Author: Dr. Michael Karol, DDS | Dental Practice Transitions Specialist
We are joined by Dr. Michael Karol to discuss Maximizing Profit in Dental Practice Sales and more!
Having practiced clinical dentistry for over 26 years, Dr. Michael Karol is uniquely qualified to help you sell or buy your dental practice.
With his extensive experience in buying and selling several practices, as well as being a dental practice broker for 10 years, Dr. Karol has the expertise to guide you through the process.
Additionally, he has served as a clinical educator at NYU, Columbia, and the Yale Graduate Clinic, and has conducted numerous presentations and seminars on dental transitions.
Dr. Karol offers competitive commission rates, and free consultations (including in-office consultations), and does not charge buyers a fee when representing a seller in a transition.
Video Transcript
Patrick:
Hello everyone, welcome to another episode of The Dental Brief. I'm so excited for today's show. We have a doctor joining us on the program. Without further ado, Dr. Michael Karol. Let's start how we always do: tell us how you got involved in dentistry. How did you become a dentist?
Dr. Michael Karol:
Well, I had been following a science track through my educational training and decided that I was going to pursue this career. I found it to be interesting because it combines technical expertise, medical training, and also a business aspect if you're running your own practice. So it's a combination of a bunch of things.
Patrick:
So I know you're a practice broker. You help people with transitions, buying and selling practices, which is fantastic. But let's talk a little bit about how you got there. I know you bought and sold a few practices yourself as a dentist. What made you decide to get involved in transitions?
Dr. Michael Karol:
It was really by default. What happened is, unfortunately, I started having significant health issues involving my back and neck. A couple of fingers on my right hand began to go numb. I had to hire a practice broker to sell my own practice in kind of an emergency situation. They liked how I communicated with the prospective buyer, so they went ahead and hired me, and that's how I began my career.
Patrick:
And you're with U.S. Dental Practices, that's plural, USDentalPractices.com. In your travels, what are some of the struggles you're seeing dentists have when they're either selling or buying a practice? Let's take those separately. Let's start with buying a practice.
Dr. Michael Karol:
One thing I see is that many young dentists coming out of school are working in environments that aren't realistic compared to mainstream dentistry. In dental schools or corporate environments, they're practicing with every bell and whistle, basically in a spaceship. Then they see a normal office, one that's generating a good income, and they're underwhelmed.
That leads to unrealistic expectations. They overlook solid opportunities because the practice doesn't match their imagined ideal (see ADA, The State of the U.S. Dental Economy). And setting up a brand new office is extremely expensive due to the specialized plumbing and electrical needs.
Patrick:
And what about challenges for those selling a practice?
Dr. Michael Karol:
Most dentists make a plan to get in, but very few make a plan to get out. In my case, health issues created a crisis. But in many cases, when we talk to doctors ready to sell, they haven't thought through the transition. It's also a slow process, not like selling a house. You won't have someone walk in on a weekend and make an offer. Selling a practice typically takes six months minimum, and sometimes more than a year.
Patrick:
I'm getting calls from dentists whose practices have been listed for years, two, three, even four years, and they're good practices, just not in major metro areas. Are you seeing that too?
Dr. Michael Karol:
Yes, absolutely. Geography is key. If we're selling a practice in Manhattan, we may get several inquiries right away. But in Burlington, Vermont? It could take over a year. I worked with a practice in Western Massachusetts that took four years to sell.
Another issue is presentation. If you've been in the same office for 40 years and never replaced the carpet, repainted, or updated the technology, it becomes very hard to market. Sellers need to think ahead and prepare their offices to be delivered, so to speak.
Patrick:
Let's shift to buyers again. A lot of newer dentists want the high tech, modern office they're used to. But some of these practices, especially outside of cities, may not be as equipped. It's possible to add new tech and increase revenue, right?
Dr. Michael Karol:
Absolutely. Much like the seller, the buyer needs a life plan. Do you want to get married? Have a family? Settle in a suburb? We've seen great practices just outside of New York City, Westchester County, Fairfield County, where a young dentist can enjoy the city while planning a future in a suburban area.
Interestingly, demand has grown in these suburban regions because of the pandemic and concerns around city life. These areas offer excellent income potential, but it's a hard sell because dental schools don't teach the business side well.
Patrick:
Let's talk about major mistakes. What are three big mistakes that buyers make?
Dr. Michael Karol:
First, misaligned priorities. You've just graduated and you're not generating serious income yet, but you go out and buy a Porsche and a big house when you haven't stabilized your income stream. That's a major mistake.
Second, dismissing profitable practices just because they're not in your ideal location. Flexibility is key.
Third, looking only at what the practice is now, not what it could be. With upgrades, tech, aesthetics, you can dramatically improve a practice's potential.
Patrick:
What about sellers?
Dr. Michael Karol:
Number one: failure to plan. No exit strategy.
Number two: trying to sell on their own. They often get less for the practice.
Number three: emotional attachment. Sellers say things like, "My Florida patients come up every summer just to see me!" But the buyer hears, "I'm about to lose those patients." That's not reassuring.
Also, failing to reinvest in the practice, not updating the waiting room, carpeting, or equipment, makes it hard to sell.
Patrick:
It's all about curb appeal. Especially in a slower market with higher interest rates and less buyer demand. Dr. Karol, for those looking to buy or sell a practice, how should they vet a broker? There are a lot of people out there. How do you know who to trust?
Dr. Michael Karol:
Great question. Our tagline is Custom Managed Transitions for Dentists, by Dentists. Our team includes mostly retired or practicing dentists. You don't just get me, you get our full team's expertise, and we work together, not in competition.
Second, we only work with practices we've physically visited. I won't list a practice unless I've been there and met the doctor. That's important to us.
Third, we build relationships. Sometimes, we'll do an evaluation for a dentist who's not ready to sell, and three years later they come back, and we honor that original evaluation for up to five years. We charge $1,500 for it, and if they return, we update it at no extra cost.
Lastly, we don't charge buyers. Buyers are usually tight on funds. We believe the seller, who benefits financially from the deal, should cover our fee. And we support both parties throughout the entire process, beginning to end.
Patrick:
That's great. Dr. Karol, thanks so much for being here. One last thing, what's the best way for people to get in touch?
Dr. Michael Karol:
You can visit our site at USDentalPractices.com.
Patrick:
Got it. Dr. Karol, thank you again for coming on the show. We really appreciate it.