A practice merger is a transaction where one doctor wishes to sell his/her practice to an established doctor in the same area and merge the practices together into one office facility.

NOTE: A practice merger is a full practice sale and does not result in a co-ownership practice environment.

Many sellers would prefer to sell their practice to an established doctor in the area who already has experience with operating a practice. This is especially true if seller financing is involved, but also true because sellers are genuinely concerned about their staffs and their patients and feel more comfortable with the experience level of the purchaser. Some sellers also wish to continue to practice for the purchaser after the sale (the PARAGON Pre-Sale Program) and are generally more comfortable practicing along side a seasoned veteran.

There are numerous reasons, both financial and non-financial. A practice merger allows you the opportunity to invest in a business that you already know about (as opposed to some limited partnership investment or other type investment that you absolutely nothing about). A practice merger immediately increases your market share by instantly providing you with more fee-for-service patients, more referral sources, more growth and more profits. A practice merger eliminates competitors. Acquiring the practice obviously removes the seller as a competitor, but, acquiring the practice also prevents a more aggressive competitor from acquiring the practice. A practice merger is typically structured to make the transaction extremely financially appealing as well. The transaction is generally fully leveraged (meaning that the purchase price and closing costs are typically financed). You invest ZERO personal capital to reap significant financial benefit. There are many other reasons as well. You should discuss your particular situation with a PARAGON consultant so you will know all the ways a practice merger could greatly enhance your “quality of life.”

That is a choice for the purchaser to make. We have found that often the seller relocates to the purchaser’s office unless the seller’s office is larger and can better accommodate the larger practice. Occasionally, both practices are relocated to a larger new facility if neither the seller’s or buyer’s is large enough. If the seller is leaving the practice immediately it is probably best for patient retention if the purchaser relocates to the seller’s existing facility.

Granted, this creates a challenge but there are ways to schedule for the use of a small office when merging two practices. We have successfully merged practices into a facility that only had 3 total treatment rooms. Offsetting doctor office hours, days or even weeks is one possible solution. This generally works well because a seller is usually ready to cut back some on his or her clinical time. Occasionally we have buyers who also see the opportunity to back off a clinical day or so. There are certainly some very creative scheduling techniques that could make the merger work for you even with limited space. Ask your PARAGON consultant about some of the creative scheduling techniques we have used in the past.

Confidentiality is paramount for our clients. PARAGON can’t disclose a seller’s identity to you or anyone else until we have determined your level of interest as well as your suitability for a merger with a specific seller. In order to do this, we will need to know more about you and your practice. Once suitability has been determined, you will then be shown a complete financial analysis of the opportunity, including proformas reflecting income, expenses and debt service. This will show you the economic benefits of a specific merger. If you are interested in moving forward, the next step would be to disclose the seller’s identity to you and arrange for a meeting between the two of you so you can determine compatibility. PARAGON will walk you through each step of the process to assure an effective and efficient transition.

PARAGON will need to prepare a financial analysis of your practice to determine if a merger really makes sense for you. Often a practice has untapped growth and adding more patients to the mix would be like pouring water into a full glass. A practice merger can easily double practice production overnight, and it is imperative that the purchaser’s existing practice environment can successfully absorb this growth. As a part of our analysis, we will also prepare a merger proforma to show you the financial effects of acquiring and merging a specific practice. There is no charge to our clients for this in-depth analysis.

Since 1988, PARAGON consultants have assisted its clients with purchasing, selling and merging dental practices. Contact PARAGON today. We have the experience to help you make a practice transition one of the most rewarding experiences in your lifetime. We look forward to being of service to you.