Podcast Recap: Why Every Dentist Needs to Know Their Practice’s BAM

As a dental practice owner, you likely track production per hour, hygiene department performance, and claim filings – but are you paying attention to BAM? If not, you could be missing a crucial financial metric that helps ensure your practice stays profitable and supports your lifestyle goals.

In a recent episode of Beyond Bitewings, the team at Edwards & Associates, PC broke down BAM (Basic Amount of Money) and discussed what it is, why it matters, and how to calculate it accurately.

What Is BAM?

BAM stands for the Basic Amount of Money needed to operate your practice successfully. However, it’s not just a break-even number – it includes:

  • Overhead costs (rent, salaries, supplies, etc.)
  • Loan payments for practice purchases, equipment, or expansions
  • Owner compensation (including taxes and personal financial goals)
  • Profit to keep the business healthy

Think of BAM as a financial goal – the amount your practice needs to collect (not just produce) each month to cover all expenses while maintaining the income and lifestyle you want.

Why BAM Matters

Understanding BAM is essential for cash flow management and ensuring your practice is set up for success. It also plays a key role in staff bonus structures – since any revenue collected beyond BAM can often be used to reward the team.

Additionally, BAM isn’t just based on historical numbers. It should factor in expected expenses such as new hires, equipment purchases, and rent increases to give you an accurate picture of future financial needs.

How to Calculate BAM

To determine your BAM, you’ll need to account for:

  • All fixed expenses: Rent, payroll, utilities, supplies, insurance, and other overhead.
  • Debt payments: Loan repayments that aren’t reflected in your profit & loss statement.
  • Owner compensation & taxes: The amount you need to take home after covering all practice costs.
  • Future growth: Planned hires, equipment purchases, or operational changes.

BAM should be reviewed and updated annually to reflect any major financial changes, though adjustments – such as a gradual BAM increase (Baby BAM) – may be made in cases of significant shifts like hiring an associate or expanding operations.

The Difference Between BAM and Net Income

A common mistake is assuming that net income (the bottom-line figure on financial statements) reflects the actual cash needed to run a practice. However, BAM factors in non-cash expenses (like depreciation and amortization) and full loan payments, giving a clearer picture of financial needs.

Plan Ahead for Success

By understanding and tracking BAM, you’ll have a clearer financial goal for your practice and avoid surprises when it comes to cash flow. Whether you’re planning for growth, refining your bonus structure, or simply ensuring financial stability, BAM is a must-know metric for every dental practice owner.

Want to learn more? Listen to the full episode of Beyond Bitewings for expert insights and practical strategies!

Celebrating Our Team, The Heart of Our Success

Today, on Employee Appreciation Day, we want to take a moment to express our deepest gratitude to the incredible team that makes our Firm thrive.

Accounting isn’t just about numbers – it’s about people. And we are beyond fortunate to have a team of dedicated, talented professionals who go above and beyond every day to support our clients. Serving dental practices means juggling complex financial challenges, staying ahead of ever-changing tax laws, and ensuring each client gets the personalized attention they deserve. It’s not always easy, but you make it look effortless.

We see your hard work, dedication, and commitment to excellence. We know that busy seasons can be overwhelming, that unexpected client needs can disrupt even the best-planned schedules, and that the details of tax, accounting, and financial compliance demand constant focus. But through it all, you show up, problem-solve, and provide exceptional service that helps our clients’ practices succeed.

Beyond the work you do, we also appreciate the ideas, insights, and suggestions you bring to the table. Your voices matter. Whether it’s improving internal processes, finding new ways to serve our clients, or simply making our workplace better, we hear you, we value you, and we’re grateful for you.

So today, we celebrate you – the people who make our Firm what it is. Thank you for your passion, your expertise, and the care you put into everything you do. Your contributions don’t go unnoticed, and we couldn’t do this without you.

Here’s to you, today and every day! Happy Employee Appreciation Day!

Podcast Recap: Protecting Your Dental Practice from Embezzlement

Running a dental practice requires trust—trust in your patients, your team, and your financial systems. But what happens when that trust is violated? Embezzlement is a growing concern in the dental industry, and unfortunately, it’s more common than many realize. In a recent Beyond Bitewings, we sat down with Allen Schiff, CPA, CFE to discuss how dental practices can spot, prevent, and respond to fraud within their offices.

How Common Is Embezzlement in Dental Practices?

According to Allan, one in six dental practices will experience some form of embezzlement. Many dentists assume their practice is safe because they trust their employees, but the unfortunate reality is that fraud often comes from the person they trust most. The long-time, dedicated employee who arrives early, stays late, and manages the office finances is often the one with the most access and opportunity to commit fraud.

Signs That Embezzlement May Be Happening in Your Office

Many dentists don’t realize fraud is happening until it’s too late. Here are some red flags to watch for:

  • Overprotective control – An employee who doesn’t want anyone else handling financial matters, insists on doing everything themselves, and resists oversight.
  • Unexplained lifestyle changes – A staff member suddenly making expensive purchases or taking extravagant vacations without a visible increase in income.
  • Avoiding time off – Someone who refuses to take vacation or sick leave may be afraid that their fraudulent activities will be discovered if someone else steps in.
  • Unusual adjustments in financial records – Frequent patient account adjustments, missing deposits, or discrepancies between collections and bank statements.

How to Prevent Embezzlement in Your Practice

While no system is foolproof, there are steps dentists can take to minimize the risk of fraud in their offices:

  • Segregate Financial Duties – No single employee should have complete control over financial transactions. Have different team members handle collections, deposits, and adjustments.
  • Monitor Daily Reports – Print and review your day sheet at the end of each day. Even if you don’t analyze it in detail, knowing that you check will discourage fraud.
  • Review Bank Statements Personally – Open and review your practice’s bank statements before handing them off to anyone else. This small step can deter an employee from attempting fraud.
  • Enforce Strong Internal Controls – Use software permissions to restrict access to financial transactions and ensure that no one can alter records without oversight.
  • Conduct Surprise Audits – Randomly reviewing financial records and logs can catch discrepancies early and keep employees on alert.

What to Do If You Suspect Fraud

If you notice warning signs of embezzlement, do not confront the employee immediately. Instead:

  1. Gather evidence quietly – Work with an accountant or fraud examiner to review your financial records before taking action.
  2. Do not fire the employee right away – While your first instinct may be to remove them immediately, fraud investigators recommend keeping them on staff until a thorough investigation is completed.
  3. Seek professional guidance – A Certified Fraud Examiner (CFE) can help you collect admissible evidence and even obtain a written confession.

A Real-Life Case of Dental Practice Fraud

During the podcast, Allan shared a shocking case where a long-time dental employee embezzled more than $400,000 in implant supplies. She sold them on eBay, and the only reason the fraud was discovered was because the implant vendor congratulated the dentist on their high-volume purchases—purchases they had no idea were happening. The perpetrator was eventually caught and sentenced, but it was a painful and costly lesson for the dentist involved.

Embezzlement is a real and growing threat to dental practices, but awareness and strong financial controls can help mitigate the risks. If you own a practice, take the time to review your financial processes, set up safeguards, and work with professionals who can help you protect your business.

For more insights and tips on managing the business side of dentistry, listen to the full episode of Beyond Bitewings or contact our team for guidance. Your financial security is worth the extra vigilance!

BOI Filing Requirements Are Back!

The Beneficial Ownership Information (BOI) filing requirements under the Corporate Transparency Act (CTA) are back in effect, with a new compliance deadline of March 21, 2025. This extension follows recent legal developments, including the lifting of a previous injunction by a Texas federal judge, allowing the enforcement of the CTA to proceed. 

For most dental practices, BOI filing is straightforward but requires careful attention to detail to ensure accuracy and the protection of sensitive business information. If you choose to handle the filing yourself, the Financial Crimes Enforcement Network (FinCEN) provides a secure and user-friendly electronic filing system on their website. If you would like our help with your filing, reach out as soon as possible so we can get started before the deadline. 

NOTE: Beware of vendors with offers that seem “too good to be true.” Since filing requires you to provide personal data, unscrupulous providers can easily steal your identity, putting your business and personal information at risk.

To assist you in this process, our team at Edwards & Associates offers comprehensive support to ensure your filing is complete, compliant, and stress-free. We stay abreast of the latest regulatory changes and are prepared to guide you through every step of the BOI reporting process.

Key Filing Information:

  • New Deadline: March 21, 2025, for most reporting companies.
  • Filing Method: Electronically via FinCEN’s E-Filing system. 
  • Required Information:
    • For Your Practice: Legal name, any trade names, primary U.S. business address, jurisdiction of formation, and tax identification number.
    • For Each Beneficial Owner and Applicant: Full legal name, birthdate, residential or business address, and a valid identification number (e.g., passport or driver’s license).

Non-compliance can result in significant penalties, including daily fines of $606 and potential criminal charges. To avoid these risks, we recommend addressing your BOI filing obligations right away.

For personalized assistance or to learn more about how we can help manage your BOI filing, please contact us today so we can get started on your filing. 

Note: This information is based on the latest available guidance as of February 20, 2025. For the most current updates, please refer to FinCEN’s website.

What You Need to Know Before Buying a Dental Practice

Expanding your dental practice portfolio through acquisition requires a strategic approach that builds upon your existing experience. If you currently already have one or more practices, you already know quite a bit about the dental industry, but each acquisition presents unique challenges and opportunities. Here’s a guide to assist you prepare for, and get through, the process successfully:

1. Strategic Alignment and Market Analysis (6-12 Months Before Acquisition)

  • Define Acquisition Objectives: Clarify your goals for expansion. Do you want to increase market share, expand the services you provide, or enter a new part of town or entirely new area.
  • Market Research: Analyze target markets to identify practices that complement your existing operations or give you an opportunity to meet one or more of the goals you have identified. Be sure to consider factors such as local competition, patient demographics, and market demand.

2. Financial Assessment and Valuation (6-9 Months Before Acquisition)

  • Financial Due Diligence: Examine target practices’ financial records, including profit and loss statements, tax returns, and cash flow analyses, to assess profitability and financial health.
  • Practice Valuation: It is important to employ the correct valuation methods which can include income-based, market-based, or asset-based approaches to determine a fair purchase price. At Edwards & Associates, we have evaluated scores of practices for clients looking to expand and would love to help you by providing an objective assessment of the practice(s) you want to acquire.

3. Operational Evaluation (4-6 Months Before Acquisition)

  • Patient Base Analysis: Review the number of active patients, retention rates, and demographics to evaluate the potential for growth and integration with your existing patient base.
  • Staff Assessment: Evaluate the current team’s roles, experience, and compatibility with your practice culture. Retaining skilled staff can help smooth the transition and maintain patient continuity.
  • Facility and Equipment Inspection: Assess the condition of dental equipment, technology, and the facility itself and make a list of any necessary upgrades or investments.

4. Legal and Regulatory Considerations (3-4 Months Before Acquisition)

  • Compliance Review: Ensure the practice you are evaluating adheres to all regulatory standards, including licensing, OSHA regulations, and HIPAA compliance.
  • Contractual Obligations: Examine existing contracts, such as leases, vendor agreements, and service contracts, to understand ongoing commitments and any limitations to your plans.

5. Negotiation and Structuring the Deal (2-3 Months Before Acquisition)

  • Deal Structure: Decide between asset purchase or stock purchase agreements, considering tax implications and liability concerns.
  • Negotiation: Engage in discussions to agree on terms, including purchase price, payment structure, and transition support from the seller.

6. Financing the Acquisition (2-3 Months Before Acquisition)

  • Explore Financing Options: Investigate various financing avenues, such as traditional bank loans, SBA loans, or private lenders, to fund the acquisition.
  • Financial Projections: Develop detailed financial projections to show lenders the acquisition is going to be profitable and viable for the long term.

7. Integration Planning (1-2 Months Before Acquisition)

  • Transition Strategy: Create a comprehensive plan outlining how the acquired dental practice will be integrated into your existing operations, including branding, systems, and processes.
  • Communication Plan: Develop a plan to inform and reassure patients and staff about the transition to maintain trust and continuity.

8. Post-Acquisition Management (Upon Acquisition and Ongoing)

  • Monitor Performance: Regularly assess key performance indicators to ensure the acquisition meets projected goals.
  • Continuous Improvement: Seek feedback from staff and patients to identify areas for enhancement and ensure the combined practices operate seamlessly.

By following this structured approach, you can effectively expand your dental practice portfolio, leveraging your existing expertise while carefully managing the complexities of acquiring an additional practice. We specialize in helping dental practices through this process and can provide valuable best practices, insights and advice whether you are just starting to think about expanding by purchasing an existing practice or have already identified one you want to buy. Reach out to us today so you are prepared and not caught off guard by unexpected roadblocks.

2025 IRS Rules for Vehicle Depreciation

If your dental practice uses business vehicles, a recent IRS update could affect your tax deductions. For the first time in three years, the IRS has lowered depreciation limits for 2025. These changes, tied to inflation and market trends, impact how dental professionals claim vehicle-related expenses. Here’s a simple breakdown.

Lower Depreciation Limits for Business Vehicles

Each year, the IRS adjusts vehicle depreciation limits. For vehicles placed into service in 2025, the new limits are:

  • With First-Year Bonus Depreciation:
    • Year 1: $20,200 ($200 lower than 2024)
    • Year 2: $19,600 ($200 lower than 2024)
    • Year 3: $11,800 ($100 lower than 2024)
    • Each following year: $7,060 ($100 lower than 2024)
  • Without First-Year Bonus Depreciation:
    • Year 1: $12,200 ($200 lower than 2024)
    • Later years: Same as above

For dental professionals deducting vehicle expenses, this marks a shift after several years of increases.

What About Leased Vehicles?

If you lease a vehicle for your practice, the IRS requires an income inclusion adjustment to ensure fair tax treatment between leased and owned vehicles. The amount varies based on the vehicle’s market value and lease duration. If you’re leasing, talk to your accountant to see how this affects your tax planning.

Why Did the Limits Change?

The IRS adjusts depreciation limits based on market trends. Recent Bureau of Labor Statistics data shows:

  • Used car prices increased by 1% in the past year.
  • New car prices dropped by 0.3% in the same period.

These shifts influenced the IRS’s decision to reduce depreciation limits.

How Does This Affect Your Dental Practice?

  • Tax Planning – Thinking of buying or leasing a vehicle? These updates may impact your tax benefits. Check with your accountant for the best approach.
  • Compliance – If you lease, be sure you’re calculating required income inclusions to stay IRS-compliant.
  • Budgeting – Since depreciation affects cash flow and tax deductions, plan accordingly to avoid surprises.

What Should You Do Next?

If you’re considering purchasing or leasing a business vehicle in 2025, understanding these IRS updates is key to maximizing deductions and avoiding tax pitfalls. Need help? Contact us today for advice on tax strategies and vehicle deductions for your practice.

What Dentists Need to Know About Tax Changes Under Trump

Since President Donald Trump’s re-election, several tax policy changes have been proposed that could significantly impact dental professionals both personally and in their practices. Since it is always important to stay informed about developments that can impact our clients, we wanted to share what we know now since it could impact the decisions you make this year and going forward. 

Extension of Tax Cuts and Jobs Act (TCJA) Provisions

The administration aims to extend key provisions of the TCJA, many of which are set to expire at the end of 2025. For dental practices structured as pass-through entities, the continuation of the 20% Qualified Business Income (QBI) deduction is particularly relevant. This deduction allows eligible businesses to deduct up to 20% of their qualified business income, effectively reducing taxable income. Without legislative action, this benefit may expire, potentially increasing tax liabilities for many dental practitioners. 

Reinstatement of 100% Bonus Depreciation

The administration is considering reinstating 100% bonus depreciation retroactively. This provision would enable dental practices to immediately deduct the full cost of qualifying equipment and property in the year of purchase, rather than depreciating the assets over time. For practices planning to invest in new dental equipment or technology, this change could offer substantial tax savings, if it happens. 

Potential Reduction in Corporate Tax Rates

A proposal to lower the corporate tax rate from the current 21% to 15% is under discussion. For dental practices operating as C-corporations, this reduction could result in significant tax savings, enhancing cash flow and providing opportunities for reinvestment into the practice. 

Impact on Dental Mergers and Acquisitions

The current political climate introduces uncertainty in the dental mergers and acquisitions (M&A) market. Factors such as potential tax law changes and economic policies may influence practice valuations and the feasibility of transactions. Dental professionals considering buying or selling a practice should closely monitor these developments and consult with us so we can help you navigate the evolving landscape. 

Personal Tax Considerations

On a personal level, proposed tax policies may affect individual dental professionals. Discussions include reducing the top long-term capital gains tax rate from 20% to 15%, which could influence investment strategies and financial planning. Additionally, potential changes to deductions and credits may impact personal tax returns. Stay informed and reach out to us so we can put together a tax plan that optimizes your personal outcomes. 

The evolving tax landscape under the current administration presents both opportunities and challenges for dental professionals. It is essential to stay abreast of policy changes to ensure both your personal and practice-related financial strategies are optimized in response to these developments.

Podcast Recap: How Payment Processing Fees Are Hurting Your Profits

In the latest episode of Beyond Bitewings, we sat down with Jeremy Lasarus, founder and CEO of Payment Brokers, a fintech company using AI to slash costs in the payment processing industry. Jeremy, a seasoned entrepreneur who has built and sold eight successful companies, shared valuable insights on how small and medium-sized businesses (including dental practices) can save thousands of dollars annually by addressing hidden inefficiencies in credit card processing.

The Hidden Cost of Payment Processing

Jeremy highlighted a pressing issue: predatory pricing in the payment processing industry. He explained that small and medium-sized businesses often bear the brunt of excessive fees, while larger enterprises enjoy significantly lower rates. These inflated fees can quietly erode profit margins, costing businesses thousands of dollars each year.

Drawing from his own experiences as a business owner, Jeremy recounted how high processing fees nearly bankrupted his first company. This personal struggle inspired him to found Payment Brokers, a company dedicated to leveling the playing field for small businesses by negotiating better rates with existing processors.

How Payment Brokers Makes a Difference

Payment Brokers operates on a unique model combining technology and human expertise. Using advanced machine learning, they analyze credit card processing statements to identify hidden costs and profit margins. Once identified, their team negotiates directly with the payment processor to secure lower rates—without requiring businesses to switch providers, change equipment, or retrain staff.

Jeremy emphasized the importance of ongoing monitoring. Processors often adjust rates with little or no notice, making it essential to have a system that tracks changes and holds providers accountable. Payment Brokers offers a monitoring service to ensure clients continue to save money long after the initial negotiation.

Real Savings for Small Practices

Jeremy shared an inspiring case study about a small dental practice in Miami. With just one location, the practice was paying exorbitant processing fees that Jeremy’s team reduced by $6,000 per month. This single change resulted in an annual savings of $72,000—money that went straight to the bottom line.

For dental and medical practices, these savings can have an even greater impact during an acquisition or sale. Jeremy explained that reducing expenses directly increases EBITDA, which can significantly boost the valuation of a practice during a sale. For example, an annual savings of $72,000 at a 5x EBITDA multiple could add $360,000 to the sale price.

Practical Advice for Business Owners

Jeremy shared actionable tips for businesses looking to reduce their payment processing fees:

  1. Calculate Your Effective Rate: Divide your total monthly fees by your total credit card sales to determine your effective rate. If it’s above 2.2%, it’s time to take action.
  2. Negotiate with Data: Armed with insights from your statements, approach your processor to renegotiate rates.
  3. Avoid Costly Pitfalls: Watch out for flat-rate plans, cash discounting schemes, and unnecessary add-ons like paper statements or redundant software.

Why Good Advisors Matter

Jeremy also discussed the value of having trusted advisors in your corner. Whether it’s an accounting firm that focuses on dental practices or a specialized firm like Payment Brokers, the right advice can save businesses from costly mistakes and unlock opportunities for growth.

Podcast Recap: Funding a Dental Startup or Expansion

For many dentists, opening their own practice is a major milestone—and often, it’s one of the biggest financial investments they’ll ever make. In a recent Beyond Bitewings podcast episode, Ash invited Adam Schenck from Bank of America to discuss the ins and outs of practice financing, offering valuable insights for dental professionals thinking about opening or acquiring a practice.

Build Your Support Team

If you’re considering starting or purchasing a dental practice, your first step shouldn’t be Googling “dental practice loans.” Instead, focus on assembling a team of experts who understand the unique aspects of the dental industry. This includes:

  • A CPA familiar with dental practices – like Edwards & Associates, of course!
  • A lender with experience in financing dental startups or acquisitions
  • Industry-specific advisors, such as financial planners and insurance providers

“You’re already an expert in dentistry, and that’s where your focus should remain,” emphasized Adam. “Surround yourself with professionals who are experts in their fields—construction, accounting, banking—so they can guide you through the process without you having to become an expert in those areas.”

Cash Flow is Key

When applying for a loan, it’s crucial to consider both your personal and business cash flow. Banks often look at the big picture—your financial habits, recent large expenses, and your ability to sustain yourself during the early months of practice ownership.

One common concern for new practice owners is having enough funds to cover operational costs, such as payroll and rent, before the business starts generating steady revenue. To address this, lenders often include working capital in the loan. This ensures you have the cash needed to operate smoothly during the initial ramp-up phase.

“Don’t stress about out-of-pocket costs,” Adam noted. “Your loan should cover everything—from building the practice to providing the working capital you need to keep things running.”

Startup vs. Acquisition: Keep Your Options Open

A common dilemma for new dentists is whether to build a practice from scratch or acquire an existing one. Both options have their pros and cons.

  • Startup: You have full control over the design, culture, and operations of the practice. However, it may take longer to build a patient base.
  • Acquisition: You gain an established patient base and cash flow from day one. Yet, you may need to invest in updating the office or marketing to grow the practice further.

Adam’s advice? Keep an open mind. “Sometimes, dentists spend years searching for the perfect practice to buy when they could have already started building one. The key is to assess what’s available in your desired location and remain flexible.”

Beware of Misinformation

When researching practice loans online, be cautious about taking everything at face value. Social media and forums can often present half-truths or misleading information about interest rates and financing terms. Adam recommended verifying information with trusted advisors and asking questions. “Fact-check everything, and don’t hesitate to ask your lender or CPA for clarification.”

Preparation is Everything

If you’re a dentist considering a new practice venture, we can help you navigate the financial side of the journey. From tax planning to financial advisory services, we specialize in supporting dental professionals at every stage of their careers.

For more personalized advice, contact us today, and don’t forget to subscribe to the Beyond Bitewings podcast for more insights on growing your practice and optimizing your financial future.

When Cheap Solutions Fail: A Lesson from Bench’s Sudden Shutdown

Dental practice owners and administrators are no strangers to juggling finances and operations. That’s why outsourcing bookkeeping and accounting often feels like a smart, time-saving move. But what happens when your chosen provider shuts down unexpectedly?

This is exactly what’s happening with Bench, a popular outsourced accounting service, which has announced its immediate closure. For many small businesses—including dental practices—this abrupt shutdown leaves them scrambling to find a replacement and navigate potential disruptions to their financial records.

The Real Cost of “Cheap” Bookkeeping Services

On the surface, services like Bench offer an affordable and convenient option for bookkeeping. However, the downside of budget providers often becomes painfully clear when things go wrong. Whether it’s inconsistent service, lack of industry-specific expertise, or, as in this case, an unexpected closure, relying on a “cheap” solution can leave you vulnerable.

Dental practices, in particular, require specialized financial management to navigate unique challenges like insurance reimbursements, patient financing, and regulatory compliance. When a provider without deep industry knowledge falters, you’re left with a mess to clean up—often at a much higher cost than you initially saved.

We’re Here to Help

If your dental practice has been affected by Bench’s closure, you don’t have to face this challenge alone. Our team specializes in accounting and bookkeeping services tailored specifically for dental practices. We understand the intricacies of your industry and can seamlessly transition your financial records while maintaining accuracy and compliance.

With our services, you gain:

  • Industry Expertise: We understand the nuances of dental practice accounting, from managing collections to tracking overhead.
  • Reliability: You’ll work with a trusted team, not an algorithm.
  • Custom Solutions: Our services are tailored to your practice’s unique needs, ensuring financial clarity and confidence.

Don’t Get Left Holding the Bag

The Bench situation is a stark reminder that inexpensive solutions often come at a high cost. Investing in a specialized, reliable accounting partner ensures your financial operations remain stable and your practice is prepared for growth—without fear of sudden disruption.

If you need immediate assistance transitioning from Bench or are looking for a more dependable partner, we’re here to help. Contact us today to discuss how we can support your dental practice.

Effective Strategies for Selling Your Dental Practice

For dentists, transitioning out of a practice is one of the biggest financial and emotional decisions of their careers. On our latest episode of Beyond Bitewings, we sat down with Steve Hipson, a seasoned dental practice broker. As the owner of the North Texas franchise of DDSmatch.com, Steve specializes in helping dentists successfully plan and execute practice transitions, and here is a synopsis of that conversation.

Start Preparing 3-5 Years in Advance

One of Steve’s key pieces of advice is to start planning 3 to 5 years before you plan to sell. While it may seem early, this timeline allows for strategic preparation that can significantly impact the value of your practice. Many dentists wait until they’ve started slowing down production, often due to burnout, injury, or lifestyle changes. But if production starts to decline, so does the value of the practice.

To avoid this, dentists need to get ahead of the curve and be proactive about maintaining production levels. This approach not only supports a higher valuation but also allows sellers to be more intentional about when and how they transition out of their practice.

Understand How Your Practice is Valued

When it comes to valuing a dental practice, dentists want to get fair market value assessments to get a clear, objective valuation based on revenue, production, and other key financial metrics. This removes the guesswork and sets clear expectations for both sellers and buyers.

Many dentists are also curious about EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), especially when dealing with DSOs (Dental Service Organizations). While EBITDA plays a major role in offers from DSOs, doctor-to-doctor sales prioritize different factors, like compatibility between the buyer and seller, the buyer’s clinical skills, and the location of the practice.

Selling to a Private Buyer vs. a DSO

One of the most critical decisions a dentist makes when selling a practice is whether to sell to another dentist or to a DSO. Both have pros and cons, and Steve’s advice is to remain open to both options.

Here’s a quick breakdown of the differences:

Private Buyer (Doctor-to-Doctor)DSO (Dental Service Organization)
Focus on compatibility and clinical fitFocus on EBITDA and financial metrics
Buyer often plans to run the practice themselvesDSO manages the practice while hiring providers
Less emphasis on cost-cuttingDSOs may streamline operations and increase efficiencies
Simpler, relationship-driven processCan result in higher offers but often involves stricter requirements

DSOs are a great option for dentists who want to remain part of the practice after the sale. Many dentists like this approach because it allows them to continue practicing while offloading management responsibilities like HR, compliance, and vendor negotiations. On the flip side, doctor-to-doctor sales are often simpler and more personal, with a focus on matching buyer and seller personalities, skills, and values.

Confidentiality is Key

One of the top concerns for dentists planning to sell their practice is maintaining confidentiality. Dentists fear that if their staff or patients find out they’re planning to sell, it could cause panic, employee turnover, or disruptions in patient care. Look for partners that prioritize maintaining confidentiality in every transition. All communications and negotiations should be handled discreetly, and announcements should only made when the sale is complete and both parties are ready.

The Importance of Hiring the Right Team

Transitioning a dental practice isn’t a solo endeavor; it requires a team of experienced professionals, including:

  • Brokers to manage the sale process and negotiations
  • CPAs to ensure the financials are in order
  • Attorneys to handle the legal side of the transaction
  • Lenders to assist buyers with financing

DDS Match refers to their approach as a “trusted transition process”, where his team works with the seller, buyer, and support professionals from start to finish. They focuses on creating smooth transitions where both the buyer and seller walk away satisfied.

How to Get Started

If you’re thinking about selling your practice or just want to explore your options, start early. If you’d like to connect with Steve Hipson for more information, you can reach him at s.hipson@ddsmatch.com or visit ddsmatch.com to learn more about his process for buying and selling dental practices.