ACQUISITION:

Refers to the act of purchasing or acquiring a business entity, either by an individual or another business entity.  In this case, acquisition is used specifically to describe DSO's strategic process of purchasing or partnering with dental groups to merge them onto their platforms for greater efficiencies and economy of scale.

 

ADJUSTED EBITDA:

This term describes the calculated actual profitability of your Practice, utilizing your initial EBITDA (see below for definition) number and making adjustments to remove expenses that are not typical.  These expenses may be one-time occurring, such as a major roof repair or a consultant expense for a specific project; or the expenses may be recurring but not ongoing true business expenses, such as owner related expenses (cell phones, car lease, personal life insurance, event tickets), payroll adjustments, debt forgiveness, and related party transactions.  Adjusting for these expense line items may significantly increase the Adjusted EBITDA, resulting in a higher valuation and purchase price for your Practice.

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DUE DILIGENCE:

Due Diligence is the intensive process that a prospective buyer undertakes to confirm the underlying financial, legal, and logistical details that support the Adjusted EBITDA and the details of your Practice's assets and liabilities.  The due diligence process commences after an LOI (Letter of Intent) is signed by both parties and can take 30-120 days to complete, depending on the size of your Practice.  Examples of documentation that are reviewed by the prospective buyer include tax returns, P&L's, employee census, vendor contracts, lease contracts, history of tax payments, details of mortgages and business loans, equipment leases, provider contracts, and more. 

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EBITDA:

The acronym stands for Earnings Before Interest, Taxes, Depreciation, and Amortization.  This metric is the basis for determining the profitability of your Practice and directly impacts the purchase price.  An in-depth and accurate analysis of your Practice's financials to determine EBITDA and Adjusted EBITDA are the critical first steps in the mergers and acquisitions (M&A) process.

 

INTEGRATION:

The period of time immediately following the business sale closing when the business side administrative tasks and processes are shifted to the DSO platform.  The integration process can take 90-120 days to complete and is supported by the DSO integration team for transition success.

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MERGER:

In the context of the current M&A trend in healthcare and dentistry, merger most commonly refers to the process of shifting a practice's non-clinical business side management (including HR, payroll, hiring, accounts payable, marketing, and other administrative responsibilities) on to the existing administrative platforms of a DSO or other healthcare management organization.

 

VALUATION PROCESS:

The Valuation Process is the step following your decision to engage a healthcare M&A professional, such as Island Coast Advisors.  During this process, we spend time working directly with you to gather information on your offices, your providers, your team, your philosophy, your goals, your legacy, your community, your referrals, your treatment process and scope, and your key financial and business performance reports.  With this information, we are able to provide you with valuable information on your Key Performance Indicators (KPI), your profitability, and the anticipated value of your practice holdings.