We’ve seen a consistent trend toward consolidation in the dental space for the last 15 years. But coming out of the pandemic, the DSO marketplace is changing.
And if you’re thinking about selling your practice to a Dental Service Organization, it’s useful to understand the different deal structures available to you.
So, how are DSO deal structures evolving in a post-COVID world? And how can a dental lawyer help choose the option that’s right for you?
Dean Gould serves as Senior Attorney at Dykema, where he specializes in dental law and the DSO transaction space.
On this episode of the podcast, Dean joins host Drew Phillips to explain why DSOs are moving toward joint venture deals and how the site-level equity structure prioritizes income replacement and encourages organic growth.
Dean discusses the benefit of building a team of legal and financial advisors before you sell to private equity and describes how a dental lawyer can help structure a win-win scenario for you and the DSO at the LOI stage, giving you clarity and confidence prior to the resource-heavy due diligence process.
Listen in for Dean’s predictions around the success of doctor-centric DSOs and learn how to choose a deal structure that fits your risk tolerance and benefits you and your dental practice for the long term.
[3:54] What’s behind the trend to JV (also known as site-level equity) deals in the DSO space
[8:35] How different DSO ownership structures play out when a doctor exits the business
[13:50] The risk/reward profile of site-level equity deals vs. ownership at the holding company level
[18:40] How nuanced the terms can get around participating in recapitalization events
[22:08] How DSOs are incentivizing doctors to work past their 3- or 5-year workback agreements
[24:45] How doctors can take care of younger associates in negotiations with DSOs
[27:30] What DSOs are doing to prioritize income replacement and encourage organic growth
[31:11] How dental lawyers can help you with term sheets, LOIs, purchase agreements, new employment agreements, equity documents and lease arrangements
[35:36] Why private equity companies are growing real estate portfolios alongside their dental holdings
[37:17] Why Dean suggests getting your documents in order and building a team of legal and financial advisors before you sell to a DSO
[41:24] How a dental lawyer can help structure a win-win scenario for you and the DSO at the LOI stage, giving you clarity and confidence prior to the resource-heavy due diligence process
[45:29] Dean’s predictions around the evolution of specialty play platforms and the success of doctor-centric DSOs
[49:38] How to register for Dykema’s industry-leading DSO conference in Denver this July
Wes knows what's best for dental practices. He's been doing this for a long time and he sees lots of practices. He can tell me how our practice is doing, and what we can do to increase our productivity. With past CPA's, there were no ideas. It was all coming from me, saying "I think I can do better, but I don't know how." I come in to meet with Wes and he says "You CAN do better, and I know how."
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Whenever something comes up, whether it's building or practice related and we weren't sure where the numbers would go, PracticeCFO has been instrumental in helping us figure that out. I can't say enough of how important that is - that it goes beyond that initial partnership. They make sure this business marriage works.
When I go home from work, I don't spend a whole lot of time stressing about what my books look like, or how much I owe in taxes. By using PracticeCFO, the burden of keeping track of a lot of the big financial numbers and metrics are taken off my plate.
PracticeCFO helped me develop a plan for the future. I have colleagues that work with other accountants that don't have a plan - they just look at the numbers of the practice and that's it. There's no plan for 10, 20 years from now. But with PracticeCFO, you get that. PracticeCFO makes you feel like you're they're only client.
(In reference to his practice sale) What could've been super stressful, wasn't! When picking John and Wes, it was from word of mouth recommendations and other people's experiences from the past that really did it for me. And it turns out that those recommendations were right on the line.
Wes knows the business side of dentistry. His comprehensive plan will organize your personal and professional finances so you can focus on taking care of patients. Massive ROI.
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I love Practice CFO! They have helped me obtain a practice and maintain a practice. They are incredible people who are on top of everything and make owning and running the business portion of a practice easy. They couldn’t be better for my business and my sanity. They have every detail of the business and taxes taken care of where all I have to do is show up and follow their easy steps to success!
Practice CFO has the best tools I’ve seen for personal tax and financial planning in addition to top-tier corporate tax and accounting services. I have been very pleased with the level of quality service. They manage my monthly bookkeeping and accounts payable. It is a great system and saves me a ton of time, and it allows us to have monthly financial statements within a week of month end.