In "Should I stay or should I go," I tackled the question on the minds of many dentists today—whether to stay in private practice or join a DSO. I'd love to give you a checklist that tells you exactly what you will need to ensure that joining a DSO is a “good deal,” but it’s impossible. Why? Because you’re unique. Just like the saying about trash and treasure, what you want is not the same as what someone else wants. You’ve got to figure out what your “treasure” is and chase after it.
As you decide what a good deal looks like for you, consider these three ideas.
Decide what you want
Before you ever start talking to potential DSO partners, you’ve got to decide what your priorities are. I’ve found that most of my clients’ priorities fall into one of four categories.
Profit: This is usually what first grabs the attention of practice owners—selling their practice at a significant profit, helping them achieve not just financial freedom, but generational wealth.
If profit is your number one priority, here’s my advice: while there’s still time, work to maximize your practice’s profitability. The higher the profitability number (EBITDA) you bring to the table, the better financial deal you’ll get.
Prestige: Dentists have always suffered from a woeful lack of prestige in their communities, but joining the right DSO could change that.
If this is your number one priority, look for a group that will help you elevate the profession and impact of dentistry. Many like-minded dentists are creating their own dental practice rollup DSOs, with the purpose of setting a high standard of care and focus on oral-systemic health.
Preservation: A decision to join a DSO doesn’t take place in a vacuum. Many practice owners want to ensure that whatever professional action they take has a positive impact on their partners, their team, and their patients.
If looking after the people who have supported your practice is a high priority, include their needs in your negotiations. You can talk about health and retirement benefits and even debt elimination programs for associates.
Pleasure: Who doesn’t want to have more fun? While the DSO 1.0 model took away your freedom, DSO 3.0 puts the power back in your hands to choose to live the life that you want.
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If having more fun on and off the court is your top priority, go for it! Whether you want to take off eight weeks a year or relocate from Minnesota to Florida, you get to choose how you want to work—just be completely upfront and transparent about what you want.
Remember, becoming part of a DSO or taking money from a private equity partner can be structured to meet your goals, needs, and wants. It can be ideal for you, but only if you are completely clear on what you want.
Be the buyer, not the seller
Once you are clear on what you want, reach out to multiple potential partners and see what they have to offer. The more competition you can drum up, the better your final offer will be.
Your ultimate goal in this is to become the buyer. Don’t get into the mindset that you are working hard to “sell” your practice to the organizations. Instead, you are the buyer—the person who is picking between the organizations, the person who gets to call the shots. Acting as the buyer allows you to influence the offer, choose between multiple potential partners, and find your best fit…not the other way around.
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Don’t go it alone
There are tons of people out there who can help you! Talk to brokers who have helped other dentists enter the DSO world. Listen to dentists who have already sold. Once you get an offer that looks good, get a second opinion from a disinterested, knowledgeable party. With the proper support, you can be confident you are protected and you’re getting the great deal that meets exactly what you want and need.
Obviously, this just scratches the surface of what a good deal is. So here’s your takeaway for today—know what you want (and don’t be afraid to be upfront about it!), remember that you hold the power in the negotiations, and enlist the right people to help. You get to decide what your treasure is. Figure out what it is and seize the opportunity!
Editor's note: This article appeared in the June 2023 print edition of Dental Economics magazine. Dentists in North America are eligible for a complimentary print subscription. Sign up here.