The Year of the Sell-Out? Or Maybe Not….

Looking to Sell? Make sure you know your options

It is no secret that running a dental practice has become more complex in the last couple of decades. As such, there has been much speculation as to what the best options are for principals looking to sell the practice and move on. It has been suggested that the dental corporates will dominate practice sales for the foreseeable future, and that this is the best solution for professionals looking to sell.

However, I would argue that this isn’t always the case. In my experience, the majority of practices sales are actually either to professionals with money to invest and looking to start their own business, or those purchasing their second, third or fourth practices. (Only about 2% of practices I currently work with are looking to sell to macro-corporates.)

In the current profession we are seeing more entrepreneurial dentists than ever before who are keen to acquire a handful of practices, with some owning up to ten at a time. These ‘micro-corporates’ are becoming increasingly popular as professionals continue to search for ways to increase their income or attempt to build an asset that is saleable.

Dentists with micro-corporates do one of two things: they either pass them down the generations in order to hold them in the family, or they build the business up to ten or fifteen sites and then sell out to a bigger corporate, normally over a six or seven year plan.

We at Dental Elite believe that the dental industry will follow the optometry and pharmacy markets, where the consolidation process has been relatively slow. After all, there are some very big players in the pharmacy market including Boots, Lloyds and various supermarkets, but there are also still a lot of independents and smaller groups.

It’s also worth bearing in mind the perception that the large corporates will always offer the best deal – in my experience this is simply not true.

For example, a private practice that we began working with were already in the process of selling to a corporate group. The deal they were about to sign was for 1.9 million with a commitment period of 7 years with growth, plus a tie-in. However, the practice ended up being sold to a micro-corporate for 2.7 million with only a three-year tie-in and no growth, demonstrating just how dangerous such assumptions can be.

At Dental Elite, the second largest specialist practice sales agency in the country, only about 2% of the practices we currently work with are in fact selling to a corporate. There really are other viable options out there for principals looking to sell, and it’s important to understand the opportunities available in order to not only secure the highest price, but also the most suitable arrangement for you.

For more information and to find out how Dental Elite can help to sell your practice visit www.dentalelite.co.uk, email info@dentalelite.co.uk or call 01788 545 900

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