In the November 2013 News Bulletin, I discussed at length the challenges facing the dental profession in Australia with a specific focus on the increased number of dental graduates from Australian universities and the affect this would potentially have on competition within the dental profession. My conclusions then are much the same as they are now – there will be increased competition in the dental profession and it will become increasingly important in terms of practice success and sustainability how you differentiate yourself from your peers. Differentiation will also be key to both the successful sale and purchase of a good practice.
With increased competition in the market, the Keynesian rules of supply and demand follow that with increased demand, unless supply can match this increase in demand, prices will go up. These basic rules have existed since time immemorial. There are less practices for sale today than five years ago. Practices that are for sale are asking a premium over what they were five years ago. Whilst practice supply has marginally decreased with the entrance of the corporates in the space (marginally as the corporates have mostly been acquiring large top end and specialist practices which were beyond the reach of most purchasers), demand has increased substantially during this period. Ergo the equation tells us price will also increase. But is price the only determining factor in the successful acquisition of a practice?