Deciding to sell your dental practice is one of the most significant moments in your professional life. It’s the culmination of years of hard work, patient relationships, and personal investment. For dentists in Oklahoma City, the current market presents unique opportunities, but navigating the path to a successful sale requires careful planning and a clear understanding of the landscape. This guide provides a look at what you need to know.
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Oklahoma City’s Dental Market: A Snapshot
The good news is that you are operating in a strong and growing market. The broader Oklahoma dental industry is healthy and expanding, which creates a favorable environment for practice owners considering a transition. Understanding the key financial metrics of this market provides important context for your future sale.
A Growing Industry
The dental industry across Oklahoma is on a solid growth trajectory, projected to become a $2 billion market. This expansion creates an attractive environment for buyers, from private practitioners and groups to private equity investors, who are actively looking for quality practices to acquire in stable, growing metropolitan areas like Oklahoma City.
Healthy Profitability
Nationally, dental practices are known for strong financial performance. Most practices retain about 30% to 40% of their revenue as profit after covering overhead. This level of profitability is a key indicator of a healthy business and is one of the first things a potential buyer will analyze. For you, it’s the foundation of your practice’s value.
3 Key Considerations Before You Sell
Moving from the general market to your specific practice, certain factors have an outsized impact on your sale’s success. Buyers today look beyond the basic numbers. They are purchasing a modern, functioning business. Here are three areas to focus on now, even if a sale is a few years away.
- Get Your Financials in Order. This means more than just having clean books. It means presenting your financials in a way that clearly shows the practice’s true earning power. A potential buyer needs to see organized profit and loss statements, a clear list of equipment, and well-documented operational procedures.
- Strengthen Your Online Presence. In today’s market, your practice’s website and social media profiles are its digital front door. Buyers will often review your online reputation before they even look at your financial data. Positive patient reviews and a professional web presence are no longer optional. They are assets that add real value.
- Plan for Your Staff. Your team is one of the most valuable assets you will transfer to a new owner. A loyal, well-trained staff ensures continuity of care and smooth operations from day one. Planning for their transition and communicating clearly (at the right time) is critical for protecting the practice’s goodwill.
Preparing properly for buyer due diligence can prevent unexpected issues.
What Recent Market Activity Tells Us
The market for dental practices in Oklahoma City is not just theoretical; it’s active and diverse. We see practices of various sizes and specialties successfully changing hands, which signals a healthy appetite from buyers. This activity provides tangible proof that there is real demand for practices like yours.
A look at recent transactions shows a wide range of practice sizes finding new ownership. This data confirms that buyers are looking for different types of opportunities, from smaller practices perfect for a first-time owner to large, multi-operatory clinics attractive to expanding dental groups.
| Practice Status | Annual Collections | Specialty | Operatories |
|---|---|---|---|
| Recently Sold | $454,000 | General | 3 |
| Recently Sold | $1,200,000 | General | 4 |
| Recently Sold | $2,598,000 | General | 12 |
| Currently for Sale | $630,000 | Periodontal | 5 |
| Currently for Sale | $800,000 | General | 4 |
This activity shows that the market is liquid. However, the range in values also highlights that final price depends on more than just collections. It’s about profitability, location, staff, and the story you tell.
Curious how your practice compares to others in your specialty that have recently sold?
Understanding the Sale Process
The journey of selling your practice can be broken down into a few key stages. While it seems straightforward, each step has complexities where a deal can get delayed or even fall apart. Knowing the road ahead is the first step toward a smooth trip.
- Preparation and Valuation. This is the foundational stage where you organize your practice’s information and, most importantly, get a professional valuation. This isn’t just about a number. It’s about understanding what drives that number and how to defend it.
- Confidential Marketing. You don’t want to put a “for sale” sign on the front door. The right approach involves confidentially marketing your practice to a curated list of qualified, vetted buyers.
- Negotiation and Offer. Once you have interested buyers, you’ll receive offers. This stage involves negotiating not just the price, but also the terms of the deal, which can have significant financial and personal implications.
- Due Diligence. The buyer will conduct a deep dive into your practice’s financials, operations, and legal standing. Being prepared for this intense scrutiny is where many deals are won or lost.
- Closing. This final stage involves the legal transfer of the practice. With proper guidance, it can be a seamless conclusion to the process.
The due diligence process is where many practice sales encounter unexpected challenges.
How Your Dental Practice is Valued
Many owners have heard “rules of thumb,” like a practice is worth 70-80% of its annual collections. While simple, these formulas are often misleading and can cause you to leave a significant amount of money on the table. Sophisticated buyers and investors don’t use them. They use a more detailed approach.
Beyond “Rules of Thumb”
The modern standard for valuation is based on a multiple of your Adjusted EBITDA. EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It’s a measure of your true cash flow. “Adjusted” means we add back personal expenses run through the business or one-time costs that a new owner would not incur. This process often uncovers value that a simple formula would miss.
What Drives Your Multiple?
Once your Adjusted EBITDA is calculated, a multiple is applied to it (e.g., 5x, 7x, or more) to determine the enterprise value. This multiple is not arbitrary. It’s influenced by several factors:
* Size and Scale: Practices with higher EBITDA generally command higher multiples.
* Provider Reliance: Is the practice’s success tied entirely to you, or is there an associate-driven model?
* Growth Potential: Are there clear opportunities for a new owner to grow the practice?
* Technology and Equipment: Modern, up-to-date facilities are more valuable.
Understanding these drivers is key to not only getting an accurate valuation but also increasing it before a sale.
Valuation multiples vary significantly based on specialty, location, and profitability.
After the Sale: Planning for a Smooth Transition
The day you sign the closing papers is not the end of the story. A well-planned transition protects your legacy, ensures continued success for your patients and staff, and secures your financial future. Thinking about these elements early in the process is one of the smartest things you can do.
- Protecting Your Legacy and Staff. You’ve built more than a business; you’ve built a community. The sale structure can include provisions to ensure your staff are retained and your patient care philosophy continues. This is often a top priority for selling dentists.
- Defining Your Future Role. Do you want to walk away completely, or would you prefer to stay on for a period of time, either full-time or part-time? Many buyers value a seller who is willing to help with the transition, and this can be a key point of negotiation.
- Optimizing Your Financial Outcome. The structure of your sale has major implications for your after-tax proceeds. An expert can help you navigate options like earnouts or potential equity rollovers, which can provide a “second bite at the apple” if the practice continues to grow under new ownership.
Your legacy and staff deserve protection during the transition to new ownership.
Frequently Asked Questions
What is the current market outlook for selling a dental practice in Oklahoma City?
The dental market in Oklahoma City is strong and growing, supported by a healthy and expanding $2 billion state dental industry. This creates favorable conditions for sellers as there is active demand from private practitioners, groups, and investors seeking quality practices in the area.
What key factors should I prepare before putting my dental practice up for sale in Oklahoma City?
Three critical areas to focus on are: 1) Getting your financial documents organized to showcase true earning power, 2) Strengthening your practice’s online presence with a professional website and positive patient reviews, and 3) Planning for your staff’s transition to ensure continuity of care and smooth operations post-sale.
How is a dental practice typically valued for sale in Oklahoma City?
Valuation is commonly based on a multiple of Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which reflects true cash flow after adjustments. Factors influencing the multiple include practice size, reliance on the current provider, growth potential, and the quality of technology and equipment. Simple rules of thumb based on annual collections are less accurate.
What does the process of selling a dental practice in Oklahoma City involve?
The sale process typically includes: 1) Preparation and professional valuation, 2) Confidential marketing to vetted buyers, 3) Negotiation of price and terms, 4) Due diligence by the buyer covering financials and operations, and 5) Closing of the sale with legal transfer of ownership.
How should I plan for the transition after selling my dental practice?
Planning for a smooth transition involves protecting your legacy and staff by possibly including provisions for their retention, deciding on your future role in the practice (full-time, part-time, or complete exit), and optimizing your financial outcomes with options like earnouts or equity rollovers to maximize long-term benefits.