[EP 317] Why 2026 Is a Seller’s Market for Dental Practices

Note: this transcript was generated automatically, so it will contain errors. It’s here as an easy way to scan for anything relevant to you, not as a word-perfect record of the episode.

(0:00) Announcer: Ladies and gentlemen, are you ready? Okay, here we go. You’re listening to The Deal Room Podcast. Join us as we bring you the inside scoop on business sales and acquisitions. Get across trends in the area and hear the industry’s best recount their real-life tips, traps, and experiences. Now, here’s your host, Joanna Oakey.

(0:25) Joanna Oakey: Hi, it’s Joanna Oakey here and welcome back to The Deal Room Podcast, a podcast proudly brought to you by our commercial legal practice, Aspect Legal. Now, in this episode, I am talking with Carl Burroughs from Professional Practice Sales. Carl’s been buying, building, and selling dental practices for more than 25 years. And today, we get really practical covering the state of the market right now, what the corporate wave means for sellers and why timing your exit matters more than most people realize. We’ve also put together a free practice sale readiness checklist to help start planning your exit if you have a dental practice and are looking at exit at some point soon. If you’re interested in that, just grab it in the show notes link. But for now, there’s a lot to get through in this episode, so let’s dive right in. Carl, welcome to the Deal Room Podcast. It is always a pleasure to have you on the podcast with us.

(1:29) Carl Burroughs: Thank you for the invite. It’s always a pleasure to be here.

(1:32) Joanna Oakey: Wonderful. All right. So a few things have changed in the dental practice ownership market, I think, since our last podcast. And for any of you who missed those last podcasts, we’ll put a bit of a link through in our show notes to those. But why don’t we kick off with where the market is right now? Now, I guess, and I guess to pre-frame these, we’ve known each other now for around about, I think it’s about 25 years. So that’s a quarter of a century. So we’ve seen a few changes in the dental industry in that time. But maybe we even traverse a little bit the biggest changes. We’ve seen corporates come in and then we’ve seen a bit of a tide turn of the way the corporates have worked here in Australia in the acquisition. And, of course, there’s been changes over time for individual dental practices too. Why don’t you give us a snapshot from your perspective?

(2:32) Carl Burroughs: Well, look, since we’ve met, there’s certainly been a huge amount of change. I mean, we went through the GFC together, which was a big change. We’ve seen different legislation change. I think probably in recent years, the biggest change was through COVID and practices have been heavily affected by Both the loss of staff, but also the morale of staff. And I don’t necessarily think the morale of staff is linked to COVID. I think it’s just a point in time where, you know, a younger generation has different aspirations to, say, my generation. And uh so that was that’s been a very big change um in terms of um how a practice operates um but you know underlyingly um everybody needs dentistry and that’s not really going away the the peaks and troughs in dentistry tend to be driven by sort of trends uh we had a lot of cosmetic dentistry happening before the gfc and when the gfc hits cosmetic dentistry literally just disappeared, With the exception of people in the media. And more recently, we’re seeing the profession pivot towards a lot of implants, and that’s happening. A lot of people are accessing their superannuation to go ahead with quite substantial dentistry. That’s a current trend. However, you believe whether it’s good, bad, or indifferent, but it’s happening, and there’s a lot of marketing so yes it’s um the you know it goes in cycles but general dentistry stays as a baseline we tend to all go and see our dentist at least uh once a year and that’s where you know where most of dentistry uh comes from

(4:30) Joanna Oakey: And so, if we’re looking then at the market from the perspective of sales and acquisitions, do you feel right now it’s a buyer’s market? Is it a seller’s market? Or is it something more complicated in 2026?

(4:47) Carl Burroughs: Well, look, it is a little bit complicated because we’ve got a lot of things going on. But the two major trends that are happening is we’re moving into a phase where there’s a lot of dental practice owners who are now into their 60s so that would probably tell us there’s going to be a lot of practices wanting to sell in the next 10 years let’s say 10 years so about 50 percent of all practices are owned now by private practices not not um corporate practices private practices, about 50% are owned by people in their 60s. So that’s going to be a huge amount of stock coming into the marketplace in the next five to 10 years. The other trend is younger dentists are still buying practices, but they tend to be buying them a little bit later. So a lot of dentists would have bought their practice in their 20s or started a practice in their 20s, going back, you know, a few decades. That tends to be now much more into their late 30s. So they’re getting more experience. They are possibly, You know, more conservative when it comes to entrepreneurialism. It’s taking them longer to move into practice ownership. But ultimately, they are moving into practice ownership just a little bit later in life. So those two things will definitely have an impact. At the moment, there’s a distinct lack of practices for sale. So at the moment, there’s probably only 150 practices in Australia that are actually openly on the market. We have well over 8,000 practices in Australia that are in private hands. So that’s a very small percentage. So I would probably, to condense that, I’d probably say that it’s a seller’s market right now.

(6:46) Joanna Oakey: Isn’t that interesting? And I sort of touched earlier on the fact that I guess the corporates as a whole were a bit of a brand new concept when we started working together. But we’re watching sort of parts of that wave reverse. What do you think that means for sellers then? Yeah.

(7:06) Carl Burroughs: Well, the corporates have sort of steadied. I mean, I was part of one of the very first ones, which was called Dental Partners back in 2007. And together with Dental Partners, Dental Corporation also launched in 2007. And they were the two major corporates that came into the marketplace. Since then, we’ve seen a lot more move into the market. But they’re steady and what’s happened is a lot of the the bugs have been ironed out so some of the corporates got in you know pretty much For just reasons of greed and they didn’t really think it through in terms of who their customer is when you read a prospectus and there isn’t the word patient in that prospectus you know that they’ve got their modeling wrong. So dentistry is about looking after the patients and it has to be about that as the first and foremost principle. But we’ve been through a lot of this now. So corporates have come and gone and they’ve consolidated and some have bought each other and all of that has now happened. So we’re now much more of a level playing field. And I feel that the corporates that are actually currently buying, which there’s only probably about four that are actually acquiring right now. I feel that they’re all established and they’ve got good ethics and they’re doing the right thing by the patient first and foremost through the dentist, but they’re looking after the dentist as well. So I think the corporates are actually quite a good option now for people looking to exit. As long as they’re prepared to stay on, and this is the big driver, anybody who needs to sell and needs to sell in the next 12 months, very rarely is a corporate transaction going to be successful for them. But if they’re planning their exit in the next four or five years, then the corporates who are currently acquiring, they’re not a bad option.

(9:19) Joanna Oakey: It’s a really good point that you make. And I guess, you know, being aware of the period of time that you want to build for your runway for exit, particularly in light of some of the things you were talking about earlier about this, you know, this wave of practice owners coming up to retirement age. Actually, I had an earlier conversation with someone. You’ve probably heard this term, but I thought this was fabulous, new to me. The silver tsunami. I thought that was a good, I love that. But anyway, I guess like, you know, this really connects with if we’ve got a wave of businesses that are going to come up to the point of exit. But also it’s very important for us to realize or for someone who’s thinking of exit in the future to realize that some of the best buyers or, the buyers who might be willing to pay the most also will require them to be in the practice. For a particular period of time. There’s a lot there for, I think, dental practice owners to maybe think about in terms of how they’re timing their run for exit. Is that what you’re talking to the market about at the moment?

(10:33) Carl Burroughs: Look, absolutely. And I think when you think about what a seller is looking for, it’s multifaceted. And so everybody really sort of concentrates on the money. And look, the money is important. I mean, generally, it’s a retirement plan. Generally, it’s the end of decades of really hard work. So, you know, as a broker, I want to get the very best deal for my clients, but it’s only one of the outcomes. So if somebody gets the very best price, but then he’s married into a very unhappy relationship for five years, five years at the sort of end of your working career is a long period of time to be unhappy. And therefore, you know, that may not be the best overall result. Selling to a private buyer, you may get less, but you also may get a much more enjoyable environment. You know, the whole collegiate idea of maybe being able to mentor somebody for a few years, that can be very rewarding. So I think it boils down to the individual aspirations of the seller. And trying to find the best result for them. Price being obviously a driver, but not necessarily the main driver. There’s other aspects to consider.

(11:57) Joanna Oakey: Yeah. Well, and actually that rounds up to a point I wanted to talk about. In the past, you’ve talked about the associates as being a potentially great buyer of dental practices. Maybe talk us through that. What’s your thinking there?

(12:15) Carl Burroughs: Well, look, I think the associates, not just in dental, but across all professional practices, is the ideal buyer because the client, in the case of a dental practice, the patient really doesn’t see any changes. They’re not going to see a new shiny sign outside with a corporate name on it, such as Bupa or anything else. They’re just going to see its business as normal. And the seller is probably going to wind back from, you know, four days to three days to two days to none. So there really isn’t anything that’s particularly obvious. So from a patient customer point of view, it’s the ideal situation. Um, for the, for the vendor, the seller, it’s a very comfortable situation because they know who they’re dealing with. They probably worked next to this person for you know upwards of two to three years and beyond so that’s that all makes perfect sense the downside is very often that the associate feels that they’ve built the business and therefore they feel they need a significant discount so they will say well you You know, your business, if it’s, let’s say it’s doing $2 million a year and the associate is doing $800,000 a year, they’re saying that $800,000 of revenue is due to me. And that’s foolish because it’s not. They’ve been paid handsomely for that revenue. The owner has taken all the risk. The owner has paid their superannuation. The owner has paid for all the equipment. But the associate sees that they’ve built the business and therefore they see that their revenue is part of that and they often discount the value of the business accordingly, even though they’ve been paid for it. It’s a very common thing to bump into. Yeah. So very often the associate is not prepared to pay market value. Now, I would argue that given the benefits of selling to the associate, you know, a discount is totally appropriate, but probably no more than 10%. You know, 10% discount alleviates, you know, broker fees. It can reduce legal fees as well. All of those things can really help, but any more than about 10% discount on the market value, you probably need to go to market.

(14:52) Joanna Oakey: Yeah, and it’s a good point. You know, certainly, when we’re in due diligence, an associate purchasing who understands the practice becomes a lot easier in terms of a buyer to deal with, not just in due diligence in the contract phase as well. But of course, financing can often be a lot trickier when we’re dealing with, an employee or an associate buy-in. And I guess actually there’s also a lot of structuring things to think about because the way that quite often works is sometimes, often, it’s not a full sell-down in that instance, like it might be to a third-party buyer. It’s a sell-down over time. And then we have to think about, well, you know, how will we run the business together when you’re both holding equity together and what does that ultimate exit look like? Are there any other things that you sort of are talking to your practice owners about to think about as that? Obviously, you talked about the, you know, the positives, but also, you know, the other considerations. But are there any things that are good for a practice owner to think about as they lead into potentially having this discussion with their associates?

(16:05) Carl Burroughs: Yeah, look, I think I’m in the process with a veteran practice right now whereby the associates are very interested in buying, but they’re not anywhere close to market value. We’ve gone to market and we’re now getting interest in that practice from the market and it’s pulling the associates up because they’re now seeing that, well, hey, we are getting offers at a much higher rate than they’re at. So it’s giving them the confidence to actually pay a little bit more because they know that if it doesn’t work out, they’re going to actually be able to sell the practice themselves. Creating a little bit of competitive tension is actually a very good thing to do. And it also just justifies everything. And so if those buyers end up with a discount, they’re actually going to value that discount because they’re going to go, well, we could have sold at this. We’ve decided to sell to you for less. If you went to market tomorrow, let’s say something happened in your life whereby you had to sell the practice, you’re actually going to see an uplift because we have offers at a high amount. So going to market is probably a good thing to do whether you end up selling it to your associates or not. It sort of proves the case. And that could be something that people want to consider as well.

(17:31) Joanna Oakey: Well, I think you’re absolutely right because there’s always this element of, you know, even if you, you know, have the associate in mix, you end up selling to the associate. Just the reality for the associate, no one really understands what a business is worth, really. And there’s so many different valuation approaches, I guess. So just that having that competitive tension where someone can see, you know, the associate can see, well, this is, you know, this is what this value, what this asset is worth right now. And also for them themselves in building themselves for an exit. I think it’s just such a sensible idea because I’ve actually seen both in dental and in veterinary, you were talking about veterinary a moment ago. I’ve seen this play out a few times recently, actually, where the associates have been the first port of call. Actually, I recently started in an accounting practice. So this actually is relevant to many sort of types of industries. Where, you know, the employees or the associates have been tagged as the successor, the succession plan. But then it comes to the point, you know, what you’re dealing with is someone who’s never been in business before. So there’s this business sort of literacy and sophistication, but also they’ve never been in a transaction before. So it can be a very, very, very slow moving transaction if there’s not something else that is, you know, that competitive tension or something else that’s helping to push the timeline along. And I’ve certainly seen these timelines go on forever and ever when we’ve got people who are keen on buying, but inexperienced both in business and in the acquisition process.

(19:21) Carl Burroughs: Absolutely. And I think because, you know, again, people sell at different stages of their career but let’s say generally most sales are happening towards the end of the career and move people moving into retirement um you know in the professions you know honestly 95 of the people i deal with are really ethical lovely human beings and then you’ve So they feel loyal to their staff. They really don’t want anything to happen to their staff. They feel loyal to their associates. But you have to put a value on that because at the end of the day, you can only sell something once. And that loyalty, particularly today in 2026, that loyalty isn’t necessarily a two-way street. We know employees have a shifted mentality to a few decades ago. So they’re more self-centered and more about their own lives. So that level of loyalty can be sometimes, you know, sort of Heightened to a higher degree. And I think it’s nice to look after everybody, but not at the complete expense of your own retirement or your own exit strategy. And that needs to be taken in place. Now, as I say, selling to associates is fantastic. There’s a continuation you can do things like vendor finance that you mentioned finance before you know very often you could probably lend 10-15% back to the associates to help them get their finance that will probably be quite pragmatic to do so that makes the transaction easier the staff all know who they’re working for so all of that is lovely but you really do have to put a value on that and how much you prepare to discount or lose in the process other than you can just go off to another buyer and get full tilt and, you know, that may enhance your life.

(21:29) Joanna Oakey: And so I guess from a very practical perspective for our practice owners listening, if they’ve got a great associate, what should they start doing today and how early should they be opening that conversation at.

(21:45) Carl Burroughs: Um, I think, you know, having, it’s very personal. So it depends on who the associate is, but generally there’s an age issue. So that’s relatively obvious. So to say to an associate, look, I’ve just turned 60, uh, you know, I see myself, you know, not working past 65 or whatever the age might be is, is quite a practical conversation. So you could sow the seed early. You could sow it a lot earlier than that. So you could say, you know, 10 years earlier and say, well, look, you know, what’s your long-term ambitions? My long-term ambition is, you know, I’m going to sell up at some point and, you know, move into retirement. In terms of organizing the business, that doesn’t actually change. Most businesses are not clean enough to sell at the point of wanting to go to market. And that’s a mistake. You know, we should always be grooming our businesses for sale, whether we have any intention to sell or not. Having the accounts in order, you know, having everything tidy, having things well organized is never a bad principle. So having that all, you know, organized, ready for market is a good thing. Um, even on an annual basis, being able to review with your advisors and sit down and say, well, what is my business worth? Um, having your accounts particularly in order really helps that. Um, it’s, it’s not particularly difficult. It’s not particularly time consuming, but it does give you a level of security that you say, well, hey, if something changes, I probably could get this for the, uh, for my business.

(23:26) Joanna Oakey: Hmm. It’s interesting, isn’t it? Because I feel like we’ve been having almost this exact discussion for decades, Carl, the importance of being ready for market before you head to market, being ready for the process. But so many sellers just don’t, I just find sellers just don’t want to think about exit until they’re at the doorstep of, okay, I want to sell tomorrow. Is that what you see when you talk to, I mean, you’re talking to a lot of practice owners right now who are actually at that doorstep, but how do we get, business owners, dental practice owners to start thinking about this earlier?

(24:17) Carl Burroughs: I’m not sure how we do that other than just through education, through things like today, your book, all of those things can really add to get people thinking that if you’re starting in business, you may have a calling, particularly in veterinary, you know, it’s very much a calling. Um they feel a real affinity with the uh the animals and and and that’s very admirable and but they’re also starting a business so when you start a business you really should have the end in mind whether that end is 40 years down the track uh it should be written into a business plan um you know it surprises me uh just how many small businesses don’t actually have a business plan Um you know i’ll write a business plan on a on the the cusp of an idea i’ll write the business plan because i want to see how that plays out and going through that that process really helps and very often when you go through that process you might go well this just isn’t lucrative enough or it may doesn’t doesn’t sit with my other values for whatever reason so you know writing Creating a business plan is a great start. Actually, the template I use is, and I don’t often compliment anything that’s government-driven, but the template I use is a New South Wales government business plan template, which you can just get off the internet. And it’s sensational. It really just leads you through step by step, You know, every aspect to writing a business plan. And so that’s my usually my starting point. And I would encourage anybody listening, if you don’t have a business plan, doesn’t matter if you’re halfway through your business, if you’ve only got another two years left, or you’re right at the beginning, write a business plan, it will really consolidate your thinking, you know, on certain aspects of what you do. Things that you think you know about, values that you think you have, writing it down just consolidates that and you may revise your view on certain aspects in the process.

(26:30) Joanna Oakey: Love it. And I guess the one other thing, if you’re within, let’s say, five years of thinking about a sale, make sure you’re engaging, your broker, Carl, and your lawyers and your accountants early to get yourself ready in advance. I think that’s the other thing.

(26:46) Carl Burroughs: Absolutely. And particularly if you’re in the higher bracket, you know, let’s say with a dental practice, you know, a million dollars of revenue and above, then you really do need to consider, are you going to sell to one of the corporations? The corporations pay a premium. In many respects, You’re only actually getting your money in advance because if they pay a premium, but they ask you to stay for five years, well, you know, you’re just getting five years earnings sort of earlier. You would have kept that money if you’d kept the practice, but you still need to exit at some point. Um, but knowing that they’re going to ask you to probably stay on, uh, for a period of time, getting prepared for that early is really important. Um, and also engaging with them early. So, you know, let’s say you, you classically want to, you know, hang up the, uh, the drill at 65. Um, well, let’s start talking to them in your late fifties, um, because you know that you’re going to have that period of time to maximize your return. And as much as there’s been some terrible cases within corporate dentistry, less so in veterinary, by the way, there’s been some wonderful cases. I’ve got clients who’ve sold twice. They’ve sold to one of the groups. They’ve gone back out into private practice. They’ve sold again. I’ve got one particular client in Melbourne who has re-signed to keep working for the same corporate twice and they’ve got a bonus every five years by re-signing and they couldn’t be happier. They haven’t got the responsibility of running the practice, they’re getting paid well, they’re reducing their hours over a period of time and they’ve had two quite significant bonuses by signing on again. So there’s upside to these things. But you mentioned before, early engagement preparation is very, very important. So you can’t start the process too early, you could be 10 years out, and it would still be appropriate.

(28:57) Joanna Oakey: Well, I hear another podcast episode in this, Carl, getting your practice ready, for a successful sale. So I think we’d better come back and in another episode, maybe we should walk through that in more detail. But for now, I just want to say a huge thank you, Carl. What a great run through. Catching up to date with where the dental industry is right now. It’s been a pleasure as always having you on the show. Any parting thoughts for our listeners?

(29:28) Carl Burroughs: Well first of all thank you for having me on it is always a pleasure we have known each other an incredible uh length of time you must have qualified at the age of 12 um for us to know each other for this period of time um uh passing thoughts yeah just just don’t be shy to talk to your advisors um it costs nothing and um if you you’re relaxing on a sunday afternoon and you have the thought of where you might be in five years or 10 years, spread that thought, talk to your advisors, get some input. I say most advisors are very generous because they know that it’s going to come back to them at some point. And, you know, it’s good to be thinking about these things. You know, we all have a future beyond our businesses, hopefully. And, you know, that It should be something that you plan in detail to get the very best outcome.

(30:26) Joanna Oakey: Absolutely. Well, Carl, once again, thank you so much for joining us on the Deal Room podcast.

(30:33) Carl Burroughs: Very welcome.

(30:34) Joanna Oakey: Well, that’s it for this episode of The Deal Room Podcast. If you enjoyed this one, make sure you subscribe so you never miss an episode. We’ve also put together a free practice sale readiness checklist to help you start planning your exit. So grab it via the link in the show notes. And make sure you also check out part two of this two-part series with Carl, where we get into the practical side of getting transaction ready. To book a call with Carl directly, email carl at practicesales.com.au or to book a call with our Legal Eagles at Aspect Legal, head to aspectlegal.com.au and both of these are in the show notes. Well, that’s it. Thanks again for listening in. You’ve been listening to Joanna Oakey and the Deal Room Podcast, a podcast proudly brought to you by our commercial legal practice, Aspect Legal. See you next time.

(31:28) Announcer: Ladies and gentlemen.