Is Now a Good Time to Sell a Dental Practice?
As practice transition specialists, we are often asked “Is now a good time to sell a dental practice?”
While there are many factors involved in making the decision to sell your office, the short answer is YES. The current practice transition environment in Texas features two key attributes that are helping to enhance practice value and make it an ideal time to sell a dental practice:
1. High Demand
The strength of the Texas economy, relatively low cost of living, and moderate weather is attracting many dentists from other states such as California, Arizona, and Michigan to Texas. Our state also has three dental schools that produce a substantial number of graduates each year. While many of these graduates may have previously chosen to relocate, we are currently seeing a large number of them opting to make Texas their permanent home. As a result, the pool of potential buyers has increased over the past three years and this trend is expected to continue in the near future. With a surge in the number of potential buyers comes an increase in the demand for quality practice acquisition opportunities.
An increase in demand is not the only factor currently affecting the transition market. Many doctors who are well within retirement age have delayed the sale of their practices due to the recession. As a result, there have been a relatively fixed number of practice acquisition opportunities available over the past few years. The increase in demand coupled with a limited supply of opportunities, has resulted in an increase in the value and marketability of quality practices and make NOW an ideal time to sell a dental practice in Texas.
It is important to mention: As the baby boomer generation reaches retirement age and the economy/stock market recovers from the recent recession, more and more sellers will enter the marketplace. Therefore, it is expected that demand and supply will eventually reach equilibrium and the current window of opportunity to maximize the value of your practice could begin to close.
2. LOW INTEREST RATES
Due to the fact that most buyers rely on third party financing to fund practice purchases, interest rates and the availability of capital play a major role in practice value and transitions. Interest rates are currently at an all-time low and numerous lenders are offering 100% financing plus working capital to qualified buyers. The current availability and low cost of capital is allowing buyers to comfortably afford to purchase practices and fueling the increased demand for quality practice purchase opportunities.
While the current banking and interest rate environment make it a great time to be buying or selling a practice, interest rates are expected to increasing substantially within the next 5 years. Combined with an increase in the amount of practices available for purchase, this could negatively impact the value and marketability of dental practices in Texas and across the country.
The factors we have discussed in this article make NOW an ideal time to sell a dental practice in Texas.
If you are considering a practice transition, don’t go at it alone. A practice broker will help you formulate a transition strategy to meet your individual needs, confidentially market your practice to find a buyer who is the right fit for your office, provide a structured closing process to facilitate a smooth and timely transition, and maximize the value you receive for you practice. Feel free to call or email us if we can be of assistance to you in any way.
