Every doctor has different motivations for considering an IDSO partnership for their practice. Some are interested in selling part of their practice today to secure their financial future with a large sum of cash in their pockets at Long Term Cap Gains rates. At today’s value levels, a smart move which also locks in a known future buyer at retirement, five, ten, or twenty years in the future. Some doctors see more value than the cash up front.
Synergies with a Silent Partner
Other doctors are excited about a partnership with the right IDSO as a way to increase the growth rate, size and value of their practice using someone else’s risk, capital and operational resources. They are also interested in accessing potential synergies with the IDSOs’ other area practices. It is often both a defensive and offensive strategy. The goal is that their retained equity of 10% to 40% in their own practice or their new parent, will be worth far more five or ten years in the future than the 100% they own today. It results both in Cash in the bank now AND a second monetization event at higher values in the future.
Multi-Million Dollar Upside Longer Term
Many doctors are also interested in the potential upside of the parent’s equity value. They want to create tens of millions of dollars in future value/wealth, not just a high level of ordinary income. Doctors have real potential upside with an IDSO partner whose backers are proven, sophisticated investors. The doctor gets to ride their coat tails in a business they know. Some doctors who received parent equity in IDSOs have made 3X, 5X and 10X+ the initial value of that equity, some in a few short years. The billion dollar investors invest in dental for the predictable returns and upside gains. Some doctors can too.
No matter what your particular goal may be, it pays to understand the value of your practice to an IDSO. We completed transactions for doctors in 2019 at 2X, 3X and 4+X collections in 2019. The process is confidential, free and without obligation.
- Dentistry Unmasked: Inside the world of invisible DSOs | with Chip Fichtner - February 21, 2024
- Practice Partnership Podcast Ep 9: Top 10 Attributes to Achieve the Highest IDSO Partnership Value in ’24 - February 21, 2024
- The DrBicuspid Podcast featuring Chip Fichtner - February 6, 2024