The outside world seems to be combusting nowadays: Countries are engaged in tariff wars. Stock markets are extremely volatile. Conflict rages on in Ukraine and the Middle East. Global climate change impacts our daily lives. AI is sparking ethical debates. We’re in the midst of a very close federal election. Residential real estate sales across Canada are slowing. And there’s a measles outbreak in Ontario.
Yeesh.
And if you’re thinking of selling, macro factors like these definitely impact the price and terms you get.
But don’t be unnerved: while certain things may seem to be beyond your control, other things are totally within it. Knowing what buyers are looking for is important. And so is having an experienced team (i.e. dental lawyer and accountant) guide you through the sale process. This will help you get the best deal possible. And irrespective of what’s happening out there and what you do end up getting during these uncertain times, focusing on your inner peace at all times is paramount.
Macro: The good
The downward interest rate trajectory is helping to keep practice values stable. The Bank of Canada’s overnight lending rate (the rate that it lends to Canada’s big commercial banks and which impacts what they loan money to their clients at) has come down quite a bit – from 5.00% in June 2024 to 2.75% at present.[1] Although the Bank of Canada just decided to hold the rate at 2.75% – citing a mixed bag of weakened inflation amid uncertainty surrounding ongoing trade wars[2] – there are expectations of further rate cuts for 2025 to help keep the economy stimulated.
When interest rates drop, money becomes cheaper to borrow, giving practice owners breathing room to invest in equipment, marketing, and hiring or keeping key team members. It also increases the value of dental practices since buyers will pay less interest each month to the bank and so will have more cash flow available.
Proposed tax law changes also favour selling dentists.
Federal Liberal Party Leader Mark Carney promised, if elected, to increase the lifetime capital gains exemption to $1.25-million;[3] this would allow selling dentists to avoid paying capital gains tax on up to $1.25-million of purchase price when they go to sell the shares of their dentistry professional corporation. And if their corporation is set up properly and rigorous tests are met, selling dentists can multiply this tax benefit through family members to save even more.
Meanwhile, Federal Conservative Party of Canada Leader Pierre Poilievre promised that, if elected, small business owners would get to use their lifetime capital gains exemption plus would receive a new tax credit to avoid paying capital gains tax if they reinvest the proceeds in Canada; this would apply on capital gains realized from July 2025 until the end of 2026, but could be a permanent fixture if it causes a major economic boom.[4]
Macro: The bad and ugly
Inflation – as measured by comparing, through time, the cost of a fixed basket of goods and services (called the consumer price index) – went from 1.9% in January 2025 to 2.3% in March 2025.[5] When things become more expensive, patients will use their limited discretionary income to prioritize paying for their grocery, auto and home bills instead of fixing their smile.
Tariffs and trade wars have also driven consumer confidence to record lows.[6] Will the economy go into a recession because of a global trade war? Will patients have jobs (and with dental benefits)? How will the incoming federal political party address these macro factors? Economic and political uncertainty can cause market participants to hold off on making big purchase and sale decisions (like a dental practice), choosing rather to wait out the economic storm.
Meanwhile, minimum wage is going up again in Ontario this October 2025 from $17.20 / hour to $17.60 / hour.[7] This puts pressure on dentists (and business owners who are patients too!) to pay higher wages across the board. The unemployment rate has trended upwards from 5.0% in March 2023 to 6.7% in March 2025.[8] Patients with less money because of rising labour costs and patients without jobs (and dental benefits) are less likely to visit the dentist or accept (read: expensive) treatment plans.
Micro: Show me the money!
In any economy, practices with great micro metrics will always sell for a great price and terms. Average and below-average performing practices will get hit the hardest when macro and micro factors are pitted against them.
Most dentist buyers today typically want: at least 3-4 operatories on the ground floor with free parking and great signage, newer equipment (including digital x-rays and pan), a solid lease or property being sold alongside the practice, up-to-date team contracts in place, a solid hygiene practice (e.g. 40% of overall production), lots of referrals being sent out, lots of active patients who’ve attended the practice for some kind of treatment in the last 12 months (e.g. at least 1000-1500 for a 3 or 4 op and 2000-3000 for a 5 or 6 op), paperless charts, the dentist taking lots of time off, more operatories / treatments / days and hours to add to grow the practice, and new residential developments happening nearby, etc.
Buyers want to be able to repay the bank (which will finance the purchase at 100% of appraised and more, depending on the buyer), take home a comfortable amount, and repay the loan sooner than the typical 12-year bank loan amortization period. So the seller’s best and final year must be the buyer’s first and worst year financially; for the buyer to offer the best price and terms, they must believe they’ll make more money with the practice than the seller ever did.
Micro: Lawyer up to save
Having an experienced team of dental professionals can help selling dentists save hundreds of thousands of dollars.
Dealing with demolition clauses are one such example. These nasty clauses (prevalent in many leases nowadays) allow a landlord to terminate a lease by giving the tenant some amount of notice (e.g. 12 months) should the landlord want to redevelop the building. Dental lawyers address so-called “demo” clauses, for example, by speaking to the landlord to find out if they have actual plans to demolish, or if they’d be open to removing or pushing back the application of a demo clause (e.g. 12 years) to allow an incoming dentist tenant / buyer to secure bank financing. Dental lawyers that sell practices may also look for a buyer in the neighbourhood with an existing practice who may not be put off by a demo clause because they can relocate the practice into theirs and save on the lease expense. Fortunately, these strategies (and others) have allowed otherwise compromised practices to be sold.
Selling dentists also face big headaches and costs if their staff are not on proper and up-to-date contracts. Without such contracts, a buyer could inherit large employee-related liabilities when it comes to terminating team members after the sale. And long-term associates not on contract also pose a significant risk to buyers as associates are generally free to set up shop across the street and solicit staff and patients they treated if there’s no contract in place that says otherwise.[9] Buyers would offset these risks with purchase price reductions or by forcing the seller to share in employee termination costs for a set period of time (e.g. 6 months after the sale). Luckily, dental lawyers can mitigate all of these risks by introducing contracts without upsetting team members’ morale.
Finally, dental lawyers can work with accountants to help ensure the selling dentists pays the least taxes. After all: it’s not how much you get, it’s how much you keep! If need be, dental lawyers can execute complex corporate re-organizations to clean up the corporation’s books prior to a sale (e.g. remove excess cash, investments or eliminate loans receivable) since a buyer won’t pay extra for these things; they also need to be removed to help the selling dentist (and other shareholders) qualify for the lifetime capital gains exemption. And dental lawyers can also, in asset sales, negotiate to try to allocate most of the purchase price towards the patient records, which get favourable tax treatment compared to other asset classes.
Focus on your inner peace
When you’re selling in any market, you get what you get based on the macro and micro factors. And you shouldn’t get upset. If you hold onto the stories of the past or future expectations, you’re just setting yourself up for disappointment. You’ll always want more and never be happy, even if you get it. So you should focus on being happy in the present moment and flow with life, no matter what happens next.
This way, you’ll stop feeling the emotional highs and lows of the outside world because your inside world will be grounded in peace, joy and love. And if you build daily practices – e.g. meditating, praying, being actively grateful, being in nature, serving others, taking care of your body through diet and exercise, being gentle and patient with yourself and others, going on walks outside, engaging in the arts (dancing, singing, etc.) and adding little joys throughout the day, etc. – then you’ll be living your best possible life no matter what the outside world is doing.
References:
[1] Bank of Canada, “Interest Rates”, source: https://www.bankofcanada.ca/rates/interest-rates/ (site accessed: 8 April 2025).
[2] Ana Pereira, “Bank of Canada holds key rate at 2.75% in close-call decision”, Toronto Star , 16 April 2025, source: https://www.thestar.com/business/bank-of-canada-holds-key-rate-at-2-75-in-close-call-decision/article_7a9cbe4c-550e-4dac-8a08-edbdf3072c1a.html (site accessed: 16 April 2025).
[3] Prime Minister of Canada, “Prime Minister Carney cancels proposed capital gains tax increase”, source: https://www.pm.gc.ca/en/news/news-releases/2025/03/21/prime-minister-mark-carney-cancels-proposed-capital-gains-tax-increase (site accessed: 8 April 2025). Notably, the press release stated: “In addition, the government will maintain the increase in the Lifetime Capital Gains Exemption limit to $1,250,000 on the sale of small business shares and farming and fishing property. The government will introduce legislation affecting the increase in the Lifetime Capital Gains Exemption limit in due course.”
[4] Conservative Party of Canada, “Poilievre Announces Canada First Reinvestment Tax Cut”, Source: https://www.conservative.ca/poilievre-announces-canada-first-reinvestment-tax-cut/ (site accessed: 8 April 2025).
[5] Statistics Canada, “Consumer Price Index – March 2025”, https://www150.statcan.gc.ca/n1/daily-quotidien/250415/dq250415a-eng.htm (site accessed: 16 April 2025).
[6] The Conference Board of Canada, “Consumer Confidence Plunges to Historic Low”, source: https://www.conferenceboard.ca/insights/consumer-confidence-plunges-to-historic-low/ (site accessed: 8 April 2025).
[7] “Ontario Minimum Wage to Support Workers”, source: https://news.ontario.ca/en/release/1005723/ontario-raising-minimum-wage-to-support-workers (site accessed: 8 April 2025).
[8] “Labour Force Survey, March 2025”, https://www150.statcan.gc.ca/n1/daily-quotidien/250404/dq250404a-eng.htm (site accessed: 8 April 2025)
[9] Michael Carabash, “No Associate Agreement? Can your associate set up shop across the street and solicit patients and staff?”, Oral Health (April 2025), pp. 64-65.
About the author:
Michael Carabash, BA, LLB, JD, MBA, CDPM is a founding partner of DMC LLP, Canada’s largest dental-only law firm that helps dentists sell and buy practices in Ontario. Michael leads DMC’s annual Caribbean dental mission trips (Grenada, Jamaica, St. Lucia, Turks & Caicos, Bahamas and Antigua). Michael can be reached at michael@dentistlawyers.ca or 647-680-9530.
