The Canadian practice marketplace has been described as a seller’s market for decades. Generally speaking, that’s still true. The ratio of associate dentists to practice owners continues to grow, and there is no shortage of dentists who identify themselves as buyers.
But there exists a ceiling of value for every practice, and that ceiling is not influenced by the number of buyers in the marketplace. It is influenced by cash flow, perceived risk, and future opportunity. And by future opportunity, I mean actual opportunity—not the gloriously optimistic valuation scenario where no patient ever leaves the practice and profit skyrockets after the transition.
Lender scrutiny is at an all-time high, which is an important detail when virtually every acquisition is financed by a bank. Add to that the reality that buyer risk tolerance appears to be at an all-time low, and decisive action from some buyers often requires defibrillation.
The marketplace is saturated with dentists we call “buyers.” What it isn’t saturated with is authentic buyers.
An authentic buyer understands value, cash flow, and how to interpret an appraisal. They have a qualified lender on side who understands their goals and has already crunched some numbers. They have an accountant and lawyer who know dentistry. Most importantly, they possess the confidence to proceed when the right opportunity presents itself. Authentic buyers are excited about an opportunity rather than terrified of the possibility of failure.
That type of buyer is vastly outnumbered by everyone else.
In reality, we’ve got three kinds of dentists who wear a nametag that says “Buyer.” It’s the same as a shopping mall.
First, there are the people walking through the mall looking in store windows. They’re curious about prices and curious about what’s for sale. Maybe they wonder what their own practice will be worth someday. Maybe they’re waiting for a too-good-to-be-true opportunity to appear. They’re interested, but they’re not committed.
Then there are the people who actually walk into the store. Their curiosity is deeper. They ask questions. They spend some time looking around. Maybe they’re serious and maybe they aren’t, but they’re certainly closer to being serious than the people standing outside the window.
Finally, there are the people who came to the mall intending to buy something. They know what they’re looking for. Their financing is organized. Their advisors are assembled. Their spouse is on board. They understand their numbers. They are prepared to act. They’re probably leaving a store with a purchase.
Serious buyers buy. Serious lookers look.
When I look at today’s marketplace, my experience is that perhaps 20% of dentists wearing a nametag that says “Buyer” are actually buyers.
Why does that matter?
Because many practice owners continue to believe that a seller’s market automatically translates into an easy sale. It doesn’t.
Great buyers compete aggressively for great practices.
Average practices compete aggressively for great buyers.
Those are two very different realities.
What this means is that having your practice ready for sale and attractive to the portion of the buyer pool that is truly capable of acquiring it requires more effort than it once did. Buyers are competing for outstanding practices, but sellers should also be competing to attract outstanding buyers if results matter.
The owners who achieve exceptional outcomes understand this years before they sell. They focus on business readiness. They reduce risk. They improve profitability. They increase attractiveness. They build practices that sophisticated buyers actually want to own.
And when you’ve absolutely nailed business readiness and attractiveness, even the window shoppers start stepping inside to compete.
