10 Aug THE LONGER YOU WAIT…
By Tabitha Jaquay-Fernandez
You have been practicing dentistry for a number of years now and it’s been a very rewarding career. You may even consider dentistry to still be the biggest factor in your life (if not, certainly one of the biggest)! However, you have been giving some serious consideration to backing down some and taking life a little easier. In fact, you may have thought that this may be the year you will seriously consider selling your practice.
But, it seems that as you settle into each new year, you convince yourself that you should probably wait at least one more year before you sell. After all, you’re still healthy and active. You enjoy the relationship you have developed through the years with most of your patients. You enjoy the company of your staff. When you really think about it, you would be giving up too much to stop practicing right now. Frankly, when it gets right down to it, you really don’t know what you would do with yourself if you didn’t have your office to go to every week.
So, each year you have convinced yourself that waiting one more year will not matter… but, will it?
If your health remains good, it is possible, under normal market conditions, that one more year may not matter that much. But, “normal market conditions” no longer exist! A major change is taking place in the economics of dental practice sales of which you really need to be aware. Your practice may already be losing equity value. We are fast entering into a lengthy period in which the dental market will have substantially more sellers than buyers. The aging “baby-boomers” and numerous consecutive years of fewer dental school graduates have contributed to a negative market condition for the dental practice owner.
Experts predicted that market conditions will deteriorate so much over the next 5 years that we will see numerous dental practice owners get frustrated because they cannot sell their practice at any price. Many of these unfortunate practitioners will be forced to close the doors to their practice… losing hundreds of thousands of dollars in practice equity!
In fact, most dental experts say that we would already be moving into this decreased market value period today if the economy had not experienced a setback over the past year or so. The down economy and investment market uncertainties translated into many otherwise market-ready practice owners delaying the sale of their practice.
But, the economic situation is showing improvement and the financial markets are rebounding. Dental practitioner age demographics will prevail. We will soon see a major increase in dental practices on the market. In fact, we are already seeing sellers begin to rush back into the market. Over the past few months, we have experienced a substantial increase in unsolicited calls from sellers and potential buyers looking for practices.
Sellers are more educated about their practice transition options than they once were. Many realize that selling the practice does not mean that retirement must immediately follow the sale. Sellers are now understanding that they can sell at peak value and continue to work as the buyer’s “associate” for as long as they wish to work. Younger sellers with high profile, well-equipped, fee-for- service practices are getting more and more plentiful. In fact, because of the PreSale Program, our average seller is slightly over 51 years old now. Sellers in their 40’s and 50’s are becoming more common than ever before.
What does this mean to you? Some dental markets will soon have more practices for sale than buyers willing to acquire those practices. Buyers will have both more and better practice opportunities from which to choose. Simply put, we are rapidly entering into a major buyer’s market! In fact, in some parts of the country we are already in a buyer’s market. Dental practice values in those markets are already starting to fall!
The current top-heavy mix of dental practitioners who are 55 or older versus dentists who are 35 and younger clearly supports this trend. The fact that sellers are getting younger and younger also supports this trend. As more sellers enter the marketplace, your practice will become harder to sell as you must compete with more sellers as well as younger sellers who own more appealing practices (have the latest “bells and whistles” that buyers always prefer).
The following statement is a fact… not a prediction! If you continue to delay the sale of your practice, you are virtually guaranteed of losing equity dollars. In some cases this will equate to a loss of hundreds of thousands of dollars!
Call 833.ADVISRS(238.4777) TODAY for a complimentary consultation. You have numerous valuable transition options. No obligation… just a very worthwhile discussion!