Associate or partnership track? How to decide in your first five years

Almost every dentist we talk to says some version of "I'd like to own something eventually." Almost none of them has been told what that actually involves. Here's the version we give on the phone.

Three routes to owning a practice

• Buy in to the practice you work at. The most common route and usually the least risky, because you already know the patients, the staff and the numbers. The owner sells you a share, often over several years, and you share profit in proportion.
• Buy a practice outright. A retiring dentist sells, a bank finances it, and you own it on day one. Higher reward, higher stress, and you need to be ready to run a business, not just treat patients.
• Start from scratch. Rare now, expensive, and slow to reach profitability. Usually the wrong first move unless there's genuinely no practice to buy where you want to live.

Rural and small-city markets have more of the first two than big metros do, because more owners are near retirement and fewer young dentists are competing for each one. That's a large part of why we work in Maine.

What a partnership path looks like when it's real

A real path has dates and numbers. A typical honest version:

1. You join as an associate on a guarantee against percentage.
2. At a fixed point, often 18 to 24 months, both sides review whether a buy-in makes sense.
3. The practice is valued by an outside appraiser using a method agreed in advance.
4. You buy a defined percentage, financed by a bank loan, seller financing, or a mix.
5. Your compensation shifts from a percentage of your own collections to a share of practice profit, plus a salary for your clinical work.

If any of those five steps is "we'll see," treat the partnership as a possibility rather than a plan, and price the job as an associate job.

How practices are valued

You'll hear three methods. Ask which one applies.

• A multiple of collections. Somewhere around 60 to 80 percent of annual collections is a common range for general practices, varying with profitability and location.
• A multiple of profit (EBITDA). More precise, and what buyers of larger practices use. Make sure "profit" is calculated after a fair salary for the dentists, not before.
• Asset-based. Equipment, supplies and goodwill totaled up. Usually produces the lowest number and is more common for small or struggling practices.

The method is negotiable. The point of agreeing it early is to stop the number moving after you've spent two years building the practice's value.

Financing a buy-in

Dental practice lending is a specialty, and most large banks and several dental-specific lenders do it. Lenders generally like dentists because practices rarely fail. What they look at: your production history, the practice's cash flow, your student debt, and whether the purchase price matches an independent valuation. Seller financing, where the owner takes payments over time, is common for partial buy-ins and keeps the owner motivated to help you succeed.

The questions to ask an owner who says "path to partnership"

• When, specifically, does the buy-in conversation happen?
• What percentage would be available, and would more become available later?
• How will the practice be valued, and who does the valuation?
• What happened with the last associate you discussed this with?
• How are decisions made now, and how would that change with a partner?
• What does your own exit look like, and on what timeline?

Vague answers aren't a red flag by themselves. Plenty of owners genuinely haven't thought it through. But it tells you the partnership isn't a reason to take a lower offer today.

What we do

When a Maine practice tells us there's a partnership path, we ask these questions before we introduce anyone, and we tell you what we heard. If the owner says "not for years," we'll tell you that too. There's no fee to you at any point.