The 2022 Dental Practice Sale Outlook

Hey, everyone. This is an AI conversation covering our recent personally authored blog post on our Practice Orbit website. Enjoy.

Hey, everyone, and welcome back to the Deep Dive. So many of you asked us to take a deep dive into what was happening with dental practices back in 2022.

Oh, yeah.

And honestly, it's a fascinating story.

Yeah, it really is.

So we're basing this deep Dive on an article from Practice Orbit, which, if you're not familiar, is an online marketplace for buying and selling dental practices.

They're, like, right in the thick of it.

Exactly. So their insights are incredibly valuable.

Yeah.

And what they saw in 2022 was pretty surprising. It was a seller's market for dental practices.

Wow.

Multiple offers, high demand. Practices were going for top dollar.

I would have thought with the pandemic and everything, it would have gone the other way.

Yeah, I know. I would have thought a global pandemic would put a damper on things, but it seems like it had the opposite effect.

It's really interesting how that happened.

Yeah.

There were a few key things at play.

Okay.

The first is what we call the rebound effect. After Covid, people rushed back to get the dental work they put off.

Right.

So practices were suddenly bringing in a lot more money.

So more patients equal more money for the practice.

Yeah.

Which makes it more valuable to a potential buyer.

Exactly.

Okay.

Think of it like trying to sell a house in a hot market.

Good.

Everyone wants in.

Right.

Which drives the prices up.

Got it.

It was the same situation with dental practices in 2022.

That makes total sense.

Yeah.

But even though things are picking up, Covid wasn't exactly over. Right, right. Were buyers worried about another potential shutdown?

Oh, absolutely.

Yeah.

There was still a lot of uncertainty around new variants popping up.

Yeah. And?

And it wasn't just about patients actually getting sick.

Okay.

It was the fear and caution that lingered.

Yeah.

Even if they weren't sick, people might hesitate to book appointments if they were worried about exposure.

Right. So that hesitancy could impact a practice's earnings.

Exactly.

Even if there wasn't a full blown shutdown. And that would obviously make the practice less attractive to a buyer.

Exactly. It's all connected.

Right.

And another thing Practice Orbit highlighted was the seasonal aspect of this uncertainty.

Okay.

We often see viruses being more prevalent during the colder months.

Oh, right. Like flu season.

Exactly.

Yeah.

So those periods, typically the first and fourth quarters of the year, are when practices might experience a bit of a.

Downturn because people don't want to go.

Out, as people are more cautious about venturing out.

Right.

Especially for Non emergency dental work.

So sellers might be thinking, okay, maybe I should try to sell before flu season hits.

It's certainly something to consider.

Yeah.

But of course, there were other factors at play in 2022 besides Covid.

Right. Of course.

One of the biggest challenges was the staffing shortage that was hitting the entire dental industry.

Right. Everyone was talking about that.

Oh, yeah. It was huge.

What kind of impact did that have on the market?

Well, imagine you're a buyer looking at a practice that's struggling to find and retain staff. Maybe they just lost a bunch of experienced people or their team is made up of brand new hires who are still learning the ropes. Yeah. That adds a whole layer of risk and uncertainty, wouldn't you say?

Absolutely. If I'm investing that much money, I want to know that the practice is running smoothly and efficiently.

Exactly.

Yeah.

And one of the biggest challenges was finding and keeping hygienists.

Oh, really?

Their wages skyrocketed in 2022.

Wow.

Which made them even harder to come by.

Wow. They were in high demand.

Oh, yeah.

Are you looking to sell a dental practice? If you're a seller, how do you find a strong list of potential buyers? There's no MLS or Zillow for dental practice sales. In such a fragmented market, with transaction costs so high, many dentists selling their practice feel discouraged. That's why I built practice orbit.com practice orbit is modernizing how dental practices are sold through its online marketplace platform. It brings together buyers, sellers, and their professional teams directly. Sellers can easily and anonymously showcase their practice on the site for free. Practice Orbit offers two options to sell your practice. Option 1. For 2% of the sale price fee, you'll get access to all Practice Orbit tools to sell your practice, along with a dedicated human assistant to corporate coordinate the sale. And you only pay that 2% if you sell through the Practice Orbit system. Option 2. Practice Orbit also offers a fully brokered option of 4 to 6% of the sale price. With our fully brokered option, you'll be assigned an experienced practice sales agent to help you determine a price, identify a buyer, and navigate the entire transaction. If you're thinking about selling your dental practice, create your free account today at www.practiceorbit.com.

I guess they're pretty crucial part of the operation.

Oh, absolutely. Yeah. For many buyers, a practice without a hygienist is a deal breaker.

Really?

They're that essential to the smooth running and profitability of a practice. Wow. Yeah.

So we've got this rebound effect driving up demand. And then the staffing shortage, making things even more complicated. Yeah, sounds like a real balancing act for anyone looking to buy or sell a practice.

It was, but then. Then there was another layer to this whole situation. Okay, which is the financial landscape. Right. Interest rates were incredibly low in 2022.

Oh, yeah.

Which had a huge impact on the market.

Okay, now we're getting into my territory.

Okay.

I'm always fascinated by how these things work.

Yeah.

So how did those low interest rates affect things?

Well, when interest rates are low, it's much cheaper to borrow money. Right. And that meant loans for buying dental practices were suddenly very attractive.

Okay.

Easy access to capital always fuels a seller's market.

Right. So it's like a chain reaction.

Exactly.

Are you looking to buy or sell a dental practice? If you're a seller, how do you find a strong list of potential buyers? There's no MLS or Zillow for dental practice sales. In such a fragmented market, many dentists selling their practice feel discouraged. That's why I built practiceOrbit.com practice orbit is modernizing how dental practice is are bought and sold. It's a platform technology. Y' all know them. Zillow, Airbnb, Uber, and OpenTable, just to name a few. These technologies do two things. First, they help match buyers and sellers by centralizing the marketplace. Second, once the match between buyer and sellers made, these technologies help them navigate the sale to a successful close. Here are a few of the features inside of Practice Orbit. Users can determine a reasonable sale price for practice in just minutes. All they need is the most recent business tax return. Practice owners can use the directory to find important service providers like practice brokers, attorneys, accountants, and bankers. Practice owners and their brokers can invite those service providers into the platform. So all parties are coordinating the sale together. Practice owners will have a beautiful digital listing of their practice, like a home on Redfin. And importantly, the listing will be anonymous. And personal information like your address, name and pictures are only released after an NDA is signed and approved by you or your broker. Practice buyers can create saved searches to be auto notified when new listings come on the platform that fit their desired specialty and location. And hey, dental practice brokers, you can list all your practices on the site for free. By doing so, you'll get access to practice or Orbit's large pool of buyers, all of whom have created profiles and saved searches to be auto notified when new listings come for sale. You can use the platform to introduce your listings to a targeted set of buyers. Additionally, and optionally, you can use the platform tools such as a built in NDA, a customizable loi and a workflow tool to navigate the sale from LOI to closing. In fact, you can manage all your listings on the system, from listing the practice to NDA to loi and finally to closing the deal. Create your free account today at www.practiceorbit.com.

Low interest rates mean more buyers can afford to get loans, which creates more competition for those desirable practices.

Exactly.

Got it.

But what's fascinating here is that this seemingly isolated market for dental practices is actually quite vulnerable to global events.

Oh, really?

That might seem totally unrelated at first glance.

Okay, you've got to give me an example.

Okay.

I love this kind of stuff. What kind of global events are we talking about?

Well, think about what was happening in China's real estate market back then.

Okay.

There were concerns about a potential bubble bursting, and that had ripple effects throughout the global economy. Or consider the supply chain issues that were making headlines.

Yeah, for sure.

Those kinds of disruptions can affect everything.

Wow.

From interest rates to lending practices.

So even something happening in China's real estate market.

Yeah.

Could influence whether a dentist here in the US decides to sell their practice.

Precisely.

That's. Wow.

These things are all interconnected in ways we might not always realize.

Right.

It highlights the importance of staying informed, not just about what's happening in your specific field.

Okay.

But also about the broader economic and political landscape.

So it's like a giant game of Jenga.

Yeah.

You pull out the wrong piece, and the whole thing could come crashing down.

That's a great analogy. And it's why Practice Orbit was urging dentists to be cautious.

Oh, okay.

Even amidst all this positive momentum, they were saying, hope for the best, but plan for the worst.

So timing is everything.

Yeah.

Dentists really need to have their finger on the pulse of the market.

For sure.

What kind of signs should they be looking for?

Well, Practice Orbit's advice was pretty clear.

Okay.

Strike while the iron is hot. If you're thinking of selling in the next few years, they were saying, don't wait.

Okay.

Take advantage of this seller's market while it lasts.

I can see why they'd say that.

Yeah.

High demand, low interest rates.

Right.

It sounds like the perfect storm for sellers.

It really was.

But what about the buyers?

Yeah.

What kind of advice does Practice Orbit have for them?

They emphasize due diligence, especially when it comes to staffing. Buyers need to thoroughly evaluate the practices team and consider the potential costs of recruitment and training. They also highlighted the importance of having a solid financial plan in place, one that accounts for Potential fluctuations in the market.

So it's not just about jumping in head first.

Right.

You need to be strategic and prepared.

Absolutely.

Yeah.

And that brings us back to the interconnectedness of it all.

Right.

Buyers need to be aware of those broader economic trends and how they might impact the dental industry down the line.

It sounds like the key takeaway here is that knowledge is power.

Exactly. Yeah. The more you understand about the forces at play, the better equipped you are to make informed decisions, whether you're buying, selling, or just trying to navigate your own career path.

This has been so insightful. I'm starting to see the dental practice market in a whole new light.

It's a fascinating microcosm of the larger economic world.

So we've seen how a rebound from COVID combined with low interest rates created this unique seller's market.

Yeah.

But we've also learned about the challenges like staffing shortages and those global economic wildcards. It really is a rollercoaster ride.

Indeed it is.

Yeah.

And I think that's a great point to wrap up this part of our deep dive.

Yeah. It really makes you think, doesn't it?

It does.

It's amazing how something like a dental practice, which seems so local and personal, can be so connected to the global economy.

Yeah.

It's a good reminder that we're all part of this bigger system, whether we realize it or not.

Absolutely. And that awareness can be incredibly empowering.

Right.

It's like having a map.

Yeah.

Versus just wandering around hoping you'll find your destination.

Exactly.

Understanding these forces can help you anticipate challenges, seize opportunities, and just make more informed decisions overall.

So what are some of the bigger lessons we can take away from this deep dive into the 2022 Dental Practice Market? What can our listener apply to their own lives, even if they're not in dentistry?

Well, I think the most important takeaway is the power of understanding market forces. Whether you're a dentist thinking about your exit strategy or an investor eyeing a new market, or just someone who's curious about the world.

Right.

This kind of knowledge is invaluable.

Yeah.

It allows you to see the bigger picture, anticipate trends.

Okay.

And make smarter decisions.

So it's about being proactive rather than reactive.

Exactly.

Instead of just getting swept along by whatever's happening, you can actually position yourself to benefit from those changes.

Precisely.

That makes a lot of sense.

And I think another key lesson is the importance of adaptability.

Okay.

As we saw in 2022, things can change quickly and unexpectedly. Right. The ability to adapt to those shifts to pivot your strategy when needed is crucial for success in any field.

So it's not just about having a plan, but also being flexible enough to adjust that plan when circumstances change.

Right.

That's great advice for anyone. Really.

Couldn't agree more.

Yeah.

And finally, I think this Deep dive highlights the interconnectedness of our world. What happens in one corner of the globe can have ripple effects that touch us. All.

Right.

Staying informed about those broader trends and understanding how they might impact your own life or business is essential in today's world.

I completely agree. It's been a real eye opener for me, and I hope our listener has found it just as insightful and engaging.

Me too. It's been a pleasure diving into this topic with you.

Likewise. And that wraps up our deep dive into the dental practice market of 2022.

Wow.

We've covered a lot of ground today exploring the factors that drove this unique seller's market and the lessons we can all learn from it.

It was a W ride.

It really was. We hope you've enjoyed the journey. Join us next time for another fascinating exploration on the Deep dive.