What Dental Practitioners Should Learn About Mergers

No one Id rather work with. Shot of a young dentist with his assistant

As the healthcare landscape continues to evolve, dental practitioners must be prepared to adapt to changes in the industry. One such change that is happening more and more frequently is mergers between dental practices.

While some may view mergers as a threat to their practice, it is important for dental practitioners to understand the potential benefits that can come from these types of transactions. By learning about the motivations behind mergers and the process of integrating two practices, dental practitioners can be better prepared to take advantage of this growing trend.

If you want to be enlightened about the potential financial benefits that can be achieved with mergers, connect with a CPA who can inform and guide you. But to get you started, here’s what dental practitioners should learn about mergers:

What’s a Merger for Dental Practices?

A merger occurs when two dental practices combine their business operations. Mergers can be between two similar-sized practices or one large practice and a smaller practice. Unions can also involve different types of dental practices, such as orthodontics and general dentistry.

The process of a merger can vary depending on the size and scope of the transaction. The first step is to typically identify a target practice that is a good fit for your own practice. Afterward, a deal and terms may be negotiated. Due diligence must be conducted on the target practice, and that involves reviewing financial statements and interviewing staff.

How Does a Merger Differentiate from Acquisition?

An acquisition occurs when one dental practice buys another dental practice. The process is similar to a merger, but in an acquisition, one practice is typically larger than the other. The larger practice will oftentimes pay more money for the smaller practice and absorb it into their own rather than a partnership of two practices that see each other as equals.

What’s a Merger Primarily For? 

When two practices merge, they can leverage their collective buying power to get better prices on the supplies and services they need. Mergers can also lead to increased efficiency as the two practices combine their resources and eliminate duplicate processes and procedures. To simplify, dental practices can include mergers for either transition or collaboration.

What’s Merging for Transition?

Merging for transition is often done when one of the practices is looking to retire or sell their business. The other practice will take over the patients, staff, and equipment of the retiring practice. This can be a good option for the retiring dentist because they can be sure their patients will be taken care of by a trusted colleague.

What’s Merging for Collaboration?

Merging for collaboration is often done when two practices are looking to grow their businesses. The two practices will combine their resources and knowledge to create a stronger business. This can be a good option for both practices because they can leverage each other’s strengths to grow their business.

Conclusion

In conclusion, it is evident that dental practitioners need to be well-informed about mergers. This is because the process of merging can have a significant impact on their practices, patients, and careers.

Looking for a dental CPA? Ash Dental CPA provides accounting for dental and healthcare professionals and helps with buying, selling, and valuing dental practices. Get in touch with us today!

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