In a compressing dental practice acquisition market, the best exit strategy might be to stop planning for one, according to one dentist.
With the conventional playbook not working the same way it did in the past, Sibera Brannon, DDS, owner and dentist of Affordable Dentures & Implants in Bullhead City and Sun City, Ariz., says the dentist-owners in the strongest negotiating position are the ones who’ve built a practice they’d be comfortable never selling.
Dr. Brannon recently connected with Becker’s to discuss how dental practice owners should approach the next few years.
Question: Dental practice valuations are compressing and deals are becoming more difficult to complete. For dentist-owners thinking about selling in the next three to five years, what should they be doing right now to maximize their position — and what mistakes are sellers making in this market that they’ll regret?
Dr. Sibera Brannon: With valuations compressing, I think dentist-owners need to be careful about expanding simply to create a larger number for a future sale. For someone looking three to five years ahead, this may actually be the time to simplify and strengthen the practice they already have — deepen the value of the existing patient base, improve the services they provide, strengthen the culture and invest in mentoring and developing their associates.
Owners also need to recognize that selling a practice today may look very different from what they originally envisioned. The purchase price is only one part of the equation. Depending on the transaction, the selling dentist may be required to remain clinically involved for several years, maintain certain production levels or accept compensation and employment terms that don’t necessarily align with their personal or financial plans for the next stage of their career.
For that reason, I would encourage owners to build a practice they would be comfortable continuing to own if the right transaction never materializes. Keep operations contained and understandable, develop associates who can function without the owner being at the center of everything and double down on patient care, team culture and mentorship. Optionality itself has value.
One of the biggest mistakes a seller can make in this market is building an entire strategy around an assumed future multiple — or assuming that selling the practice necessarily means leaving the practice. A good valuation does not automatically make for a good exit.
In a more difficult acquisition market, the dentist in the strongest negotiating position may ultimately be the one who doesn’t have to sell.
At the Becker's 5th Annual Future of Dentistry Roundtable, taking place September 14-15 in Chicago, dental leaders and executives will gain insights into emerging technologies, practice growth strategies and the evolving landscape of dental care delivery, with a focus on innovation, patient experience and operational excellence. Apply for complimentary registration now.
