​Many fear that DSOs (corporate dental practices) are on a growth path that will lead to the eventual end of dentist-owned private practices.
 
Before we conclude the demise of private practice, let’s look at pharmacy.  In the 1950s and 1960s pharmacy chains did exist but independently owned pharmacies were very commonplace.  Now, as we see CVS, Walgreens, and Walmart pharmacies everywhere we turn, it might be easy to conclude that the growth in pharmacy chains has destroyed independent pharmacy ownership and made it a thing of the past.  That is not the case.

​In recent years, more and more practice sellers are considering sales to DSOs, or at least want to explore the possibility.  Let’s look at two important issues related to DSOs.

​When you sell your practice, expect that your Asset Purchase Agreement (Sale Contract) will include a section that addresses the letter that you will be required to send to your patients, introducing your buyer and describing what you will be doing, such as: retiring; changing your career direction; or, staying on to work in the practice for your buyer after the sale.  If you don’t have this section added to your Asset Purchase Agreement, it is almost certain that your buyer will require it to be added.

There are some other factors that come into play but in most cases, for the most part, the maximum price that a seller can get for his / her practice is determined by:

1. The practice’s cashflow;
2. The bank utilized by the buyer; and,
3. The buyer him / herself.

HOW IT WORKS:

1. This quiz is for general dentists only (not specialists).
2. Use your cursor to click on the answer(s) you want to select.
3. At the end of the quiz, click "SUBMIT".  Your quiz answers will be emailed to Dr. Stollings.
4. Based on his 25+ years of experience in dental practice sales, Dr. Stollings will:  i. grade your quiz; and ii. then email your graded quiz back to you along with explanations for all correct answers.
5. To Open the Quiz, click on "Read More" below and to the right.

​There are a number of factors that are important when the goal is to minimize the taxes that you’ll have to pay on your practice sale price.  As is commonly known, one of the most important factors is the amount of the sale price that is allocated to the sale and transfer of goodwill.  Portions of the sale price allocated to goodwill will be taxed at long term capital gains tax rates.  For most sellers, the long term gain tax rate will be less than the ordinary income tax rate that normally applies to the portion of the sale price allocated to the sale of tangible assets (equipment, instruments, etc.).