Steve Darbon outlines the benefits of developing a portfolio of dental practices and what you need to think about if you are considering this growth path.
Some buyers have plans from an early stage of ownership to establish themselves as multi-site owners of the future, with varying ambitions around local, regional or even nationwide presence and scale.
This ambition commonly evolves through the acquisition and ownership of an initial single- or dual-site first-time purchase, where the initial successes fuel the appetite for further growth.
There is also a very wide pool of regional independent smaller group operators, some of which have specific or select plans and targets for growth. The scale has often evolved in a short- to mid-term timeframe, with a cohesive plan for volume, geography, patient profile and clinical services, as well as common synergies across existing operations and ownership.
Small-scale centralised head office or management functions are also sometimes evolving to support wider operations.
Select the right plan
Other independent regional operators include those whose growth (often over a much longer period) might have been more coincidental to circumstance and opportunity, rather than specific planning. Future acquisitions will often be made to ‘round off’ regional geography, perhaps to enhance clinical offerings, or indeed to supplement future revenues through a wider variety of services and patient reach, and commonly in easy ‘owner accessible’ geographic locations.
There are also more significant larger group operators, as well as corporate entities, often with wider regional or national ownership profiles, and there is commonly a structured, focused and targeted acquisition strategy for expansion.
Centralised head office functions are likely to exist that offer a variety of support and administration functions to the wider group at a practice level. These are often developed with a clear clinical focus and ethos, as well as in the type of dentistry and services provided with future target practice profiles for acquisition, which are often key to what will suit the wider operational group.
Typically, there is a strategic growth plan, delivered through a dedicated mergers and acquisitions team.
Common benefits
At whatever scale of operation – and outside of the clear benefits in what is likely to be greater value realisation from enhanced revenue and profitability volume being delivered across multi-site ownership – there are often common benefits that can be found across those differing scales of ownership pools:
- Clinical focus and culture are common traits where the synergies in multiple ownership, as well as a focused direction of travel in that regard, can assist in maintaining the clinical ethos and consistency across the operation
- Depending on scale and volume, benefits might also be realised through efficiencies of scale. Reductions in cost margins can often be found in areas such as labs, materials and ‘specialist materials’ providers. Service suppliers, which might include equipment maintenance and a variety of property services, may also see proportionate marginal efficiencies
- Benefits of streamlining supporting functions such as IT/digitisation, financial accounting and marketing/websites are also often seen. Centralised and remote systems may reduce the requirement for multiple single-site deployments and overheads that can be managed from a single source. Areas such as HR, payroll and compliance often fall within this category, too
- Outside of operational benefits, access to resources to assist in future growth may also be realised. This can include financial resourcing/funding and investment for future growth and where the platform to date has a proven track record and thereby becomes attractive for secure future investment to support further growth.
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