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11/9/2017 |
Insights |
An Introduction To Mergers For Dental Practitioners |
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An Introduction To Mergers For Dental Practitioners by Alan Clemens Mergers and acquisitions, popularly known as M&As, have been a favorite tool of the corporate world, starting with the conglomerate craze of the 1970s and 1980s and continuing to the present with the surge of consolidations in the financial and airline sectors. But what holds true here is the old adage, slightly paraphrased, that what’s good for the goose (large corporations) is also good for the gander (in this case, the transitioning dentist paired with an aggressive mid-career practitioner). A merger can prove to be among the most important and potentially successful actions taken by dentists over the course of their career. In a practice merger, one general dentist acquires another general and/or specialty practice and merges the two into one facility. The usual scenario pairs a dentist moving on to a later career phase with an established financially and professionally successful practitioner whose office is generally in the same geographical area. Please note that the merger is usually between two dentists in the same discipline or in closely related disciplines. Most frequently, the merger moves the acquired practice into the buyer’s physical office, but there are instances of the reverse or even of a new facility housing the merged offices. What is most important is that when done successfully, a practice merger provides a win-win situation for both participants. The transitioning dentist is seeking to achieve a reduced workload or to move directly to retirement in a specified period of time. But he or she faces difficulty achieving this goal because of financial, health, and/or emotional issues. A merger presents a unique opportunity to create value for what is most likely a practice environment based upon old ideas, equipment, and habits. It provides a rescue from waning practice load, income not keeping pace with inflation, a reticence to extend leasing commitments, difficulty keeping up with management or current dental procedures, or even fear of the unknown future. A practice merger is an insurance policy that earns a premium for the transitioning dentist and offers options other than a partnership, a delayed buyout, or an outright sale. The acquiring practitioner has opposite goals. This dentist is looking for a larger practice and patient base, a higher after-tax income, and increased utilization and efficiency from the hygienist, professional, and office support staff. The practitioner making the acquisition has longer-term goals then the seller. Read full article on Dentistry Today.
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