free to treat patients, which could bait them into giving up what they might consider to be pain points. Do your own fact-finding. Be seen as a patient in one or more of their offices. Talk to the doctors and staff to get an idea of the culture and attitudes, and assess the look and feel of the office. DSOs use a cookie-cutter approach to minimize costs. Is that what you want for your patients and your staff, especially if the office will continue to have your name on the door?

“You will receive X dollars when you sell.” DSOs can mislead practice owners with statements that make them think they’ll receive the agreed-upon price in one payment at the time of sale. That’s never the case. As an example, a $3 million deal would typically be structured so the seller would receive half up front, plus an amount in shares of stock and another amount in five years. Unfortunately for sellers, if the DSO is resold within that period, the new owners may have no legal obligation to fulfill terms of previous agreements, and they might never see that final payment.

Learn how to take control

Whether you want to keep your practice for a lifetime of income or eventually sell, the most fundamental strategy is the same—learn and then execute what it takes to put the business on a profitable growth trajectory.

Train your team how to deliver an end-to-end patient experience that generates scads of referrals. Show them how to capture every potential new patient who calls. Learn how to cost-effectively expand your capacity to accommodate growth. Avail yourself of coaching so you learn the skills needed to lead and run your practice better than a DSO could. These are the characteristics that will attract reputable independent buyers who are interested in a deal that also benefits you, your patients, your staff and your community.

In the meantime, protect yourself against the well-disguised and misleading tactics of DSOs that would have you selling at a time and under terms that are in only their best interests. Learn how to take control by understanding the value of what you have, being knowledgeable about every detail of the buyout and payout process with the benefit of expert legal advice, and knowing who you’re selling to in the long term.
Author Bio
Author Jay Geier is an authority on growing independent practices. His passion is in turning practices into businesses, doctors into CEOs, and employees into high-performing individuals and teams. Geier is the founder and CEO of Scheduling Institute, a firm that specializes in training and development and coaching doctors on how to transform their private practices into thriving businesses. Subscribe to his "Private Practice Playbook" podcast at podcastfordoctors.com/dtown.
Dentaltown Magazine
September 2025
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