Do You Have A Dental Crystal Ball?

I had a call from a colleague yesterday about selling his practice.

He’d been using an agent to find a buyer for his dental office.

And the agent had come back to my friend with an “offer” from one of the corporates.

Now as you know, I sold my practice in 2007 to a Dental Rollup.

And the offer was exemplary.

I received eighty percent of the sale price in cash, and the remaining twenty percent of the sale price was paper, in a company that we all thought would never fly.

And so we thought we’d get our practices back in a fire sale.

What happened was that when a third entity bought the rollup lock, stock and barrel, the paper matured to be worth almost as much in value as the cash component.

On top of this, in the seven years that I worked for these entities I was paid far better than I ever paid myself while I owned my practice.

Because what happens when you own, you kind of always end up putting more money back into the business than you’re meant to, because well, it’s kind of like your baby…

But that was then, and this is now.
And things are very different now.


Then, in Australia, the corporates were kind of feeling their way.

Eight and a half years on, now the corporates are starting to dominate the market.

But, as a friend of mine said recently, the corporates wouldn’t be out there buying up dental practices if dentistry was not a profitable business.

And I know, in my own story, once I sold, it was my duty to return to my purchasers a twenty percent profit each year.

Knowing this, I’d say that owning a Dental Office is a very good business, and an even better business to own as a Dentist Owner.

To a point.

You see, no matter what the business, be it lawn mowing, hairdressing, nails, restaurants, whatever, there will always be customers who will be more than happy to pay for your service no matter what your fee is, without even caring what your competitors charge because they consider the service they receive from you to be exceptional value and they have no reason to question otherwise.

And that’s the truth.

The guy who mows my lawn every fortnight does an exceptional job and with such care and pride in his work that there’s no reason to look around for someone else.

And although I could probably find someone else to do the job for twenty dollars less a time, I don’t need to go looking because I know that my guy is always doing a great job.

And so even in dentistry, there will always exist that same twenty to thirty percent of the population who will be loyal to their dentist no matter what the dentist charges because they are comfortable with the service and consider it to be exceptional value.

They do not care what other dentists are charging…

So back to my friend.

A colleague of mine asked me when I sold to the Rollup why I had done it.

He said the sale price was 4.5 times earnings, and in five years you pay them back five times earnings.

So he said, in five years time you’ve paid them back the purchase price, and in the end, they’ve got your practice.

And sure that’s a simplistic way of looking at things, and tax scales and tax breaks add other considerations.

But for my friend, there’s the question of what is he going to do in five years time?

With an oversupply of dentists thanks to government intake from overseas as well as more university graduates, the employment landscape could be vastly different in five years time.

I told my friend that there is a security in owning your own unencumbered dental practice.

Maybe selling to a rollup was *THE* answer eight years ago…

I’m not so sure that a rollup or a corporate is the answer in today’s market…

Sadly, I don’t have a crystal ball…


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