Selling your dental practice is one of the most significant decisions you’ll make. Dentists call us all the time asking: “Is NOW a good time to sell?”
For the fourth quarter of 2024, the answer is a resounding yes! Current market trends indicate that it is an excellent time to list and sell your dental practice. Current economic and industry conditions present a uniquely favourable landscape for those looking to transition their practices to new ownership. In this post, we’ll explore the key macro and microeconomic factors driving this market opportunity, explain valuation trends, and show how DMC LLP can help you navigate the sale with confidence and ease.
What’s Driving the Dental Practice Market Now?
Dentists are experiencing a market unlike any we’ve seen in recent years. Several factors that impact dental practice valuation are converging and creating a strong demand for dental practices, especially those with stable revenue and growth potential. Let’s break this down.
Macro Trends: The Broader Economic Landscape
The economic environment is setting the stage for robust buyer activity. Here are some important factors to consider:
- Declining Interest Rates
- After years of gradual rate hikes, the Bank of Canada has reversed course, cutting interest rates to stabilize the economy. Lower borrowing costs mean buyers—whether individual dentists or dental service organizations—have greater access to financing, which directly translates into higher purchasing power.
- Stabilizing Inflation
- While inflation remains elevated, it is showing steady signs of decline. This stability helps both buyers and sellers confidently predict cash flow and operating costs, making transactions more appealing and less risky.
- ODA Fee Guide Increases
- Adjustments to the ODA fee guide have provided a welcome revenue boost for practices across Ontario. Buyers are drawn to practices with clear growth potential under these new fee structures.
Micro Insights for Practice Owners
In addition to these macroeconomic influences, microeconomic or dental practice-specific factors will ultimately dictate how a practice will sell. These factors include things like:
- Labour Market Stability
- While practices are still finding it challenging to retain top-quality talent, the labour market has stabilized compared to previous years. Practices with effective hiring and retention strategies are better positioned for a smooth sale.
- Revenue Streams
- Buyers are particularly interested in practices with diversified revenue streams, such as strong hygiene programs and value-added services like orthodontics or cosmetic dentistry. They are also looking at opportunities to expand revenues by asking:
- How many referrals could be moved in-house?
- Is there room to expand the operating hours to attract more patients?
- Are there high-end dental treatments that could be added to existing patients (e.g. implants, clear aligner solutions, and RCTs)?
- Digital Adaptation
- Practices that have embraced technology—whether through patient communication tools, digital charting, or online scheduling—are commanding higher valuations due to their operational efficiency.
There are many factors that help determine the actual price and terms that you receive when you sell your practice. You can read more about those influences and how to value your practice here.
Looking Ahead to 2025
If you’re not quite ready to sell, there is still some good news. The outlook for sellers remains positive when we look ahead to 2025. Some additional market trends that will continue to build demand for quality dental practices include:
- Strong Patient Demand from the CDCP
- As plans for the Canadian Dental Care Plan (CDCP) continue to expand, the number of patients accessing dental care, particularly in previously underserved areas, increases. Practices that have adapted to meet this demand are seeing a significant uptick in production, directly impacting valuation in future buyers’ eyes.
- Corporate Buyers Stepping In
- As we have seen in recent years, Dental Service Organizations (DSOs) are aggressively expanding in Canada. This trend will continue as the Canadian dental market is forecasted to experience growth at a CAGR of 2-6.4% during the next five years. This increasing market potential will see DSOs seeking more and more acquisitions to grow their networks.
- Increased Population
- As the population in Canada continues to grow, both in size and in average age, the demand for dental services will increase. Stats Canada predicts that Ontario will remain one of the most populated provinces in the foreseeable future, with the migrant population leading its growth. This means more people are looking for dentists, and more foreign-trained dentists are looking for a dental practice to call home.
Bottom Line
Selling your dental practice is a decision that requires careful planning and expert guidance. With the current market conditions in your favour, there’s no better time to take the first step towards selling your practice. Even if you’re not ready to sell immediately, now is the perfect opportunity to evaluate your practice’s position and identify areas for growth.
At DMC, we specialize in helping dentists navigate the complexities of selling their practices. With over a decade of experience in Ontario’s dental industry, we understand the nuances of valuation, legal compliance, and negotiation. We are able to facilitate creative solutions to help bring sellers and buyers together, like associate compensation incentives, vendor take-backs, and ongoing transition planning.
Ready to explore your options? Contact DMC to schedule a free consultation with one of our dental lawyers today. Together, we’ll help you uncover your practice’s true potential and chart a course for a successful sale.
