Dental Elite’s Luke Moore examines the transition from dental associate to principal
It’s a huge leap from associate to practice principal, and the planning process can be daunting. However, with a bit of time and effort it doesn't take long to set the wheels in motion, you just need to know where to begin.
You should look at what’s out there well in advance, because although it may be a while before you’re in a position to buy, it’s certainly never too soon to scope out the marketplace. Then, when the time is right you’ll be well placed to make a competitive offer and feel confident in your decision-making.
Equally, keep your options open. With demand still very high across the sector, you may need to look at a wide variety of practices in different locations before you find an ideal fit. That means keeping a watchful eye on all the big players, because much like homeowners will often sell through one estate agent, vendors tend to stick to one agency for the sale of their practice. If you were to only target one company in particular your options would be limited and you would run the risk of missing out on your perfect practice.
Author: Luke Moore
Just be prepared that when you do find a suitable practice you’re interested in, you’ll likely need to have an independent valuation carried out on behalf of your lender to confirm your offer. It is well known that lending banks value conservatively and as they can only rely on comparable data from completed practices they are usually nine months behind the market. This could affect the amount of cash input that would be required from you to make the transaction work. This is especially true if you are competing against corporates and micro-consolidators that have bigger pockets and don't have the bank valuation hurdle to overcome. Even if you later decide against that particular practice or you miss out, you’ll have a better understanding of the process ready for when the right practice comes along.
If, however, it’s the case that you plan on buying into the practice where you are an associate, your strategy will be a little different. You will still need to determine the value by having an independent valuation, but you’ll also need to decide whether to buy outright or purchase in instalments over time. Alongside this, be sure to find out the principal’s exit strategy in advance to optimise your chances of achieving a smooth changeover with minimal impact on the practice and finances. Indeed, if you are caught unawares a partnership agreement could force a sale of the whole practice if you can’t finance the remaining share.
When it comes to the legal and technical side of things seeking advice from a specialist sales and acquisitions agency can go a long way in ensuring a successful outcome. Dental Elite, for instance, will arrange the sale structure and finance, as well as guide you through the acquisition process from start to finish.
There’s a lot to take in when planning to buy, but as long as you start preparations early and have the right support the transition from associate to principal should be successful.
Photo by Jon Tyson on Unsplash