Mergers and acquisitions are a common growth strategy in the business world, but they’re not used very often in dentistry. Today I want to tell you why they should be and how merging dental practices can help your practice grow. At LifeSmiles, we have successfully purchased and merged two practices into ours over the years, so we know that merging practices can work well when done right.
If your business has suffered or seen a decrease in patients especially over the past year, acquiring another practice can be a relatively quick way to bring in a lot of new patients. In fact, this is a great time to start considering this option because there may be many other practices that are considering closing or moving due to changes after COVID-19.
How to find a good candidate
If you know your practice could benefit from reaching more patients, you can start by finding out if there are any practices that are available for a merger. To gather this information, I recommend that you make use of your dental network.
Your dental network includes your suppliers and representatives, and they are a great resource because they also work with other dentists in your area. Your dental network may know if there are any dentists nearby who are nearing retirement or considering closing down or selling.
You may also consider simply writing a letter or email and sending it out to other practices in your area just letting them know that you are interested in merging dental practices. Mention who you are and what your practice’s values are and ensure them that any response will be confidential so they can contact you if they are interested.
Top things to consider
When deciding if a practice is a viable acquisition, there are a few things to consider. You will first of all need to determine the assets of the practice, namely:
- Patient records
Ideally, for a practice to be a good option for a merger, it should be near the end of the lease and have assets that will make the purchase profitable for you.
Generally, a practice is valued at 60-80% of the average annual collections from the past 3 years, but in the current climate, many of the practices you will see for sale will be heavily discounted, so you may have some great profitable options.
There is no time like the present to consider growing your practice by merging dental practices.
Get more in-depth tips and advice by listening to the full podcast episode where I talk about practice mergers here.