Yes, it is, and here are two powerful reasons that make NOW an ideal time to consider a practice transition:
High Cost of Practice Start-Ups - Another contributing factor to the increase in practice values is the rising cost of establishing a new dental practice. The prices of dental equipment, technology, and leasehold improvements have increased dramatically over the past decade, resulting in an average cost of approximately $400,000+ to start a practice from scratch. Combined with the significant living expense needs of most dental school graduates (due in large part to a high level of student loan debt) and the time and cost required to start a practice and generate a profit, many doctors are focusing on purchasing an established practice rather than pursuing a start-up.
Low Interest Rates. Due to the fact that most buyers rely on third party financing to fund practice purchases, interest rates and the availability of capital play a major role in practice value and transitions. Interest rates are currently at an all-time low and numerous lenders are offering 100% financing plus working capital to qualified buyers. The current availability and low cost of capital is allowing buyers to comfortably afford to purchase practices and fueling the increased demand for quality practice purchase opportunities.
While the current banking and interest rate environment make it a great time to be buying or selling a practice, interest rates are expected to increase substantially within the next 5years. Combined with an increase in the amount of practices available for purchase, this could negatively impact the value and marketability of dental practices across the country.
The factors we have discussed in this article make NOW an ideal time to consider a practice transition.