Jan 17, 2025

Uncertain of How You’ll Sell Your Practice?

Written By: Nate Williams

Earlier this year, I read an exceptional article by DFA founder David Booth, and I highly recommend it. You can find the full article here (click on “Individual Investor” on the home page to get to the article): Uncertainty Is Underrated.

 

Key Takeaways from David Booth’s Article

Uncertainty, often seen as a negative, brings many unexpected benefits, such as:

  • Surprises (think Christmas morning 😊)
  • Joy in Watching Sports

Booth also points out that without uncertainty, there would be no stock market returns. However, people often fear loss more than they appreciate potential gains.

To manage risk effectively, he suggests:

  • Avoiding Obvious Investment Blunders: Don’t try to time the market or pick winning stocks.
  • Focusing on What Leads to Success: For example, if you want to become a better runner, run more. If you want better investment outcomes, invest more money.

Booth’s positive perspective on uncertainty reshaped how I view things outside my control, and I believe this insight has a valuable application for dentists as well.

 

Uncertainty in Dentistry and the Wealth Transfer to DSOs

Over the past four years, the dental industry has experienced a massive wealth transfer. As a record number of dentists have sold their practices to DSOs, wealth has likewise transferred from the selling dentists to the DSOs. (Note that I am defining wealth as the control and ownership of productive assets).

In my conversations with dozens of dentists across the country, one recurring theme emerges: they fear the uncertainty of how to transition their practice. Because they don’t have a clear “bird in the hand” solution, many are making the worst business and financial decision of their lives—selling prematurely, and to a DSO!

 

Counter Perspectives on Transitioning Your Practice

If uncertainty about your exit strategy is keeping you up at night, here are a few key points to consider:

  1. Don’t Worry About It Too Early
    If I were a practicing dentist, I wouldn’t even think about my transition until I was 2-3 years from selling. It’s not a decision that requires decades of planning.
  2. There Will Be Buyers
    Many DSOs perpetuate the myth that there aren’t qualified buyers. This is simply not true. With thousands of practices being sold to DSOs, there are now more buyers than sellers. Fearing you won’t find a buyer is like a WWII soldier returning home and worrying he won’t get a date!
  3. Loans Are Available
    The idea that buyers can’t get financing is equally false. If you find someone capable of producing in your practice (see point #2), banks will line up to loan money. Dental practices remain one of the safest bets for lenders.

 

Embrace the Uncertainty

Uncertainty around how you’ll sell your practice has driven many dentists to make the biggest financial mistake of their careers: selling to a DSO out of fear. But uncertainty isn’t the enemy. In fact, it’s underrated.

Uncertainty is a natural and important part of life. If you’re not ready to sell your practice yet, don’t worry. Focus on being an excellent dentist and living a fulfilling life. When the time comes and you’re ready to retire, the path will reveal itself.

 

(For more on this topic, check out Season 3 of our podcast, “Just Say No to the DSO.”)

 

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