Why now is the time to buy your dream dental practice (and how to make sure it succeeds)
We interviewed industry veteran Aaron Pershall to learn about the current dental practice finance landscape, including COVID-19’s impact on existing practices and those looking to purchase.
Provide Regional Director of Practice Finance Aaron Pershall has over 15 years of experience in the industry, and we got to pick his brain about current dental practice finance trends, why now is the right time for a dentist to purchase his or her dream practice and what makes buyer representatives invaluable resources.
What is your experience in the dental practice finance industry?
I was a dental practice broker for over 15 years. In addition to helping practice owners sell their dental practices, I provided practice appraisals, consulting and buyer representation. I sold hundreds of dental practices and saw just about everything over the years … the good, the bad, the ugly — and the just plain weird! I was also a member of the Practice Valuation Study Group (PVSG), which is a national professional association of dental practice brokers. I am also a certified business appraiser and a member of the National Association of Certified Valuators and Analysts.
I joined Provide as the regional director of practice finance for the Pacific Northwest in September 2021. For a long time, I was very skeptical of Provide. I thought they were just another lender making big promises they couldn’t keep. Then, when COVID-19 shut down dental practices, I had a number of deals pending and all my other lenders refused to lend. Provide was seemingly the only lender who continued to fund dental acquisitions and support the industry during the pandemic. They delivered what they promised and made a believer out of me. So when they approached me to join the company, it was a no-brainer. I believe in what we are doing at Provide and, perhaps more importantly, how we do it.
Buyer representatives: the secret weapon
What trends do you see in dental practice ownership today?
Financially speaking, there are a number of changes happening. DSOs (dental service organizations) and other small group practices are buying up solo doctor practices, and this consolidation in the market has helped to push practice valuations higher. I think there are more senior doctors seeking to retire, so there are more opportunities available for purchase than in past years. Additionally, we are in an extremely low interest rate environment, which has driven down the cost of buying a practice.
The emergence of dedicated buyer representatives for dental practices is a fairly recent phenomenon, and I think it has generally been a very positive trend. I have said for years that a buyer has the steepest learning curve in a practice purchase. And while I tried to give buyers free advice when I could as a dental practice broker, my fiduciary responsibility was usually to the seller. Buyer representatives give buyers the help and advice they need to navigate a practice purchase and set them up for success after closing, which is wonderful.
How does one find a buyer representative?
We are happy to recommend buyer representatives, consultants and CPAs who assist with due diligence for practice acquisitions. We make those recommendations based on where the buyer and their dream practice are located and the type of assistance the buyer feels they need. It certainly isn’t a one-size-fits-all approach, but we work with the best partners in the industry and can help buyers find the help they need.
COVID-19’s impact and the industry’s future
From a dentist’s point of view, how has COVID-19 impacted practice ownership?
In general, practices that thrived before the COVID-19 shutdown are doing better than ever today, and the ones that struggled before the shutdown have struggled to recover financially. This has led to a polarization of the practice landscape. The good news: There is often opportunity to be found at both ends of the spectrum.
Additionally, many practice owners (even the successful ones) are struggling to find and retain staff. Many are running their practices shorthanded and, in some cases, have had to give raises to retain good employees that are being courted by other practices. I think COVID-19 was a catalyst that made a number of senior practice owners rethink their priorities and their retirement plans, which has added to the number of practices available for purchase.
Looking ahead, what predictions do you have for the market 6-12 months from now?
I think we will see the supply and demand for dental practice acquisitions normalize over the next year, and I am confident that the outlook for the dental industry will remain strong.
Also, I am hopeful that the staffing issues will be temporary. COVID-19 made a lot of people rethink their priorities and, while I think that is good, many of the financial incentives for employees to stay home are going away. This should get more people back into the workforce. My advice: Younger practice owners should seek to build work environments and cultures that are authentic and genuinely attractive to employees. Over the years, studies have shown that compensation alone doesn’t attract and retain employees. Often, it is the meaning that employees find in their work that is most valuable to them.
A network of helpful resources
What resources are available to a dentist looking to open his or her own practice?
There are a number of good resources available for dentists who want to own a practice. Earlier, I mentioned buyer representatives. Additionally, there are a number of really good dental CPAs out there who can provide due diligence support, retirement planning, wealth management, traditional accounting and tax preparation.
Lastly, Provide offers a number of resources to dentists who want to own a practice. From helping connect buyers with a good attorney, CPA and/or buyer representative, to providing due diligence support and cash flow analysis, we can help aspiring dental practice owners navigate the process. And we have a number of best-in-class financing products with exceptional rates and terms available to our clients. Through our online portal, potential buyers can pre-qualify for a loan quickly and easily. They can also search for practice opportunities on our practice marketplace, where we have compiled listings from the nation’s best practice brokers in one convenient place.
We hope Aaron has inspired you to chase your practice ownership dreams. If you’re ready to take advantage of the historically low interest rates and endless resources available to you, pre-qualify, browse current listings and learn more about how we can help you at getprovide.com, or call us at 877–341–0617.
This content is for informational purposes and it does not constitute the rendering of legal, accounting, tax, or investment advice or other professional services by Provide or any of its subsidiaries or affiliates, and it is being provided without any warranty whatsoever. Please consult with appropriate professionals related to your individual circumstances.
All lending is subject to review and approval. Provide, Inc. is a wholly owned subsidiary of Fifth Third Bank, National Association.