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Should you sell your practice to a DSO?

Here are the top 5 questions people ask me.

If you have been contacted by a DSO (Dental Service Organization) and are considering the option of selling to a DSO you have a lot to consider…

1.  Do you need a broker to help you with the negotiation?  YES!!

Recently I was hired to help a seller who had a deal in place to sell his office to a DSO.  He thought he had a good deal in place.  After reviewing the deal and talking to other DSOs, I was able to increase the sales price by $500,000.00!!Not only did the seller put more money in his pocket, the other terms were made more favorable as well.  Brokers that deal with the DSOs regularly understand the DSO market and how to leverage the best deal for his seller.  Don’t do it alone!

2.  Do you want to continue to work after the sale?

If you want to sell and leave the practice very quickly, then a DSO is probably not for you.  Most DSOs want you to stay for a minimum of two years.  If you want to stop managing and continue to do clinical dentistry, a DSO might be good for you.  They want you to stay as long as possible.  If you are selling to an individual, they may want you to leave sooner than later.

3.  Do you want all your money up front?

The DSOs hold back anywhere from ten to forty percent of the sale price to be paid when you leave the practice.  Most of the time I have seen the hold back be twenty percent.

4. Do the DSOs pay more for a practice than an individual?

It depends on the desirability of the practice to a DSO, but generally I would say the answer is yes.  Individuals are limited by the banks they are using as they have certain metrics they must abide by.  DSOs have more flexibility and  are competing for practices.  Again, having a broker that is familiar with the different DSOs and what they are looking for can be extremely beneficial to a seller.

5. Will the DSOs change the way you practice?

Most of the DSOs will not affect the way you do clinical dentistry.  However, there are some that will have production incentives.  Some will help with managing the office.  Many will find ways to make the office more profitable through supply and lab discounts, as well as insurance fee negotiations.

 

In conclusion, the complexity of selling to a DSO relative to selling to an individual, makes it even more important to have a knowledgeable broker helping you negotiate the best deal possible.  Don’t leave $500,000.00 on the table!!

Dr. Bonsack is helping dentists in 33 states with DSO sales.  He does NOT take money from DSOs like other brokers who try to guide dentists to certain DSOs, ignoring some of the best options for their sellers.  He only represents his seller and negotiates with all DSOs. 

His expertise includes representing his fellow denstists that have large practices (greater than $800,000 dollars) that are selling to a DSO so that they may realize maximum benefit and find the best fit.  Every DSO is unique and every seller has a unique set of needs.  Dr. Bonsack focuses on finding the right DSO for each individual seller.  On many occasions he will show a dentist the best possible option selling to an individual versus selling to a DSO.  He will then let the seller decide which option they prefer.  If you would like help with a possible DSO sale, call or email Tom Bonsack DDS at 410-218-4061 or Tom@MidAtlanticDentalTransitions.com.