The Perfect Transition Storm
For those of you that have been around for a few years, you have probably noticed that the economy is cyclical. Factors such as interest rates, employment levels, consumer spending and even retirement rates ebb and flow. This flux creates optimal opportunities to buy and optimal opportunities to sell.
Currently, the market for a practice transition is a seller’s market. This means there are more buyers looking to acquire a practice than there are sellers looking to sell a practice. It has been this way for a number of years. But there are a number of factors that make the current market a perfect storm. These factors are as follows:
- There are not a lot of practices on the market. Low supply and high demand equate to higher practice values.
- Interest rates are still relatively low. This makes note payments more affordable, so buyers are looking to take advantage of lower rates by purchasing a practice.
- The economy is strong. Patients are getting their dentistry done. They are employed and have insurance, or can afford to pay cash and get work done.
- There are more buyers than sellers. Doctors have been holding on to their practices and delaying the sale of their practice in part because of the down market in 2008 to 2010. The average retirement age for dentists was 62 in 2000 – it’s now closer to 67.
Just as perfect storms at some point break, so will the perfect storm for a transition. Interest rates are already starting to increase. Over 50% of doctors are now over the age of 55 and getting older. They are beginning to sell either to retire or, unfortunately, because of health reasons. Seller’s markets are flipping to buyers markets in other parts of the country with older populations. It will eventually happen where you are as well. If you are thinking about a transition within the next few years, we would be happy to meet with you and answer your questions and put help formulate your transition plan. Just give us a call at 877.866.6053 or send us an email at email@example.com.