Dentistry is not generally thought of as a sexy industry. It’s not the new craft brewery or craft distillery that has everyone excited. It’s not the tech company that is developing new technology that makes us run out to the electronics store for new gadgets. It’s not the property development company that is revitalizing downtown Grand Rapids. Not only does dentistry lack a lot of publicity and notoriety but a lot of people avoid going to the dentist. Despite this lack of panache, the dental industry is sparking the interest of a certain segment of investors.
The dental professional world is predicted to take a similar path to that of its counterpart in the medical industry. The medical industry was a very fractured industry with thousands of independent and small groups practicing medicine autonomously from the rest of the medical community. Slowly, but surely, there was a movement towards consolidation. Large hospitals began to operate under the same umbrella company. Smaller practices are still being bought up and brought into those centralized entities. Many believe that the dental industry is on the verge of a similar migration.
There are two major reasons behind this push. Most dentists chose their profession to help promote oral health and not to run a business. One of the biggest struggles dentist face is dealing with non-dental related business issues such as office management, billing and marketing. Private equity firms are generally well oiled machines when it comes to knowing how to run a business. The relationship seems to fit well because dental professionals can focus more of their time on what they want to be doing and the private equity firms can put the processes in place to run the business side of things.
The second reason is the dental industry is seen as a relatively stable and recession-proof industry which is very attractive to investors. With recent health care reforms being enacted, more and more patients are being introduced to the US health care system. Even in times when the economy slows, these patients will likely still be visiting their dentist.
The biggest benefit for dental professionals with this increase in investor interest is that it provides dentists with an option to sell their practice for a better value than previously available. Generally dentist sold their practice to a competitor in the market or to a new dentist that graduated from dental school. Both these options provided limited offers and generally involved payments over time. With these private equity companies looking for solid investment opportunities, a well-run dental practice can receive a much more competitive offer to buy out the dental practice.
So the big question if you are a dentist is, how do you stand apart from the rest? The best advice is to embrace what most dental professionals struggle most with and that is to treat your practice like a business. Hiring a professional advisor that can assist you in getting your business to where it is enticing to an investor is very important. Also, having a professional in your corner that is well versed in business transactions is beneficial. They will not only be able to speak the language of the investor but they can walk you through the transaction process in a way that helps you understand what is happening and what your various options are.
There are already a few private equity firms that have started to purchase and centralize dental practices over the past couple of years. This trend is likely to increase throughout 2015. As more and more baby boomer aged dentists seek to retire, there is likely going to be a frenzy of activity. Planning and taking steps to get noticed can provide a dental professional a lot more options than remaining stagnant and hoping things work out for you and your practice.
If you are a dental professional that is interested in learning more about your options and would like to grow the value of your business, contact The Business Law Group by clicking HERE or calling one of our transaction professionals at 616-528-0007.
Image courtesy of adamr / FreeDigitalPhotos.net