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Taxes, More Taxes and Diversification of Your Practice Portfolio


Jan 7, 2021 8:26:27 AM / by Chip Fichtner

LPS Completed $160,000,000 of transactions in the last 96 days!

Many people (doctors and IDSO executives) have chastised me for my “alarmist” forecasts in early, and throughout 2020, that higher taxes on rich dentists are inevitable in 2021. The recent election results pave the way for that sad, but realistic forecast. I am sorry for all of us.

Today, and I emphasize today, doctors monetizing a PART of their practices with an IDSO are taxed at a federal tax rate of 20% on 90%+ of their cash proceeds. The incoming administration would like to see the tax increase to almost 40% on the sale of your practice. Whether this is reality, is an unknown, but higher taxes are inevitable. Some say the Democrats won’t raise taxes during a recession, but others believe that trillions, not billions, of bailouts will have to be paid for by rich folks like you. Who knows…?

Your Portfolio Results in 2020

Smart dentists know portfolio diversification. However, their financial advisors often forget that your practice is your largest investment. Below compares practice values in 2020, vs. others:

  • U.S. Dental Practice Values:  Up/Down: -0- (Thank you COVID!)
  • S&P 500:  UP 16%
  • Gold:  UP 25%
  • Silver:  UP 48%
  • Bitcoin:   UP 399%
  • Residential Real Estate:  UP 12%

The New Realities of IDSO Transaction Values; UP 300% in 30 Months?

Working with great dentists for 10+ years enables us to see our forecasts come true. We are pleased to see a young, smaller DSO which started buying LPS advised practices 30 months ago, just sold for over a billion dollars! Several LPS advised doctors who recently joined this group had the opportunity to liquidate their retained ownership at 300+% of the initial value. Not BITCOIN, but not a bad return for 2.5 years or less!

2021 Will Be Interesting!

A number of IDSOs buying IDSOs transactions are also in process. And LPS just helped create another new IDSO to acquire our great clients. We identified the investor and recruited the senior management; stay tuned!

Topics: Transaction Results

Chip Fichtner

Written by Chip Fichtner

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