Blog

Beware of the Corona Effect

Posted by [email protected] on Apr. 24, 2020  /   2

The Coronavirus is obviously creating stress for most of us.  It is also creating opportunities for DSOs (those large, corporate Dental Service Organizations) that are taking advantage of dentists’ stress and buying distressed practices.  One of our supporters from Paragon forwarded to us this article from The New Dentist.  It is eye-opening and important to read if you’re contemplating selling your practice.  It also makes me concerned for those dentists who have already sold and are “on the hook” to meet production goals while working in the office in order to complete their sales agreement. As always we’re looking for your input by posting on our Forum or Facebook.   Have any of our members had unreasonably low offers to buy their practices? We want to hear from you. 

-Neil

Return to list

2 Comments

  1. Michael Anderson

    Apr. 29, 2020

    Hello, I received your note regarding the effect this virus is having on practice sales/transitions. For what I’ve heard from some of my colleagues at other DSOs, many are looking to re-structure contingent payments / earnouts to provide opportunity for selling doctors to achieve their targets once we do re-open. This can take many forms, such as lowering performance targets, or stopping the measurement period when the practice closed for elective care, and re-starting the measurement period at some later date when practice revenue recovers. This is a unique situation where a re-structuring of earnouts can benefit the DSO and the selling doctor. The DSO benefits if the selling doctor continues to work in the practice, and remains motivated after the crisis subsides. This also provides an opportunity to build goodwill with the selling dentist and to support the DSOs reputation. Most of these contingent payments are amortized (by the DSO) over a period based on the likelihood that the individual offices will achieve the targets set forth, so there’s a good chance the DSO has already accounted for expected payouts, before the COVID-19 crisis started. As long as the DSO has the cash flow coming out of this, they’re likely to benefit from re-structuring these contingent payments. For what it’s worth… Thanks, Michael Anderson Midwest Dental

  2. Anonymous

    Apr. 27, 2020

    Neil - appreciate the heads up - I get emails from DSOs nearly every day or weekly - in my opinion, many are piranhas and the fear tactics they use are so unprofessional - during the Reconstruction after the Civil War, they were called carpetbaggers -I bet some would consider them astute capitalists - I don't unsubscribe because I want to know what is impacting our profession - I personally would rather close my doors and put up a gone fishing sign than deal with a DSO -I feel the same way about the orthodontic treatment in a box - no pans - no cephs - take your own impressions - you don't even have to see "the dentist". It will be very interesting and scary to see the landscape of dentistry in the future. Friends of mine, a husband/wife dental team - he is still in ICU it will be a month come Sunday - - yesterday was the first time he spent some time off the ventilator - from what I hear on the news - my friend may not only be suffering from Covid but from the effects of three rounds of the antimalarial medication which although lacked the scientific data that Dr. Fauci requested - was touted by politicians to be a cure -each round the ICU doctors added another drug -current studies show that people on the anti malarial drug actually had a higher mortality rate than those who did not take the drug - my friends still face months of rehab - their main focus is reclaiming their health not their dental practice - I am hoping in the next week - we may be able to exchange emails - this is certainly not the retirement vision they expected - be stay well -be safe.