TRANSITIONS E XPERIENCE , INFORMATION, CONSULTANTS YOU CAN TRUST
AUGUST 2022
Getting a Jumpstart on Your Transition Plans for 2023 It’s hard to believe that summer will be over soon. So, what will 2023 have in store for you? For some, it may be planning for your retirement next year. For others, it may be planning for your associate to become your partner. More practice owners are considering multiple-office ownership, so will you be one of those entrepreneurial dentists to take that next step? Practice Transition Planning has different meanings for each practitioner based on your career stage. Retirement For those dentists over the age of 55, a recent report from the American Dental Association reported that over 6,500 dentists retired in 2021, which was a significant increase of retirees in this age group compared to prior years. Retirements in this age group are also expected to increase over the next few years. So, if several of your colleagues in your area are in your age bracket, gain a competitive edge by placing your practice on the market sooner rather than later. Have your practice valued now to see what you can anticipate receiving for a practice sale. Partnership If you are planning on offering your associate a partnership opportunity next year, now is a good time to set the wheels in motion. There are many issues and steps that need to be considered in making a partnership successful. One of the most important steps is determining the tax structure of the buy-in. There are several ways this can be accomplished, so scheduling a meeting with your CPA now to discuss plans and reviewing tax strategies in your buy-in is a must. Next, do you have a buy-in price? Was a practice
valuation previously prepared and must it be updated? If your associate has been employed for several years, do not be surprised if your future partner demands consideration in a reduced buy-in price, especially if they have made a substantial contribution to your practice’s growth. Additional Practice Purchase(s) If your plans are to purchase an additional practice or more in 2023, have you established a strategic plan to guide your intended acquisition(s)? Do you still have outstanding debt on your initial practice acquisition loan? If so, do you expect your current lender to provide additional funding? It is important to determine the amount of additional funding they will provide for any future acquisitions(s). Apart from obtaining additional funding whether it comes from additional bank loans or from private investors, you’ll need to consider assembling a strong management team to develop the proper infrastructure to manage these multiple offices. Practice owners who have done this are eventually rewarded when it is time to sell, with a higher sale price for their well-run and
profitable network of practices. The key takeaway is that whatever stage you are in your career with your transition planning, it’s time to get your plans in order so you can get a jumpstart on transforming them into reality.
IN THIS ISSUE Getting a Jumpstart on Your Transition Plans for 2023.................................1 Interest Rates are Rising— Is the Sky Falling?................................................2 What Our Clients Are Saying.......................3 Congratulations! Sold Practice Announcements.............4–5
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Interest Rates Are Rising – Is the Sky Falling? It was inevitable, the extended time of “free” borrowing has come to an end. With the pandemic, post-pandemic, and stresses on the economy, demand issues continue to exacerbate supply chains throughout the world, and in working to ease inflation, the Federal Reserve has taken the steps it can, increasing core interest rates quite rapidly. What does this mean for you? If you are looking to transition your practice, valuations may be affected by the cost of inflation and the cost of funds. Your practice expenses are likely rising (especially noticed if you have had to hire clinical staff in the last 12–18 months), which is probably affecting your net income. Simply put, in most cases, lower net income equates to lower value. Potentially buoying pricing, for much of the country though, is that same supply and demand strain that is pricing up groceries, fuel, travel, home improvements, and more. We are still seeing more Purchasers looking to buy than there are Sellers ready to sell. On the Purchaser side, the review seems mostly mechanical. It is important to understand that the price of a practice has little significance on the actual cash flow for the right practice opportunity. By quick example, for a five percent note, over the “industry standard” 10-year period of lending, $100,000 financed is roughly $1,061 per month. Equating to the real world, the difference in price between $650,000 and $750,000 is roughly 1 additional crown1 or 3 core build-ups2 about every 6 weeks. So, more important is your “match” to the practice and then sufficiency of net income, after paying debt service, to accommodate your lifestyle and expenses. Beyond the purchase price, though, there is a clear concern of rising interest rates affecting affordability. First, practice acquisition lenders are forward-looking, working diligently to secure funds at the lowest possible rates to remain competitive. Second, rates are not always specifically tied to the Fed Funds (lender dependent) rate. Third, in the environment we are in, the interest rate will probably not make or break the deal. Interest rates for practice acquisitions were, at one time, 15% to even 20%. Even in the last 20 1 2 3 4
years, they were as high as 8–10%. Now, we are talking about the difference between roughly 3% in 2021, and perhaps 5% to 5.5% today. But what does that mean? Let’s look at the repayment of a $750K loan (practice acquisition and working capital) paid over the
$750k at 10 Years
As always, we advocate annualyl (if not more frequent) UCR fee adjustments and in-network PPO fee schedule negotiations. Costs change annual and the expense of not updating your fees can be felt significantly longer than the single year over year—it’s
3.0%
4.0%
5.0%
6.0%
$7,242
$7,593
$7,954
$8,327
Difference from 3.0% (Monthly)
$351
$713
$1,085
Difference from 3.0% (Annually)
$4,212
$8,556
$13,020
10-year repayment period. As illustrated, the 1% rate increase equates to 1 core build-up per month.3 The full 3% increase from 3% to 6% is more than covered by 1 additional crown4 about every 6 weeks. So, in the end, it’s reasonable to ask whether price and rates matter? Of course, yes, it’s just to what extent, which also may be further driven by supply, demand, and opportunity/ desirability. While it’s possible that variations in rate or price could affect affordability (or the ability to obtain financing), it’s likely that other factors are much more important. Whether you are a current practice owner or anticipate being one soon, as expenses are rising, both by interest rates and inflation, it’s important to keep your practice current.
incredibly difficult to make up for lost fee increases so a regular review of your practice expenses and fees can prove valuable in the short (cash flow), middle (retirement funding), and long terms (sale price). If you need help approaching either, or would like a further review of your practice procedures and fees, please reach out to your local Henry Schein Dental Practice Transitions representative and we will be happy to get you the right resources. We’ve been here before and found that the sky is not actually falling. Most dentists do not spend the time and money to acquire professional degrees just to go to work for someone else. Acquisition and ownership are still very affordable, attractive, and obtainable options but understanding the landscape is vital.
D2740/D2750 from the NDAS 2022 Survey of National Values, P80. D2950 from the NDAS 2022 Survey of National Values, P80. D2950 from the NDAS 2022 Survey of National Values, P80. D2740/D2750 from the NDAS 2022 Survey of National Values, P80.
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WHAT OUR CLIENTS ARE SAYING: When a sudden illness forced me to retire and sell my practice, I was very fortunate to work with Brian Whalen. He found a dentist 5 miles from my office who not only was able to take on my patients but also keep my staff employed. Brian worked very hard to do this transition quickly and smoothly. He made a difficult time less difficult and went above and beyond for me. I would highly recommend both Brian Whalen and Henry Schein Dental Practice Transitions as the best way to transition out of private practice and into retirement.
Jay Harter was very knowledgeable and helpful during each step of the sale. He guided me through the entire process. Everything was painless. I would recommend Henry Schein Dental Practice Transitions and Jay to sell your practice. Gloria Nollie, D.D.S. – Seller Carmichael, CA
Mark Powalski, D.D.S. – Seller Depew, NY
Having just completed a practice transition with Henry Schein’s practice broker, Sara Marterella, I couldn’t recommend her higher. Ms. Marterella was such a joy to work with. My experience with her far exceeded my expectations of her desire to find the right person to purchase my practice, and ultimately execute the sale. Ms. Marterella is a tireless worker and possesses a wealth of knowledge that made this transition seamless. Her pleasant and professional manner helped to take the uncertainty from this difficult decision. If you are considering this next chapter in your professional career, you will be doing yourself an enormous favor by choosing Sara Marterella to assist you in this endeavor. Dr. Mark Beattie – Seller Monroe, MI
WEBINARS YO U M I G H T H AV E M I S S E D ! Presented by Dr. Thomas Snyder
Click Here to Dive-in & Learn with On-Demand Content!
• Is 2022 the Year to Sell Your Practice? • Valuation Strategies Maximizing Your Value
Webinars from Dental Practice Transitions are designed to provide
• Creating an Effective Partnership
author, and consultant who has been advising dentists for more than 30
tips, tools, and help you capitalize on the investments you’ve made throughout your dental career. Hear from nationally recognized speaker,
years, Senior Director of Transition Services, Thomas Snyder, DMD, MBA, for an update on practice values, dental market trends, considerations for successfully transitioning your practice, and more. HENR Y S CHEINDP T.C OM ● 866 -805-2 80 7
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CONGRATULATIONS
Sold Practice Announcements
CENTRAL Leland Gary Schnell, D.D.S. Kevin T. Stock, D.D.S.
Tayne A. Peterson, D.M.D., PLLC
sold to
Albert Mategrano, D.D.S
Elmhurst Dental Group, Ltd.
sold to
Donald B. Wilcoxon, D.D.S., M.S. Rick A. Fulton, D.D.S.
sold to
William Cartee, D.M.D.
sold to
Jordan M. Ferrage, D.D.S.
Jeffrey Richardson, D.D.S, LLC
sold to
Mark A. Beattie, D.D.S
Zahraa Allohaibi, D.D.S.
sold to
Christopher W. Ford, D.D.S.
Justin Garner Dentistry LLC
sold to
Charles M. Schaepler, D.D.S. Lidio Rainaldi, Jr., D.D.S.
sold to
Strawman-Tangney Dentistry LLC
sold to
Earnest Lee Rice, D.D.S.
Kohler Dental Associates, LLC
sold to
David A. Rositano, D.D.S.
Oberlin Ave Dental, LLC
sold to
Mark A. Warden, D.D.S.
Tailwater, LLC
sold to
Candace A. Grace, D.D.S.
BSOMM Dental, PLLC
sold to
David L. Duke, D.D.S.
Jon P. Wheeler, D.D.S., P.A.
sold to
D. Craig Gailey, D.D.S.
Eric A. Ahrens, D.D.S, LLC
Silas Porter, LLC
sold to
Joyce A. Kupfer, D.D.S.
Phoenix Dental Centers, P.C.
sold to
David A. Schaefer, D.D.S.
Stay Smiling Orthodontics, LLC
Nemo Dental, LLC
sold to
Cindy M. Derer, D.M.D.
Plumtree Management, LLC
sold to
Signature Dental Partners LLC & Signature Utah Dental Partners P.C.
sold to
Caldwell
ID
Burley
ID
Bartlett
IL
Overland Park
KS
Manhattan
KS
Lexington
KY
Metairie
LA
Monroe
MI
Flint
MI
Independence
MO
Kearney
NE
Gallup
NM
Cincinnati
OH
East Liverpool
OH
Lorain
OH
Brentwood
TN
Cypress
TX
West Jordan
UT
Bountiful
UT
Worcester
MA
Crofton
MD
Garden City
NY
Oyster Bay
NY
Westhampton Beach
NY
Erie
PA
Charleston
SC
Columbia
SC
Summerville
SC
Norfolk
VA
Hampton
VA
Boynton Beach
FL
Cape Coral
FL
Daytona Beach
FL
Jacksonville
FL
Oldsmar
FL
Orlando
FL
Pembroke Pines
FL
EAST Stephen Waxman, D.M.D.
Simply Dental at Worcester, PLLC
sold to
Paul J. Ingrao, D.D.S.
sold to
Smile Park Denal, LLC
James Dunne, D.D.S.
sold to
ProHEALTH Dental Management, LLC
Robert West & Denise Veyvoda, D.D.S Ronald H. Matsui (Estate of), D.D.S. Blaine M. Bell, D.M.D. Zhicheng Yu, D.M.D.
Family Dental Health of Murray Landing, LLC Family Dental Health of Oakwood, LLC
sold to
Hamada R. Makarita, D.D.S., M.A.G.D Steven L. Perlman, D.D.S.
Joshua Weiler, D.M.D., PC
John Durant, D.M.D., LLC
sold to
sold to
Keenan Green, D.M.D.
sold to
Jesse J. Hofer, D.M.D. PC
MB2 Dental Solutions, LLC
sold to
Theodore Wooley, D.M.D.
sold to
sold to
sold to
Morrison Management Company, LLC
Asha Artis, D.D.S
FLORIDA Francyne Kohler, D.D.S.
sold to
Arnaldo Lopez, D.D.S.
William Shierling, D.D.S.
sold to
Sean Coyle, D.M.D.
Dave Dunn, D.D.S.
Tejal Jamidar, D.M.D.
sold to
Raul Perez, D.D.S. Janice Brand, D.D.S.
sold to
Charles Glosson, D.M.D. Shirley Simmonds, D.M.D.
Shiva Soleimani, D.D.S.
sold to sold to
Eduardo A. Cruz, D.M.D. Carlos Perez, D.M.D.
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CONGRATULATIONS
Sold Practice Announcements
Susan Brooks, D.D.S. sold to Ariosto Rosado, D.M.D. Ron Friedensohn, D.M.D. sold to Sean Tomalty, D.M.D. Brian Vestal, D.D.S.
sold to
Logan Poff, D.M.D.
Jan Spagnoli, D.D.S. & Dan Spagnoli, D.M.D. Daniel Haus, D.D.S.
sold to
Robert Burks, D.D.S. Hemangini Shah, D.D.S.
sold to
sold to
John Farah, D.M.D.
Guillermo Ramos, D.D.S. Fabiola Camacho, D.D.S.
sold to
Hector Cuellar, D.M.D.
Port Charlotte Royal Palm Beach
FL FL
St. Petersburg
FL
Titusville
FL
Weeki Wachee
FL
Winter Springs
FL
Winter Springs
FL
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