Dental practice owners are missing out on value when selling their practice, especially when accepting unsolicited offers from DSOs, according to a new report.
TUSK Practice Sales, a healthcare mergers and acquisitions advisory firm, published a guide on May 12 for practice owners to help extract more value from selling to DSOs and private equity-backed groups.
Here are six notes:
- Purchase price vs. form of consideration; Working capital adjustments; Post-sale employment terms; and Indemnification process are a few areas where practice owners most frequently leave value behind.
- Dentists consistently make concessions during introductory calls, which often become expected terms down the line in negotiations.
- Terms established in the Letter of Intent become the baseline for the definitive purchase agreement, and dentists often overlook them.
- There are more than 35 private equity-backed groups that are actively acquiring dental practices. If a dentist accepts an unsolicited offer from a single DSO they lose leverage, as the buyer sets the valuation methodology, controls the timeline and structure of the deal.
- A represented, marketed sale creates more stability and signals to groups that they are competing to acquire the practice.
- The highest purchase price is not always the best offer for dentists, as employment agreements and alignment with the dentist is an important aspect.
