Hot News on Dental Deal Financing
International Business Brokers Association (IBBA) Panel
Dental Network Group member Bob Brooks recently moderated a panel of three of the nation’s largest practice loan acquisition lenders on a webinar hosted by the International Business Brokers Association (IBBA). The panelists addressed how the pandemic has affected dental practice acquisition and dental lending in general.
Panelists from Wells Fargo, Lendeavor and Live Oak Bank shared how business is mostly back to normal for them with a few exceptions:
Borrowers now need to complete a Covid specific form.
Borrowers’ liquidity requirements have increased with some lenders. One presenter said that his company’s liquidity requirement has gone from 3% to 5%, still a low percentage.
Before funding loans, lenders prefer to see practices reach production levels at or above pre-Covid levels with corresponding collections numbers a month or two later. If practices are producing over 100% of normal, lenders like to see where production and collections will end up after practices get caught up with patient appointments.
The bottom line is that lending does not appear to be a limiting factor for dental practice acquisitions nor for new start-ups. More likely, borrower attitude is the most significant factor affecting the transition of practices to new ownership and affecting new start-ups. Use of seller carryback and earnouts in practice transactions has been rare in the past and to date has not appreciably increased as a result of Covid.
SUMMARY
Borrower attitude is the most significant factor affecting the transition of practices to new ownership and affecting new start-ups.
DNG member Bob Brooks, with Practice Endeavors, assists dental practitioners who want to purchase, start-up , sell, and relocate dental practices. He is a Certified Business Intermediary through the IBBA and a licensed real estate broker in the state of Ohio specializing in dentistry.
ADA Health Policy Institute Tracking Poll
The COVID-19 pandemic is unprecedented. To better understand the impact on dental practices, the ADA Health Policy Institute launched an innovative tracking poll. For the initial wave over the week of March 23, 2020, nearly 70,000 dentists from across the U.S. were invited to participate in the poll, with over 19,000 responses received. Dentists were also invited to join a panel in which they complete a survey every other week; over 13,000 have opted to participate.
Below is one summary graph from this study, featuring time series for the weeks of March 23, April 6, April 20, May 4, May 18, June 1, and June 15. The full report, with breakouts by practice size, DSO, and state can be found here.
