Dental Practice Mergers And Acquisitions: Areas Of Consideration

After qualifying and a few years in practice, it is common for dentists to set up their own practice. Practice ownership can be the path to financial and lifestyle freedom, building your own brand and reputation and establishing your own way of working. Setting up your own practice, or acquiring an established practice can help you achieve you personal and professional objectives.

Financial considerations are key when planning your own practice or seeking to acquire an existing practice. Dentists will first need to consider a wide range of aspects, in addition to their own business plan and strategy, as well as competition and demand analysis for dental health care needs in the local and regional area.

Timing is important, and establishing a practice too early in a career can be a stumbling block as some dentists may not have all the required business skills and resources early on. For some professionals, launching a practice early on is straight forward, for others additional time may be needed to build up experience and resources. Generally, acquiring a practice after 2 – 5 years is a good foundation for success.

Areas of consideration for practice acquisition include lifestyle and location. For example should the base be in an urban or rural area? how many days a week does the professional wish to work, what type of treatments will they specialise in? will they work in private and public sectors or specialise in one? The practice size is also important, for example managing a practice with a patient base of 1,500 is less demanding than 3,000. Time will be required with patients but also additional staff and management, as well as training and CPD. These decisions will influence the number of days and hours required to work, as well as the level of income and lifestyle choices.

Dentists will also need to discuss transition arrangements and planning. Will they stay on to ensure a smooth transition for staff and patients? will there be a re-brand or change to the range of treatments provided? A solid transition strategy is necessary to ensure patient and staff retention.

Professionals will need to spend time understanding and analysing the practice and the owners reasons for selling. Valuation will need to be conducted by an independent valuation expert. There are various ways and formulas to complete this task. Depending on the type of practice, practices usually sell from 60% – 85% of one, two or three years average turnover. Many accountants advise the cash flow valuation model, including capitalization.

The location of the practice is an important factor, and should be considered holistically alongside the treatments you wish to offer. For example Invisalign practices do well in large cities and urban areas. Factors include property, accessibility, demographics and competition. Facilities and equipment assets are also important to evaluate.

For many professionals, acquisition is a lifestyle and financial choice. Therefore dentists need to plan for short, medium and long term goals and ensure they start off in the best possible way.

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Aimee Sharp