The modern dental practice is so much more than the bricks and mortar creating its outer shell. A successful business is often the result of many years or even decades of hard work and commitment from the principal and their team, with several personal sacrifices made along the way. Leading from the helm requires an array of skills in addition to clinical acumen, including an aptitude for business development and team management, as well as an unwavering perseverance. Sometimes, the many different hats that a principal wears can become too heavy, and they may seek to share the responsibilities by changing the ownership of the practice. However, this has historically come with its own set of challenges.
In the buyer we trust
The first concern for a vendor when taking a practice to market is finding the right buyer. It will be crucial that the team and patients continue to be looked after appropriately, and that the new ownership respects both groups of people once they take over control of the business.
For many principals, there will be a desire to protect the legacy of the practice, which has been painstakingly built with their own blood, sweat and tears. This goes beyond how staff and patients are treated and incorporates the broader emotional investment made over time. Local community commitments, industry networks and charity support projects are all examples of what may fall into this category. Though vendors will likely accept that changes will occur, finding a buyer that will maintain the practice’s ethos for helping others in the same way will be a priority for most. This makes it essential to find a buyer that shares similar values and has similar ambitions for the business.
Realising the full practice value
Finding the right buyer isn’t the only important consideration – so is achieving a fair price for the practice. For principals who have poured so much of their lives into their practices, it is more than reasonable that they should seek the full value of their business when they come to sell. In reality, when selling through the traditional sales market model, this might not be the case.
Traditionally, practices would be valued based on a multiple of EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation), with vendors typically receiving a percentage of the business value upfront. The remaining is typically deferred over time. Some vendors have reported eventually walking away with less than 100% of the asking price, as they were required to achieve a pre-agreed level of practice growth and fulfil operational KPIs (Key Performance Indicators) during these final few years, but without the autonomy to drive the business.
The challenge of this model for vendors is that they lose control of the practice from the day the sale completes. They no longer have the final say – or sometimes much say at all – in anything from the marketing plan and spend to the recruitment of team members, staff wage increases and so much more. With little of the decision-making power but most of the accountability, this makes it difficult for principals to successfully drive practice growth.
A game-changing approach to sales
With growing recognition for the challenges associated with the traditional practice sales model, an innovative new approach has been introduced. It is a totally unique model in the UK, based on success already achieved in Canada, Australia and other countries around the globe.
DeNovo Dental Partners operates a shared ownership model that delivers 100% of the practice value to vendors upfront. Principals receive the majority in cash and the remainder in group equity, with additional wealth generation opportunities post sale. Importantly, Partner dentists retain complete autonomy over their business to ensure they can protect their legacy, with optional access to various professional services from DeNovo central support.
For principals looking to realise the full value of the business they have built upfront, without compromising their team or patient care, the traditional practice sales market may not be the way to go. There’s another way – one that is redefining what’s possible and delivering the financial rewards and growth opportunities deserved.
Find out if DeNovo is right for your practice’s future by visiting www.denovo.partners today
Media Contact:
DeNovo Dental Partners
Kristen Pope
Chief Integration, Partnership & Communications Officer
Kristen.Pope@DeNovo.Partners
www.denovo.partners
