Market Appraisal: Transitions & Valuations

By Greg Auerbach, , MBA, Henry Schein Dental Practice Transitions

Leading up to early March 2020, practice values and sale prices in Florida were among the highest they had been in years, if not decades. This was driven by solo practicing dentists, smaller multi-dentist groups and DSOs in the marketplace hungry for acquisition. Smaller, local lenders had access to money that was readily available from reputable national lenders. There simply were more purchasers in the market than there were sellers. Aided by practices continuing to strengthen after the economic challenges of prior years and increasing net income, the market could not have been better. Then the clock stopped as we saw practices close abruptly early 2020. We all know what happened, but what was the result? Where did things go and what can we learn? 

After reopening, we saw a very strong recovery with many practices increasing their average monthly collections over 2019, despite the shutdown. For many, this continued into 2021 where, after accounting for the time of forced inactivity, it was almost as if 2020 was just another data point in continued year-over-year growth. This created a “first” amongst evaluators and transitions specialists — specifically, how is 2020 accounted for and how is the continued viability and sustainability of the practice made evident?  What has that meant going forward? Value has remained high and practice sale prices have similarly remained high. We note that investments made in the practices, whether by way of equipment/technology, team training, patient communications or personal education, proved a strong positive return on investment.    

In all, the timeless question continues to be top of mind: Where does value come from? How is the real value, the intangible of a practice quantified and how does value get protected and transferred in a transition? Even now, it is not uncommon to hear a doctor firmly state that practice value is 60-70% (of something). That “something” may be collections, production, an average of three years’ of collections or some other “methodology.“ While we, and many others, have published articles locally, regionally and nationally, and presented casework to demonstrate how this is incorrect, the myth persists. If you are looking to purchase an existing practice, it could mean that you miss out on stellar opportunities because your mental “evaluation“ of an asking price is not consistent with the current market. If you are considering a sale, it could mean that you agree to sell at a lesser price that could have been otherwise obtained. There is no magic formula that can be applied to all practices.

Once the hurdle of pricing is conquered, though, the pitfalls of the process abound. Transition is not about two people making an agreement, it’s two (or more) doctors — often, it’s two spouses, two accountants, two attorneys — at least one banker and their team (if not more), not to mention any other advisors, all whom are vital to crossing the goal line. Who are these other participants, though, and what should they do? 

We often come across “experts“ who stray from their experience or knowledge to try to do more, with real-life scenarios resulting in a deal that is not consummated or made very difficult from start to finish. We are seeing more out-of-state advisors who are evaluating and providing advice for practices in Florida with no local knowledge. In a lot of cases, their credentials are internet-based and there is no real personal relationship, let alone hometown or “on the ground” knowledge.

Having advisors is important; the goal is for everyone to work in concert while properly representing their client. How is this done? Further, what are the best practices for evaluating the practice and transition, working with the staff, retaining the patient base and setting the table for success? The stories of the “bad” are numerous and can be a point of education, but so can the successes. 

Experience and expertise matter in every aspect of dentistry, and this does not exclude practice transitions and evaluations. Learning how to best ready yourself, whether as owner looking to transition or non-owner looking to take the next step in your career, understanding the ins and outs of the methodologies and processes and the members of the team around you is vital. 

Mr. Auerbach is an FDC2022 speaker and will be presenting “Transitioning Transitions and Valuing Value: The Good, the Bad and the Ugly” on Thursday, June 23 at 9 a.m. Visit for more information.

Why Dorian Should Make You Think About Practice Transitioning

By Dr. Rick Huot

At the end of August, while Hurricane Dorian was on its unpredictable path, I headed to San Francisco for the American Dental Association’s Annual Meeting. Before my duties started as ADA Board of Trustees liaison to the Standards Committee of Dental Informatics, I sat down to write this article in the relative comfort of the Marriott Marquis. Whenever I have the Weather Channel on for more than five minutes this time of the year while away from home, you can be assured that Joanne and I are checking to see how the “wind is blowing” back in Florida. In 2004, we spent Labor Day in Maine watching as Hurricane Frances — and three weeks later, Hurricane Jeanne — give Florida the infamous “Plywood State” moniker, and as empty nesters, it doesn’t take us long to pack and secure our home not knowing what the force of nature is planning for the week ahead.

Early that Friday morning, and with help from Delta, we decided to leave a day early for our trip to California, knowing that conditions in the Caribbean were deteriorating, and there was a good chance that flights all over Florida would start being cancelled as early as Saturday. That was confirmed by the Delta folks when they graciously put me on a plane leaving out of Orlando Friday afternoon.

After a quick call to Marriott and the shuttle folks, we now had an extra day to “play,” and we quickly contacted longtime friends from Chicago now living in San Francisco for dinner, and the conversation quickly shifted from Dorian to our respective careers. Helen has been working for Delta since I was in dental school at Northwestern and continues to fly the international routes and loves her work. Mike is a successful retired businessman who invested wisely in his career since his early days in Chicago, and this year’s New York Marathon will be the 100th he has run since he started many years ago.

These days, longevity experts talk about your early 60s and what you can reasonably expect life to play out from there. Given that you are in good health, and that you also have excellent financial health, your options multiply when you could adapt to life’s curveballs and make lemonade when someone like Dorian hands you some lemons.

Kiplinger Magazine has an excellent article on the “go-go years” and beyond, and we remarked that the four of us were taking this very seriously. At this point, you may be wondering what the above events have to do with dental practice transitions, but please keep reading on, and you will see the method to my madness.

After Hurricane Katrina in 2005, I was asked by Dental Economics to co-write an article on disaster preparedness, and lessons learned from surviving the 2004 hurricane season. Although some of the material is now dated, a lot of what was learned then is reinforced every hurricane season, and other natural disasters throughout the country all year long.

Given that the solo practice model has slowly become less prominent, and the cost of running a dental practice continues to increase, a dentist reaching the age of 50 has more options today available to them, especially if there is a chance that a facility could suffer damage that would prevent dentistry from happening for a prolonged period of time.

Retirement “catch-up” provisions allows dentists over 50 to set aside more income in pre-tax programs, and the proliferation of solo 401K plans allows dentists to sell their practices, contractually “workback” as an independent contractor to the new practice structure, and give the dentist more free time to enjoy life, while continuing to practice and share management responsibilities with younger dentists who desire the private practice model, but could use a little “on-the-job training,” eventually taking on a younger dentist with similar goals in the near future.

Today, most dentists approaching that age should be looking to partner with another dentist who has a similar philosophy of practice, especially if one of the offices is more “dated.” It should be noted that the business practice model of most dental service organizations (DSOs) call for at least two dentists working four-day weeks with extended hours, and covering the entire week, and sometimes including weekend hours.

Millennials and the new Generation Z coming of working age are more prone to “shopping” and have convenient hours as one of their prerequisites for selection of a dental office. A shared office space arrangement allows dentists to fulfill that desire, with minimum disruption, and allows them to offer the same convenience features as DSOs or large group practices.

Thankfully, it appears that most of Florida dentists fared well from this latest storm. The disruption to our practice lives disrupted patient care at least all that week and may have delayed some of the “snowbird migration” that we experience this time of the year.

Back at work, ask yourself these questions:

  1. Am I ready for the “go-go” years, regardless of what happens to my practice?
  2. Whom am I compatible with practice philosophy-wise in my area, and might we benefit from a joint location/dental practice, and a reduced cost of overhead?
  3. If my office was damaged, is the cost of rebuilding/repairing my space a good return on investment, given the amount of years I’m looking to practice in the future?
  4. Is it time to reexamine my financial strategic plan, and make some major changes? More boldly, is it time to downsize, and reduce the clutter and “stuff” we have accumulated?
  5. Are my contingency/practice succession plans up to date?

I’ve completed my term as ADA First Vice President, and it has been a privilege and honor serving our nation’s dentists and ensuring them clinical and financial success for the past two years. Be well.

Dr. Huot is a Fellow in the American College of Dentists, the International College of Dentists, the Academy of General Dentistry and the Pierre Fauchard Academy. He currently serves on the FDA Political Action Committee Board of Directors and served as ADA vice president for the past two years. He had a private practice from 1985-2008, still practices clinical dentistry and is the CEO of Beachside Dental Consultants, Inc., a practice management and health consultant firm. He can be contacted at