Any long-time reader of our posts knows that it’s important to looks for ways to add value to your practice, but not all ways of doing so are equal. The best ways to add value are not always the most obvious. Especially when done right before you put your dental practice for sale, buying new equipment and furniture, or upgrading your technology, might make your office snazzy, but it probably won’t increase your value as much as you may think. In fact, sometimes you can even take a loss on expensive upgrades. This is because a buying dentist wants to make the office their own—with their own choices about decor and equipment.
Better ways of boosting value are in the intangibles: your brand and your business practices. This is because those areas are where most of the value of your practice lies. No one buys a dental practice because it has digital imaging technology. If a buying dentist wants that, they can get it for themselves. Buyers will look at your practice if you have a steady, solid patient base, resulting in steady, solid collections, and low overhead. These areas are where you want to build value.
Invest Wisely: Technology that Saves Money, Not Costs Money
One great—but definitely unsexy—way way to increase the value in your practice is to reduce your billing costs through software automation. When you look at practice valuation reports, you can see that a simple, smooth process for collections is a big factor. Collections take time, and in running a small business, time is money, as the cliche says. The more time your staff takes to work on collections means higher costs in the form of wages and other administrative costs.
Therefore, investing in software or other technology that enables your staff to reduce their time and work with time-of-service collections, pretreatment estimates, and claims can be an asset for your office. When you put your dental practice for sale, if this is positioned properly, buyers will see that your office practices are efficiently organized to facilitate collections.
One thing to be careful about, though, are the HIPAA standards. You first need to understand what you can do under HIPAA. You are allowed to automate claims submissions, eligibility and benefit verifications, claims payment, and remittance advice. The automation of claims submissions and eligibility and benefit verification is fairly common practice. As of 2016, about 74% of dental offices in the U.S. had automated their claims submissions, and about 58% had automated eligibility and benefit verification.
But that is only half of what you can do, and as of 2016, virtually no dental offices had automated the other process. Only 8% of dental practices had automated claim payments. And none had automated the remittance advice. This is surprising, because if the dental and medical industry would fully automate their back-office processes, it could result in nearly $2 billion in revenue annually. That’s a lot of money to go around.
How to Automate Claims Payments and Electronic Remittance Advice (ERA)
To get your piece of that pie, and boost your dental practice value, all you need to do is follow these four simple steps to get your back-office processes fully automated.
Contact the dental insurers you work with and enroll in the health-care electronic funds transfer (EFT) standard via ACH for claims payments and ERA (ACH stands for “automated clearing house” and is an electronic funds-transfer system run by the National Automated Clearing House Association (NACHA) to facilitate payment services such as payroll, direct deposit, tax refunds and payments, consumer bills and many other services). Receive payments directly in your bank account.
Decide how you’d like to receive ERA.
Make sure that your practice management software will automatically reconcile EFT and ERA.
Ask your bank for the delivery of remittance information.
When you take advantage of the full spectrum of back-office automation allowed by HIPAA, you will reduce the time your staff spends of collections and the administrative costs involved. You thereby reduce your overhead, making your dental practice more profitable, saving as much as $36,000 per year. That’s money in your pocket that you can choose to reinvest in your practice or put away for retirement.
Also, by maximizing the automation allowed by HIPPA and using compatible practice management software that allows for automatic reconciliation and posting of receivables, your practice will show the following benefits:
Improved cash flow as funds are directly deposited into your bank account
Get paid faster because many dental insurers will pay claims that accept health-care EFT before paper claims that require a check to be issued.
Reduced instances of missing payments or fraud—direct deposits don’t get stolen or lost in the mail.
Keep your patient account records up to date faster, easier, and with greater accuracy, allowing you to make sure your billing is accurate and alleviating the risk of bad debt by facilitating collections closer to the time of service.
The ability to process more payments with less staff or fewer staff hours; the benefit here is twofold: you reduce costs and the less time you and your staff spends on book keeping is more time spent with patients.
Although we described business practices as an intangible above, the benefit of automating your back-office processes can be easily quantifiable in terms of lowered overhead costs and increased profit margins. Those numbers can be provided to buyers with the explanation of how you got there. When you want to put up your dental practice for sale, having these processes in place—with demonstrable savings—will make your more attractive to buyers. This is especially the case as the dental industry continues to move away from sole practitioners toward group practices, as automated systems are easier to fold into an existing corporate structure that the buyer already has in place.
ddsmatch Southwest Helps Add Value Before You Put Your Dental Practice for Sale
If you are considering transitioning your practice in the next five years, ddsmatch Southwest will provide you with a free, no-obligation Practice Transition Assessment. As part of that assessment, ddsmatch Southwest will help identify potential practice investments to help you increase the value of your practice before you sell. Contact ddsmatch Southwest today and request your free consultation.
https://www.ddsmatchsouthwest.com/wp-content/uploads/2019/01/1-Dental-practice-for-sale_HERO.jpg6281200adminhttps://www.ddsmatchsouthwest.com/wp-content/uploads/2018/06/DDSMatch-buy-a-dental-practice-sell-a-dental-practice.pngadmin2018-12-07 05:00:182019-03-03 01:03:05Add Value to Your Dental Practice Sale
There was a reason you went to to dental school. You wanted to go, prepared, got accepted, went, graduated, and began to practice. That takes a lot of internal motivation sustained over a long period of time to achieve a difficult end.
What was your motivation? Have you lost sight of it?
When you come into the office each day, do you look forward to your work? Or does one day blur into another, punctuated only by fluctuations of stress?
Put simply, when you think about putting your dental office for sale, is it with a sense of accomplishment? Or is it with longing for relief?
To be sure, being a dentist and running your own office is stressful. In addition to dental care, in any given day, you may also have to be a bookkeeper, a human resources office, and a general manager. No one is invested like you are. It can create a sense of being all on your own, and you’re not alone if you feel a little lost under the burden.
If you’ve lost your sense of purpose, it will affect every aspect of your practice—starting with your staff and bleeding out to your patients. Once patients sense it, they will be less likely to return.
But, you can regain the sense of purpose that you once had. In fact, you must if you want to maintain the long term success for your practice. The good news is, while turning this sort of ennui around isn’t the easiest thing in the world, you might be surprised to find a few simple things will set you back on a path you feel good about.
Remember Why You Did This
Think back to when you first decided to go to dental school. What were your reasons? Think about your education. How did that change your purpose and sense of your future?
Finally, think back to when you graduated and were preparing to start, join, or buy your own practice. Why did you want to do that? What did you imagine it would be like?
Those last two questions may be the most important. The reason why you wanted your own practice is still there. The problem is probably in the disconnect between what you thought it would be like, and how it is in reality. Take time to consider that just because something turned out differently than you expected, doesn’t necessarily mean its gone wrong.
Once you’ve remembered your purpose, consider where you are at now. What’s good about your practice? You have to have an accurate sense of both the positive and negative to make an objective assessment of your practice’s success.
Like many people, maybe you tend to look at what’s wrong over what’s right, and the human brain is wired this way. But in the modern world, happiness depends on taking time to appreciate all of the parts that make up the whole.
Once you have a sense of what’s working, then consider what isn’t. If the problems are easily identified, they are probably more easily solved with actions such as creating new office practices or policies, or by replacing or training staff.
If the problems are harder to pin down—indicating a more systemic problem—consider bringing in a business consultant to assess your practice and make recommendations. Often an outside observer can view the situation more objectively, putting them in a better position to identify what works and what doesn’t.
Consider having one-on-one conversations with your staff to get their perspective on where things are at. It’s important to do this one-on-one, rather than in a staff meeting. It takes more time, but you’ll be sure to get everyone’s input and they’ll speak more freely.
Once you’ve done these assessments, reconsider your original purpose. Is the way your practice is operating moving you toward that purpose, or away from it? Is the purpose still relevant?
Have the ways you’ve changed personally, especially after experiencing dentistry as a practicing doctor, changed? What it is you really want to accomplish? If so, consciously revise your purpose.
All of this is to make sure you are on course to achieve what you set out to accomplish (or move you toward your new goal). As noted above, a practice without purpose is likely to suffer.
When you put your dental practice for sale at the end of your career, you want to see that you are transitioning your practice at its peak, not when its fizzled out. Once you know what’s going well and what needs to be changed, you can create a plan to right the wrongs and move forward in a positive direction.
It Takes a Village (or, at Least, Your Staff and Advisors)
Once you’ve reengaged or revised your career purpose, you need to bring your team on board. You team includes all of your employees, your outside professionals (accountants, lawyers, consultants, etc.), and your informal advisors— those colleagues, friends, and family that you trust and rely on for advice.
Just as you can’t run the whole practice by yourself, you won’t be able to course-correct your office to meet your purpose by yourself. When you are discussing changes with staff, they need to understand the “why” behind the change so they’ll be bought-in. If the staff doesn’t understand the “why,” they’ll be more reluctant.
There is no need for anything but transparency here. In fact, staff can be more motivated by the idea that they are contributing to the success of the office—feeling like an important part of positive change, rather than just a replaceable cog in a system.
Another benefit of enlisting your team is that it forces you to clearly articulate your purpose and your goals for achieving that purpose. You’ll find out how well thought out your ideas and plans are. Gaps will be illuminated and can be filled in at an early stage rather than later when a problem arises.
You’ll also get feedback from your team. Are they enthusiastic or skeptical? That can indicate a sense of how realistic your plans are. Skepticism doesn’t necessarily mean your plan isn’t good, it may just be missing some intermediary steps to get from A to B before you can get to C, D, E, and so on.
Career Goals Impact Post-Career Goals
We’ve discussed your purpose for your career, however, there is something important that is largely depended on your career success— what happens after you put your dental practice for sale.
You can’t practice forever. You probably don’t want to. How do you envision your retirement? Where will you live? How will you live? What will you have to enjoy once you’ve set down your handset for the last time?
Being able to choose how you live in retirement is dependent on building value in your practice now. If you have an idea in mind of where you’d like to end up, you need to map out a clear path to get there. Without a path to follow, who knows where you’ll end up? Regardless of where you are in your career, it’s not too late to start charting that course. And it’s never too early.
ddsmatch Southwest Can Help Prepare Your Dental Office for Sale
If you are in the later stage of your career, you can benefit from a Practice Transition Assessment. This is a free service offered with no obligation and designed for doctors considering transitioning their practice in the next five years.
As part of this assessment, we will discuss with you the the current local dental practice transition marketplace and help you identify the best transition options for your practice. We will suggest practice physical and image improvements and advise on potential practice investments to increase value. This will help you understand where your practice stands and where you can get it to before placing your dental office for sale. Contact us today and find out how we can help you achieve your purpose.
https://www.ddsmatchsouthwest.com/wp-content/uploads/2018/12/4-dental-office-for-sale-dental-practice-for-sale_HERO.jpg6281200adminhttps://www.ddsmatchsouthwest.com/wp-content/uploads/2018/06/DDSMatch-buy-a-dental-practice-sell-a-dental-practice.pngadmin2018-11-27 05:00:362019-03-03 01:06:25Why Are You Selling Your Dental Office?
Change will come whether we want it or not. While we cannot always control outcomes, we are better prepared to influence it when we are ready. For instance, when you are ready to sell a dental practice, you can’t control who will be interested and what they are willing to pay, but you can position your practice as one that is stable and successful in a way that will attract buyers willing to pay for value. So we are better off proactively anticipating and preparing for change rather than passively waiting for it to happen to us. And, honestly, sometimes it’s the simplest changes that yield the biggest reward. A change of perspective can help us see our professions, our lives, ourselves in new and illuminating ways.
In this second part of two articles this month that focus on good and bad business practices, we’ll take a look at some simple things you can do that can have a big impact on your business.
Change Your Point of View
If your practice isn’t quite what you want it to be, but you aren’t sure what you can do differently, the first step is to take a wider perspective. Remember, it’s not just a way to provide quality dental care. And, it’s not just mechanism for generating revenue. While it’s both of these things, it’s more. It’s a place of employment for your staff. It’s an essential service for your community. And it’s a source of relief and healing (or fear and pain, depending on the person) for your patients. Think about how your practice looks from all of these perspectives, and the tangible and non-tangible benefits you receive.
Next, it helps to take a look at the business from purely a business perspective. While it may seem crass to think of patients as “customers,” that is what they are at a certain level: people exchanging money for services with an expectation of quality. You have to look at your practice as a business and you have to run it like a business.
While there are things particular to dentistry that make it unique, there is a lot that is typical of any small business. If you don’t have any business training or experience outside of running your office, take some time to educate yourself.
None of this will diminish the quality of care you provide. It can, however, improve your patient’s experience and your staff’s experience. Happy customers and happy employees yield a more successful business.
Set Specific Goals (and Revise Them)
If your original goal was to have your own practice, congratulations! You did it! But now what? Without a destination in mind, you are more likely to wander listlessly.
You can start with a long term goal such as those for your retirement. Where do you want to be when you finally think, “It’s time to sell my dental practice”? Where do you want to retire? How do you want to retire? What do you need in the bank to get to that destination?
Once you’ve done that, you plot the route. If that’s 20-years off, set goals of where to be in 5, 10, 15 years. Then break it down even further. How do you get to that 5-year goal?
When you get to that 5-year mark, re-evaluate. Is your end goal the same? Are your intermediary goals realistic? Has your practice or your market changed?
This way you ensure you are always on course. Without this kind of map, it’s harder to predict the outcome.
Write it All Out
When you have your goals set, make a detailed plan, step-by-step, of how to reach that first goal. And then the next, and then the next. As you do this, look closely at what you are proposing. Are these steps doable? Do you have the tools, resources, and skills to make the steps? If not, your plan is probably not feasible and will need to be revised (this may also point to unrealistic goals).
On the other hand, it may also be determined that you’ve set your sights too low. By getting out all laid out on paper, you will have a better view of what is attainable and what’s not. You will also have a better sense of the work involved. This is important because time is your most precious resource, and you must be certain that you are investing in where it will bring the greatest return.
Don’t Fall for the Entrepreneur’s Fallacy
As a small (or not so small) business owner, you are an entrepreneur. Your vision, determination, and work ethic is admirable. But, just because you’re good at being a dentist doesn’t mean that you are necessarily good at running a business, or anything else for that matter. Many entrepreneurs, inspired by their own intrepid spirit, often come to believe that no one can tell them anything. Don’t fall into this trap.
Bring in an outside consultant to look at your business, assess its value, and recommend improvements. You are a dentist. You are not an accountant. You are not a lawyer. And you don’t need to be. Frankly, it’s not worth your time.
If you try and do everything on your own, it will take you much longer than an outside professional and, frankly, you’ll likely do a poor job. The money you think you’ll be saving by not hiring a trusted expert will be lost in the extra time you spend and the mistakes you’ll make. Others have already made those mistakes. Don’t reinvent a faulty wheel.
Empower Your Team
No one needs tell you that there is too much to do and not enough time in the day. You need a reliable team that you can trust to do their jobs well. By “team,” we mean your staff, your professional service providers (accountants, lawyers, etc.), and the colleagues, friends, and family you look to for counsel and advice.
Look at the non-dental tasks that take up your time. Ask yourself, “Is there someone else who can do this?” If the answer is yes, delegate that task. If the answer is yes, but you don’t trust the team member who should be doing that, it’s time replace that team member. You need everyone in the right seats for the practice to perform its best.
If you are a micromanager, you are probably inhibiting the performance of your team. You fear that if you aren’t closely monitoring something, it’ll go wrong. If your team is competent, you are most likely inhibiting their best performance. Being micromanaged creates feelings of distrust and insecurity, and people perform poorly under those circumstances.
We all perform best when we feel like we have autonomy, the support to do our jobs properly, and recognition for a job well done. These practices result in higher job satisfaction, which creates loyalty and efficiency.
If your team isn’t competent, it’s time to make hard decisions and bring in a consultant with the right reorganization and hiring skills. Proper hiring first saves hours of management later.
Invest in Your Own Business
You owe it to yourself to take a dedicated weekend each year to consider the things discussed above. Set goals, plan how to reach those goals, bring in advisors, plot how to develop a reliable, efficient team.
A lot of this is going to require some investment: hiring experts, hiring new staff, training existing staff, making improvements to your office, learning new techniques. But these investments will pay off time and again, the more so the earlier you institute them in your career.
Remember, ultimately your end goal is likely retirement—getting what you deserve when it’s time to sell a dental practice. Don’t be afraid to put money into something that will move you further down that road.
Where to invest will vary from practice to practice, but doing the first three things (setting goals, creating a plan, bringing in expert consultants) will highlight where you can improve the most—that is, where the payoff will be greatest.
ddsmatch Southwest Will Help You Meet Your Goals for Selling Your Dental Practice
At ddsmatch Southwest, we don’t simply broker a sale. We come in early and advise on how best position your practice to help you meet your goal. If you are considering transitioning your practice in the next five years, we offer a free Practice Transition Assessment, with no-obligation, where we advise on potential practice investments to increase value and suggest physical and branding improvement, among other things.
https://www.ddsmatchsouthwest.com/wp-content/uploads/2018/12/3-sell-a-dental-practice_HERO.jpg6281200adminhttps://www.ddsmatchsouthwest.com/wp-content/uploads/2018/06/DDSMatch-buy-a-dental-practice-sell-a-dental-practice.pngadmin2018-11-20 05:00:512019-03-03 07:20:48Transition Out of Your Dental Practice
Typically, a dentist will only consider the value of their practice twice: when they first buy it, and again when putting up the dental practice for sale. Between the purchase and sale, most doctors are more focused on providing care and the daily operations than on building value in an ongoing enterprise. As a doctor considers transitioning their practice, they may consult with a business valuator or other outside expert who may advise on changes to maximize value in advance of selling a dental practice. There may be lost value, however, where a doctor isn’t thinking long-term about how to build value throughout their career.
When it comes to selling a dental practice, the owner must set aside personal feelings and consider what makes it a successful business, where it can be improved, and what factors really will make it attractive to buyers. Some things can’t be changed—location, for instance—but much of it can. Importantly, using smart business practices and up-to-date technology can improve the efficiency (and value!) of your practice more than you might think.
Location, Location, Location
While you can’t change your location, you can look closely at your location and see whether you are really meeting the needs and demands of your market. If, for instance, you started your practice in an area where the demographics skewed towards young families and addressed those needs, after 25 or 30 years, you will likely have a population that includes more middle-aged and older patients. This means more restorative work, less pediatric. The question here would be, have you adapted your practice—your services, your marketing, your equipment—to reflect this?
If not, your practice may have less value, as a buyer will look at the demographics of your location as they currently are, not as they were when you started. If your practice doesn’t appear well-suited to treat the population in which its located, you may have to accept a lower offer to account for the investment the buyer will have to make in adapting the practice to the current demographics.
If you aren’t ready to sell your dental practice, this is still a good way to adapt and build value. You’ll be better prepared when you do decide to transition. Knowing your demographic market will allow you to communicate to potential buyers how you’ve made the necessary adjustments over time so they don’t have to.
The Right Buyer for the Right Practice
A community can support a wide range of practices— pediatric specialists, ones that focus on cosmetic or restorative work, etc. You don’t need to try and cover all bases for all potential buyers, you just need to be sure that however you choose to focus your practice, that you’re using a good business model and maintaining a solid customer base. That’s what the buyer really wants—a strong foundation on which to build. Knowing your patient base well and having a clear record of services will communicate to the buyer whether yours is a practice they can build on.
But, this means that you should work your niche in a smart way, and you should keep your focus on buyers who are looking for a practice that is like yours. This is where a dental brokerage like ddsmatch Southwest can help. ddsmatch Southwest has buyers looking for all kinds of dental practices in Texas and New Mexico. Our specialty is matching the right buyer with the right practice.
Tangible vs. Intangible Assets
Where is the value in a dental practice? It may include land, a building, equipment, collections, a stable patient base, and growing a growing geographic market. All of these need to be carefully documented for buyers to review. But some of the real value in a dental practice cannot be reduced to spreadsheets—it is found in the intangibles of your brand reputation and the intellectual property of your practice.
Your brand is anything that builds goodwill among your patients, employees, and community. It includes your reputation, customer service (and perception of service), the quality of your work (and perception of that quality), patient loyalty, and employee loyalty. If you are selling your dental practice, you also have to be careful with your patients’ and employees’ sense of security.
The general rule is to not make the sale of the practice public to employees or patients until you absolutely must. Letting the cat out of the bag too early can create feelings of insecurity among employees, leading to potential staff turnover and the loss of team experience, patient relationships, and service quality. These may be traits your practice is known for. Likewise, while there will likely be some loss of the patient base during a transition, it can be reduced by careful communication about the transition once it’s finalized. You don’t want your sale to go south due to employee vacancies and a dwindling patient base.
Again, a dental broker can help in positioning your message for both your staff and your patients. In fact, ddsmatch Southwest brokers have experience working closely with practices and even actively participating in the staff information meeting as part of the process when appropriate.
Your other great intangible asset is your intellectual property. What is your intellectual property? It is the unique business practices that have made your practice successful over time. Even if you haven’t thought about it explicitly, successful businesses don’t just happen. If your practice is attractive to buyers, it’s because you’ve done something right. That “something right” can often be hard to quantify but it can be reduced to a set of policies that guide the operations of your business. For instance, if you have an informal policy for collecting co-pays or deductibles at the time of service (assuring continued cash flow and reducing collections risk), and your employees and patients understand and follow that policy, then you can commit it to writing and make it a formal policy. These policies, when examined in conjunction with your financial statements, show that the good practices can be relied upon, even after the keys to the practice are handed to the buyer.
Take the time to think about how your practice operates: why you do things the way that you do, whether it’s effective, and what improvements can be made. Then, write out a policy manual that describes the practices and make sure every employee has a copy and is familiar with it. Finally, make sure the policies are consistently and correctly applied in practice. If a policy or practice isn’t working as written, revise it until you get it right. This will be a road map for the buyer to keep the practice running a smoothly and successfully as it did under your management.
The Technology Trap
A common mistake doctors make when selling a dental practice is undervaluing the intangible assets and overvaluing technology. If, immediately before placing your dental practice for sale, you update all of your equipment to the latest and greatest, it is highly unlikely that you will recoup the costs of the upgrades in the sale. You may be better off keeping your old equipment and letting the buyer decide whether and what to upgrade (they’re likely planning on doing so anyway).
The exception to this rule is technology that affects income. This basically means technological upgrades that are made not for the sake of looking shiny and new, but because they are bringing something to the practice that translates into better service, higher revenues, or greater efficiency. For instance, business software might not impact your patients’ experience, but it can streamline your back end in a way that saves time and money by decreasing your overhead, accelerating your cash flow, reducing default rates, and lowering your billing and collection costs.
However, this kind of upgrade is something you should be considering at all times during your practice as a way to build your own revenue and asset value, not only as a means before the sale. If you upgrade your software but don’t have the time to create a record of how it builds value, then a buyer may assume it hasn’t.
Don’t Wait Until You Sell Your Dental Practice, Build Value Throughout the Practice’s Lifespan
Building value effectively is a marathon, not a sprint. Trying to boost value right before transition can be somewhat effective, but you’ll get much further if you are working towards it throughout your career. Owning a successful dental practice requires you to be a business owner as much as a care provider. But, being a good business owner can make you a better dentist. Paying close attention to the business side and considering improvements will translate into a better experience for you, for your staff, and for your patients. Also, by spreading the work over years, you’ll save yourself time and stress when it comes time to transition.
If you are considering transitioning in the next five years, it’s not too late to look how you can build value before you sell. At ddsmatch Southwest, we offer a free Practice Transition Assessment where we will discuss the current local dental practice transition marketplace, establish best transition options for your practice, suggest practice physical and image improvements, advise on potential practice investments to increase value, and review present and future staffing integration. Give us a call today and find out how we can help you meet your practice transition goals.
https://www.ddsmatchsouthwest.com/wp-content/uploads/2018/12/1-sell-a-dental-practice-selling-a-dental-practice_HERO.jpg6281200adminhttps://www.ddsmatchsouthwest.com/wp-content/uploads/2018/06/DDSMatch-buy-a-dental-practice-sell-a-dental-practice.pngadmin2018-11-06 05:00:042019-03-03 00:15:43How to Add Value Before Selling a Dental Practice
Dr. John Ward has over 40 years experience providing dental services in all phases of dentistry and all ages—ranging from 18 months to 99 years of age. When presented with an opportunity for selling a dental practice, he put his trust in ddsmatch Southwest. Below, Dr. Ward explains in his own words, why he trusts ddsmatch Southwest and why you should too.
How did you come about deciding it was time to sell your practice?
I’ve known Andy [Edmister] since he was in college, and he now has a daughter in college, so I’ve known Andy for a long time. Andy came into my office one afternoon, the Thursday before Labor Day of 2014. At the time, Andy was selling large dental equipment, so I thought Andy was coming in to talk to me about selling a quarter of a million dollar x-ray unit. Andy walked in, said, “Doc, can I talk to you?” I said, “Sure.” We walked back and he said, “I’ve been working with the sale of Dr. X—I’m not going to use her entire name—Dr. X’s practice, and she said you might be interested in selling your dental practice.
At the time I had two full-time jobs. I was working my dental practice, and then on weekends I was driving 200 miles to work in a federal prison in Pecos. My normal routine was Tuesday, Wednesday, Thursday, Friday until 1:00 in my practice, take an hour’s break, drive 200 miles and then work 50 hours over the next three days, three-and-a-half days, and then do that week after week after week.
I looked at Andy. He said, “I heard you were interested in selling your practice,” and I laughed. We had a calendar on the board, one of those permanent calendars you erase and mark in. What I remember was that Labor Day was September first. I had September, October, November. I pointed to the last Thursday in November and I said, “Andy, in the next three months, that is my day off. I have one day off, Thanksgiving, in the next 91 days.”
Andy said, “I have a young man who might be interested in purchasing your practice.” And I said, “Well, I have no interest in selling my practice, but I have no interest in not selling my practice.” He said, “Well, he’d like to take a look.” I said, “Okay, Andy.” I was going to be heading to my other job the next day, so I said, “Here are the keys. You’re welcome to come in, look around the practice, see what you want.” Because I knew Andy, so I didn’t have any problem with the trust issue. I said, “Talk to me later.”
As it turned out, about four or five days later Andy stopped back in and said, “The young man is interested in buying your practice.” At the time, I owned the practice and I owned the building. Andy said, “Are you interested in selling the practice?” I sat there, sitting in a room with Andy, and I said, “Okay, Andy. If I sell the practice I’m selling the building. I don’t want to be anyone’s landlord.” What I didn’t want was if someone bought the practice and six months later walks out and I’m stuck with it, or if someone wants some changes in the building, and then you’re arguing over whose issue this is and that is.
I said, “Andy, here’s my number. This is what I want to walk away with.” I said, “I want full price for the building because it’s in a great location and there’s no need for me to give a bargain on that.” But I said, “I’m going to give a bargain on the practice because the equipment, even though it’s great equipment, is older equipment, and in the next three to five years he’ll have to replace a certain amount of it. I don’t think it’s fair that he should pay top price when he’s going to have to do that.” Andy said, “Sounds good to me.”
I said to Andy, “Andy, I don’t care. I don’t know what your percentage is, I have no idea, but this is what my number is.” Andy said, “Okay.” Then, over the next eight weeks, Andy worked very hard to put the package together. There was some issues going on because, since I had not planned to sell the practice, I had not prepared all the financial stuff. When they went to the bank, the bank wanted certain stuff that I had not prepared because, as I said, it was not my original intent to sell the practice.
Andy worked very hard to get all that together to obtain that, to help me to put that whole package together, so that the buyer could go to the bank and present it. Once we knew what the bank wanted, it was very easy in putting the package together because it was a solid, profitable practice. Part of it was based on my tax statement. You get towards the end of the year, you’re thinking, “Okay, I’m going to pay this much in taxes, so I need to buy this and do this so that I lower my tax liability.” The bank was looking at some of that thinking, “How could you be so profitable and have this tax setup?” Because I’m smart enough to know that I don’t want to pay taxes. Andy worked with me to get all the correct numbers so that when it went to the bank, it was an easy flow.
I then sold the practice on the first Monday of November. This went from essentially the beginning of September to the beginning of November, which was a two-month timeframe. Andy put this whole package together. When I left the practice, I then was working only in the prison, and that was pretty nice because now I had a pretty sweet job, only working one job.
Then at the end of July of 2017, the prison closed, and now I’m in East Texas, in Longview, Texas, working in a very busy fast-paced practice. Andy has come to me a number of times and said to me, “Doc, if you’re looking for any positions, I have positions open. I have positions available, and you know that I’d be tickled pink to move you into one of those.” I said, “Andy, right now I’m in a great position.” Andy has always been very, very supportive, very thorough, very proactive. I thoroughly, thoroughly enjoyed the process. He made it easy for me, and I couldn’t think of a better person looking in retrospect to have handled that than Andy. I give him all the kudos in the world because he handled that with smoothness, with grace, with intelligence. It was handled very, very well.
It sounds like you would definitely recommend them ddsmatch Southwest for selling a dental practice.
Oh, I would definitely recommend, definitely.
As a seller, what do you think are the main reasons that someone should choose ddsmatch Southwest?
Andy handled everything on a very personal level. Your issues were his issues. He did a really good job of balancing the concerns of the buyer versus the concerns of the seller. I know in my case he picked out a young man whose desires were very compatible with my practice. He helped the young man when the young man was running into some barriers because of what I supplied being much more rudimentary than most people would need. I will tell you that he’s not going to let anyone else get away with what I did, but Andy knew me on a personal level. Andy handled it from both sides in order to make it easy for the young man to be able to obtain the loan and for me not to have to get overwhelmed with all kinds of paperwork and bureaucracy.
It sounds like Andy is pretty patient and that working with him was very comfortable.
Very comfortable, very comfortable.
What kind of advice would you give to people thinking of selling a dental practice? Looking back, is there anything you wish you would’ve known?
Like I say, I was very lucky because Andy handled this for me. The funny thing was that I had known Andy for years and Andy was a friend. I don’t think I appreciated that, and it’s not a bad thing. Let’s put it this way, looking in retrospect, I appreciate more how hard he worked and how he was in my corner looking out for me, because I really had no idea on anything. Mine was, okay, all of a sudden one day I’m working and the next day I’m selling my practice. I just happened to find someone … and this is the way Andy is.
Like I say, I’ve known Andy for years. He’s an honest, straight shooting, very heartfelt person. He’s looking out for your best interest and he did that with me. On the other hand, he looked out for the best interest of the young man who bought the practice. I don’t think the young man who bought the practice appreciated that until he had the practice for a couple of years. I think it finally occurred to him, especially as he started talking to friends of his who had purchased other practices and who had used other brokers and realized those people weren’t looking out for my best interest. Andy did a great job of the balancing act and looking out for both the buyer and the seller.
As I said, the thing that was amazing with me was that I absolutely knew nothing, but absolutely had an amazing experience, and that’s because Andy took good care of me. Looking back, I wouldn’t know … Like I said, because it was handled so well, the experience was a totally positive experience.
He’s a good guy. He looks out for his clientele.
Selling a Dental Practice is Better with ddsmatch Southwest
Just as with Dr. Ward, ddsmatch Southwest can help you both prepare for your practice transition, and throughout the transition itself. First, we offer a free, no-obligation Practice Transition Assessment. If you are considering transitioning in the next five years, we’ll meet with you, look at your practice, and discuss what you should be thinking about with your specific market and whether there are investments or improvements that will get you the most out of your sale.
Second, we’ve assisted hundreds of dentists from across the country transition their practices. We’ve taken that experience and created a Trusted Transition Process—a clear, consistent path to selling a dental practice while maintaining the legacy you’ve worked so hard to build.
Anyone with experience with putting up their dental practice for sale will tell you that you need an experienced team of specialized advisors: dental brokers such as ddsmatch Southwest, a dental CPA, and a dental attorney, at the very least. There are too many details that require expertise and, frankly, this is too important to let any detail slide. Below is our recent conversation with David Cohen, a dental lawyer, of the Cohen Law Firm in Dallas, Texas, giving his perspective on what dentists considering transitioning their practice should consider and why a broker is a crucial member of your team.
Please tell us who you are and what you do for doctors with dental practices for sale.
My name is David Cohen. I own a law firm that specializes in helping dentists and specialists from a legal, transactional business perspective. What that means is I do a lot of practice transition work. I help draft and review contracts in connection with practice sales and purchases and partnerships. I also work a lot on business formations, business structuring, real estate in terms of buying and selling real estate and review of leases. Those are the main things that my practice specializes in. We have clients all over the country, and we’re well known for being very expeditious and responsive.
Primarily dentists then?
Correct. 99% of our clients are dentists.
How was it that you came to have a relationship with ddsmatch Southwest?
I just ran into Andy [Edmister], I think, at the Texas dental meeting, and we hit it off and we just talked about doing some work together. Andy gave me an opportunity on one of our transactions that went really well, and so we’ve worked on other transactions together.
What has been your experience working with Andy and ddsmatch Southwest?
The experiences have been great. Andy’s a really hard worker. He’s incredibly expeditious. He’s on the ball, and he really does everything he can for the client, but he also understands the full transaction and the scope of it, and that it has to work for everybody. He does his best to make sure that it does work for everybody, and I think in the end that that provides a really successful transaction that closes and optimizes the opportunity for it to close.
Have you done both seller transactions where you’re advocating for the seller and for the buyer, or do you generally do one or the other?
I don’t represent both at the same time typically, but I am sometimes on the buyer’s side and sometimes on the seller’s side. It just depends on the transaction. I’ve done both.
What’s your advice from a legal standpoint for a dentist who is to put up their dental practice for sale, or is even just starting to think about selling their dental practice?
I think there are two primary pieces of advice that I would have for that particular individual. Number one is make sure that they’re ready to sell. I’ve dealt with some sellers in the past that think they may be ready to sell, and they’re not, and it ends up being time-consuming for all parties involved. There’s time, money, and headaches for that particular doctor as well. They get to the finish line and realize it’s just not for them. Now, sometimes it just takes getting to the finish line for them to realize that, there’s no way around it, so I’m not knocking them. But if they can do the best they possibly can to begin with to really do some soul-searching and make sure they’re ready to sell, I think that’s extremely important before they start paying legal fees and spending their own time and money, and also other people’s time and money.
The second piece of advice that I would have is to hire a good team around you. That’s really important to know that you can’t do everything yourself. You specialize in dentistry, and even if you specialize in other areas, you probably don’t have the requisite time to do everything properly. It’s really important to have a team that’s dental specific, in my opinion, and really lean on them to help you. A team could consist of people like ddsmatch [Southwest] and Andy, or a lawyer, or a CPA, an insurance agent if they’re on the buying side—they need insurance, they need to get credentialed. Or a bank if they’re buying.
When you say, “Make sure they’re ready,” are you speaking about being emotionally ready? Or are you speaking about financially?
I think it’s all of the above. I was referring a little more to the emotional side of it, but I think it’s important to have all of the physical things ready. The office ready, or the records ready, and all of that. And I think that also comes down to surrounding yourself with the proper team, because those people are going to help you be ready from an operational standpoint to sell, but the doctor—only they can be ready from an emotional standpoint. I think it’s really important. It’s hard for anybody to let go of a business that they’ve operated, particularly for a number of years, and so there’s nothing wrong with that. But you really have to do some soul-searching and recognize if you’re ready to let go. Because if you’re not, you can either come to the end of the deal and have spent the time and the money, and that goes to waste because you’re no longer doing the deal.
But also it can kill a deal, because then you may not be as realistic about having a fair deal or thinking, “Well, I need to go work for 10 years for this buyer afterward, because I don’t want to let go and I want to continue to do this.” Now of course, there are different transactions and every one is unique in its right, and from time to time, you’ll get a seller who says to a buyer, “Hey, I’m looking to sell, but there’s one condition. I need to work for X amount of years. I know that might be more than the norm, but that’s just what’s going to work for me.” And that does happen from time to time, but in my extreme example, it just wouldn’t be realistic on a normal basis for a seller to think that they would just be retained for 10 years by a buyer to continue to work. Again, unless it was unique circumstance like an investment practice or something like that. So it’s important to be ready for those reasons.
What is something that sellers sometimes overlook as they prepare to transition their practice?
There’s one key thing I can think of that’s outside the box that sellers need to be prepared for when they sell a practice, and it’s very important because it can affect in an adverse manner the value of the practice that they sell or their ability to sell at all. And that is, if they have associates in the practice, make sure that they have an associate agreement in place with those associates. Now that sounds like a no-brainer, but there are a lot of doctors out there that don’t have associate agreements with their associates. So it’s important to have that agreement, not only because you want to protect yourself as an employer, but also you want to have a non-compete, so long as you’re in a state where non-competes are valid and enforceable against associates.
Because if you don’t, even if you’re not in fear of that associate competing, the buyer’s going to want that. And if the buyer believes that the associate can open up next door, and that associate has goodwill in the practice because they don’t have a non-compete, then that’s going to be problematic and the buyer is either not going to buy the practice or say that it’s not worth as much, and try to negotiate the value of that practice down. It can be a mess to try and get associates to sign non-competes and associate agreements after the fact, because they really don’t have any incentive to do it unless they’re dying to have a job and they know that the buyer’s going to retain them. Then, maybe they’d be willing. So, long story short, if there’s one thing outside the box that’s really important—even if a selling doctor does not feel they need an associate agreement or they’re not worried about their associate competing—it’s really important for preservation of value of the practice that they’re looking to sell to have that in place.
If we’re talking about both buyers and sellers, what are things that might not be on their radar that they should be considering?
I think the one thing that people need to understand when they’re going into a transaction is that, particularly in the dental world, is that a transaction has to work for everybody in order to be successful, and if either side comes into the deal wanting to scrap for every inch for themselves and don’t understand that there’s another party involved, it can make for a very difficult transaction. And it can actually cause tension between the parties to the extent that if you’re a buyer and you’re being a pain, the seller won’t have the incentive to help transfer that good will after the closing to the best of their ability. Of course, they have to per the contract, but you want, as a buyer, the seller to go out of their way, above and beyond, to help you transfer the good will in the practice and have a smooth transition. On the seller side, you want to make sure that the buyer’s comfortable and that the buyer feels good about the deal.
So that’s really important, to have realistic expectations and understand what negotiation is all about. In my opinion, negotiation is all about making sure that you’re getting more of what you want, but that the other side is, not below the status quo, where it’s not a win or lose game.
Negotiation’s not about winning or losing or beating the other person, it’s about getting more of what you want in the deal, and I think that’s really important. People can lose sight of that from time to time. For instance, I’ve seen sellers say that they are going to sell, but then if the buyer decides that they might sell their practice to somebody else that the seller gets to swoop back and take it back. Well, that could obviously limit the market ability of the buyer, and so it’s not something typically buyers want to do. That causes problems both from the perspective that (a) the seller doesn’t want to let go, as we’ve already talked about at the beginning of this interview. But (b) it also is an unrealistic expectation that is not about getting more of what you want, it’s about taking as much as you possibly can and having a foothold in everything even after the transaction. So that’s just one example of maybe overextending or having unrealistic expectations in the process.
I think the biggest thing that people need to understand when they go into a deal is that it’s important to get more of what they want in the deal, but it’s not about winning and losing. It has to work for everybody or it’s not going to work. Either it won’t happen because it’s not going to work, or it does happen, and then there’s a number of issues after the fact. Nobody wants issues after the fact. The buyer just bought the practice, last thing they want to do is deal with issues when they’re trying to make good on their investment and run a practice. The seller wants to ride off into the sunset. They don’t want to be looking over their shoulder with problems after the deal.
Are there any other things that might be more specific to the legal aspect of putting a dental practice for sale? Is there anything that you’ve seen with your clients realizing, “Oh, whoa, I didn’t know that would matter.”
If they [the selling doctor] doesn’t own the building and they have a third-party landlord that they’re leasing from, often they’ll go into the transaction expecting that the landlord is just going to allow them to assign the lease to the buyer without recognizing that the lease they signed probably says that they cannot assign the lease without the landlord’s consent. Now, hopefully they have some language in their lease that says, “Consent can’t be unreasonably withheld or delayed,” meaning that the landlord can’t be unreasonable about it, but they still can withhold consent if they feel it’s appropriate. It’s important that sellers understand that some landlords can be a little bit funny, and it’s important to use your team, the ddsmatches of the world, to bridge any gaps that might be there.
Or if you have a preexisting relationship with that landlord, make sure to continue to have open communications about the fact that you are embarking on a sale transaction and that you need cooperation. And then you’ll do whatever you can to get cooperation from that. I think those things are really important, because it’s not a home run. Every once in a while a landlord does not allow the lease to be assigned, or they may require some egregious things like the seller continuing to guarantee the lease after the fact, even through a renewal term. I’ve seen landlords or sellers to do that. So I think that’s one thing that’s really important, is not only the associate agreement dynamics that I mentioned, but also making sure, acknowledging that the landlord is a big part of the deal if you’re leasing. And that they can actually stop you from selling in some instances. So it’s important to have a really good relationship there.
Are there any other things that can pop up if you own your property rather than lease?
Yeah. I mean, if you own the property and you’re planning to lease the property to the buyer, it’s important to have those terms outlined and a letter of intent so there’s no surprises down the road where you’re getting to the finish line of the sale transaction, and then the buyer doesn’t want to pay the rent that you’re asking for, right? So that’s important, but if you’re actually selling the building to the buyer, it’s important to make sure that your building is in the proper condition to be sold, because the buyer is most likely going to get an inspection and a survey done. And they’re going to do their due diligence on the property. So again, you don’t want to get to the finish line and then the buyer finds defects in the property or something, and now you have an issue and you can’t even embark on the transaction. I think those would be my advice as far as owning the building is concerned.
When a dentist is considering transitioning their practice, how quiet should they keep that. Is there a problem with too many people knowing about it?
I mean, every deal’s different, every situation is different. So this may be more impactful for some than others, but I would say one piece of advice that I just ran into in a transaction is, I was representing a buyer in a deal, and the buyer in the deal ended up not being able to get the financing to buy the practice. And they also couldn’t come to an agreement on the lease with the third-party landlord for the building. So they had to back out of the deal because they couldn’t get the financing for the deal, and also even if they could, the lease was going to be an issue. That’s pretty rare. I mean, most deals do go through, but this was sort of on the rare side that it didn’t. And the seller had told the staff in the practice about the deal, and had done so for a significant period of time, actually. Even before we even had a signed purchase agreement or had gotten that negotiated. So they made that mistake, and it’s going to probably cause them adverse effects.
They actually blamed the buyer for that. We actually see things a little bit differently in the sense that we didn’t tell them to tell their staff. If you’re on the seller’s side, it’s important to not tell the staff until you have to. Now, when you have to is going to depend on your practice and your situation. For some they have no choice, they’re going to have to tell them even before the purchase agreement is signed. For others, they can get away with making sure they have signed documents before they go and tell the staff. So that’s where you bring your team in. Andy [Edmister of ddsmatch Southwest] does a great job of that, facilitating it at the right time to make sure that they’re telling staff at the right time, and you can lean on your teammates as to when you’re supposed to do that.
What would you say to a doctor who thinks they don’t need the full team of advisors or a broker, that they can do this all themselves?
First and foremost, as I mentioned before, even if the seller is motivated and has the itch to go do all the things a broker would do, they probably don’t have the time. I would be certain they probably don’t have the expertise, but let’s just say they did, let’s say they’ve been a broker in the past before they have their own practice. They probably don’t have the time to do it properly, and when you’re selling a practice and you’re going to take in a lot of money, it’s important to do everything properly. And so it’s really important to retain a broker in the transaction if you’re selling because they are going to work really hard for you to, number one, locate a buyer. And not just locate any buyer, but locate the right buyer for your practice which is something ddsmatch does very well. They’re also going to help facilitate the transaction. There are a lot of things that go into a transaction that doctors don’t realize.
Many people think sometimes that brokers just sort of sit on the sideline, put parties together, and wait for the deal to happen, and that’s all they do. That’s not the case. Brokers work really hard to make sure that every part of the transaction is covered, and that they’re also bridging the gap between any kind of negotiations between the parties. Sometimes if attorneys are butting heads or something like that, the broker can step in and do a really good job to facilitate the deal to bridge any gaps and make sure that it goes as smoothly as it possibly can. We’ve already talked in this conversation about why it’s important to keep things very smooth in a transaction, because there is so much at stake and there are so many emotions that either, one, you don’t close a deal if you’re not able to bridge those gaps. Or two, you close the deal, but then you have problems afterward. As we know, nobody wants problems after the fact either.
Brokers are very important, not just to find the particular buyers that are good for your practice, but also to help hold your hand throughout the entire transaction.
Why would you recommend dentists use ddsmatch Southwest?
I would say that if someone came to me and said, “Hey, thinking about selling through ddsmatch. Should I do that?” I would say, “Yeah. They’re an awesome company. They have really hard working brokers.” Most of the work that I’ve done with ddsmatch has been with Andy Edmister, so that’s the person that I would talk about the most, but I’m sure the same goes for the other brokers. You want somebody who’s going to work really hard to not only get you a buyer, but get you the right buyer and cares about that, and who cares about the deal. They care about all the components that we’ve talked about on this interview, such as making it a good win-win for all parties involved. Even though the brokers represent the seller in the deal, and they do so zealously, it’s important that the buyer feels good about the deal too. Because, again, you don’t want problems that could derail the deal, you don’t want problems after the deal.
So they do a really good job at making sure that it’s a win-win and that everybody is happy, and that it’s fair and reasonable for everybody. Again, they work really hard, so certainly I would advocate their services.
We Can Help You Get What You Want from Your Dental Practice for Sale
At ddsmatch Southwest, we offer two things that will get you closer to what you want out of the sale of your dental practice. First, we have our Trusted Transition Process, a clear and consistent path to help you transition your practice while maintaining the legacy you’ve worked to establish. We put the wisdom and experience of hundreds of transitions from across the county to work for you.
https://www.ddsmatchsouthwest.com/wp-content/uploads/2018/10/1-dental-practice-for-sale_HERO.jpg6281200adminhttps://www.ddsmatchsouthwest.com/wp-content/uploads/2018/06/DDSMatch-buy-a-dental-practice-sell-a-dental-practice.pngadmin2018-10-05 05:00:492019-03-02 00:13:53Why it Takes a Team to Put a Dental Practice for Sale
No doubt about it, transitioning your practice is the culmination of a lifetime of work, the capstone to your career. It’s a bittersweet time. It’s hard to hand what you’ve spent decades building, over to someone who, however qualified and well-intentioned, will not run it the way you did. But, reaping the reward of all of that hard work, and enjoying the proceeds, can be a rewarding time of life. With all of this, you don’t need any unnecessary stress. When it comes to selling a dental practice, there is already quite a bit of stress that is unavoidable.
The good news is, there are also a lot of stress factors that can be avoided. With planning and the right team surrounding you, your transition can be much easier than it would be otherwise. Below, we’ll discuss a couple of factors that can make all the difference between a smooth transition, and a disaster.
Set Your Goals
The first thing is to determine what it is that you want out of your transition. While the sale price is certainly a major factor, it’s hardly the only one. How do you want to sell? An outright sale where you get cash for the full amount and hand over the keys? A buy-in where you work with an associate who purchases the practice over time? Do you want to stay in the practice for a while after the sale, or do you want to hand over the keys and walk away? What kind of buyer are you looking for? One with the deepest pockets, or one who will best take care of your legacy and your staff? These questions need to be considered carefully in order to ensure the practice transition is the one you want, on the terms that matter most to you.
Once you have your team (more on that below), discuss your goals with them. Get feedback from your advisors, your family, other doctors you know who’ve had good (or bad) transitions. This will help greatly to clarify what is best for you and your practice, and will be invaluable to getting you to the goals you set for the transition. Also, your advisors need to know what they are working toward, or they can’t help you get there.
If you haven’t guessed already, a practice transition is a complicated process that balances several factors, some of which may be competing, and no two transitions look alike. Because of this, there is no such thing as “too soon” to start thinking about it. A good rule of thumb, however, is five years ahead of any transition. When you think you are less than five years away from selling a dental practice, you should have your practice assessed for transition.
This assessment, by a dental broker or dental business valuator, will give you a sense of the value of your practice. It will also, importantly, give you a better sense of what changes you should consider that can add value to your practice in advance of a sale, and which changes you shouldn’t bother with. Of course, as discussed above, you need to have a sense of how you want to transition your practice before you have it evaluated, as that will factor greatly into what changes you should be thinking about.
When you are at the point where you are ready to move forward with the transition, its essential to pick a firm date to have the transaction completed. There are a lot of details to be worked out—financial, legal, real estate, etc.—and a lot of places where negotiations can get sidetracked. Getting mired in endless discussions about the minutia can be maddening, and create unnecessary stress and frustration, tainting the process. Building in a non-negotiable closing date keeps everyone on track and moving toward the finish line at the right pace. In real estate, this is known as the “time is of the essence” clause, where if a party fails to meet the deadline, the deal is off.
That being said, as mentioned above, every transition is different. There are a lot of factors at play, from the personalities involved, to the location of the practice, and some delay may be inevitable when you put up a dental practice for sale. Texas, for instance, has major city markets and smaller rural areas. Some things happen faster in the big city, where professionals are abundant. But, that also may mean you end up waiting in line with everyone else trying to do the same thing. In a smaller market, you may have fewer options, but sometimes things get done faster where everyone knows everyone else. This is to say, be firm on your closing date, but be flexible if a change in schedule is necessary or possibly even advantageous to you getting what you want out of the deal.
We’ve mentioned your team a few times already. Who should be on your team? At minimum, you should have a dental attorney, a dental CPA, and a dental broker. These are experts knowledgeable about the particulars of their respective fields specifically as they relate to the dental business in transition.
Why not use your brother-in-law who is a good general attorney? Or a family friend with a great accounting firm? There are two reasons.
First, there are things about the business of dental practice that don’t come into play in other industries. Dental attorneys know what is standard practice for a transition and which parts of your transition may be unique. They’re not going to have to take the time to figure out the nuances of the industry, which reduces your costs, while increasing your protection.
Dental CPAs understand the tax implications of the sale and can advise on how to allocate costs in a way that will be the most advantageous to you, and make sure the money is being handled property. A mistake here could cost you thousands.
A dental broker like ddsmatch Southwest is someone in your corner who has the experience of managing numerous transitions and can walk you through each step of the process. They can also work with the other members of your team, keeping you as involved (or not involved) as much as you want.
And the second reason for a strong team is that this is probably the biggest business dealing you’ve ever been a party to, and will set the stage for the rest of your life. Why take chances? Put experience on your side.
Let ddsmatch Southwest Take the Stress out of Selling a Dental Practice
Too often, the practice transition starts off hopeful, but inexperience becomes an obstruction that can delay or derail the whole process. The ddsmatch Southwest team consists of trusted dental brokers who bring the experience of hundreds of transitions from across the country. Our Trusted Transition Process™ is a proven method to help you meet your goals in putting your dental practice for sale. Texas and New Mexico are our primary markets, but we are happy to refer you to our capable affiliates in other regions.
If you are considering a transition in the next five years, give us a call for a free, no-obligation Practice Transition Assessment. Find out what we can do for you today.
https://www.ddsmatchsouthwest.com/wp-content/uploads/2018/10/3-dental-practice-for-sale-texas-selling-a-dental-practice_HERO.jpg6281200adminhttps://www.ddsmatchsouthwest.com/wp-content/uploads/2018/06/DDSMatch-buy-a-dental-practice-sell-a-dental-practice.pngadmin2018-09-19 05:00:462018-10-05 22:54:37Key Elements to Selling a Dental Practice
The old adage “if it ain’t broke, don’t fix it,” is a gem of pragmatism. If you’ve built a successful dental practice using a certain set of tools and techniques, why change? Change for the sake of change is not a good argument. If, however, you are considering putting your dental office for sale within the next five years, there are some updates that can increase the value of your practice.
While there is likely nothing wrong with the way that you practice, you should consider that potential buyers are going to be younger than you, and more experienced using newer equipment. When they look at your practice, they will see the value of it as a business, but may also see outdated technology that, while it works just fine, may not be what they are experienced using, and may not be what they envision for a 21st-century dental office.
The question is, which investments in office technology upgrades will bring a return, and which won’t. Here we discuss some high-impact, yet low-cost, technological upgrades that can boost the value of your practice. We’re not talking about a full office remodel, just a few changes that can have a real impact on your practice, and on your patients.
If you are considering transitioning your practice within the next five years, it is also worthwhile to have an outside consultant review your office and make recommendations about other possible value-building updates. Here at ddsmatch Southwest, one of our specialties is consulting with doctors about getting ready to transition their practice, and we can look at the particulars of your practice area to help you get ready to put up your dental practice for sale. San Antonio, TX, for instance, is a very different market than Lubbock, and that needs to be considered. What will bring value in Dallas, might not in Midland.
Digital Radiography: Save Time and Build Goodwill with Your Patients
Digital radiography is a great update to an office that is using X-rays. First, it’s faster than an X-ray. Capturing the image is quick and easy, and it’s available on a computer screen right next to your patient in the dental chair. This makes informed consent and patient education simpler. Patients find it impressive, and they will appreciate not being exposed to radiation. This can be a very pleasant surprise the first time a patient encounters it.
If you are using patient software, you’ll want to check compatibility to make sure whatever digital radiography system you choose will integrate with your existing system. And, while there is a learning curve involved, ultimately, you’ll find that digital radiography will save you time. And, this time adds up over months and years.
Electric Handpieces: Greater Consistency and Control without the “Drilling Sound”
While you may have developed an immunity to the high-pitched whine of your drill, you can be sure that your patients have not. Few things send a shiver down the spine of dental patients like the dreaded “drilling sound.” Many of the newer electric handpieces are designed to be as close to silent as they can be. So while the work you are performing remains the same, your patient’s experience during the treatment will be very different, even if primarily from a psychological standpoint.
In a more practical sense, electric handpieces provide consistent levels of torque—which allow you to work more efficiently—and produce smoother tooth preparations. Additionally, they cut more easily through crowns and restorative material, where the bur on air-driven handpieces are more likely to make chattering noises and may produce a less efficient cut. They are also more effective and efficient when dealing with metals, ceramics, and polishing composites.
There are a variety of products available, and it’s worthwhile to consider their benefits and compromises. There are varying degrees of features and versatility, including things like programmable and variable settings, and touch screens. Find a system with a good user interface that you feel comfortable using. Consider which options would most benefit your practice and clientele. Also, if you are consulting with an outside expert on value-building, consider they’ll help you consider where your potential buyers may place greater value.
And, while there will be a bit of a learning curve as with digital radiography, ultimately, it will make your practice more efficient and provide a better experience for your patients. Whether you are considering putting your dental office for sale or not, this upgrade will have nothing but a positive impact on your practice. If you are, for instance, putting your dental practice for sale, San Antonio, TX, patients are the same as anywhere— no one wants to hear that “drilling sound” ever again, if they can avoid it.
Intraoral Camera: Let Your Patients See What You See
An intraoral camera can prove the truth of a couple of other old adages, that “a picture is worth a thousand words” and “talk is cheap.” Intraoral cameras allow your patient to see what you see. Rather than just explaining what the problem is, and why its a problem, you can show them. The impact of seeing a cracked tooth goes a long way towards understanding why it’s such a significant problem, and why the care being recommended is in the patient’s best interest, not simply a dentist’s sales effort.
Intraoral cameras can impact ongoing care as well. By building a photographic record of your patient’s teeth, you can use this to document progress, which the patient may find encouraging. You can also use the technology to do document a problem that is becoming more severe, to educate more reluctant patients. Additionally, your hygienists can use the images to document calculus buildup and, similarly, show the effects of good brushing and flossing, or the lack thereof.
As with the other technological improvements discussed above, the response from patients will be positive. The more they can understand about what you see and why you recommend treatments, the more confidence they’ll have in you, and your recommendations. This increase in confidence can help with patient retention, referrals, and patient compliance with recommended treatments. All of which is good for your bottom line, increasing the value of your practice.
Build Value Before You Put Your Dental Practice for Sale
You may think, “if the buying dentist wants all of these fancy gadgets, let them foot the bill.” And, honestly, depending on your market, that may be the smart move. Generally, however, these are low-cost ways to increase the value of your practice through patient satisfaction and retention, increasing procedures performed and collections, and making your office more attractive to buyers.
But, every practice is different. This is why, if you are considering transitioning in the next five years, now is a good time to call ddsmatch Southwest for a Free Practice Transition Assessment. Let us take the experience of hundreds of dentists from across the country and use it to help you get what you want out of your transition.
Dr. John Johnson Answers the Question: “Why Do I Need a Broker to Sell My Dental Practice?”
You’ve built a successful business as a dentist, and you know it better than anyone. You might ask yourself, “Why do I need a broker to sell my dental practice?” The short answer is, because a practice sale involves a lot more than dentistry. Below is an interview with one satisfied pediatric dentist that ddsmatch Southwest helped successfully transition his practice. Read about his experience, and why he recommends ddsmatch Southwest without hesitation.
When did you sell your practice?
“We sold it last November . Well, it was actually October, and we closed on it the first of November. Then they asked me to stay on with them for two years in kind of a step-down method where I worked full-time for them for one year and then just part-time the next year.”
I understand that’s pretty typical. Let’s go way back to the beginning, what made you decide it was time to move along?
“Well, I just decided. My wife and I have talked it over for years and had a little health incident that showed up, and we decided it’s time to retire. We’ve been saving for many, many years to do it, so we just said now’s the time.”
About how far in advance did you start really preparing or thinking about it versus when you actually decided it was time?
“We started thinking about it about two years before we actually called Andy [Edmister].”
How did you know to call Andy?
“Through friends, talked to him. One of my friends that’s a dentist here told me I needed to talk to him, and that’s how I did it. Then I met up with him at a convention, dental convention, and we talked it over. I had already talked to a different broker, and it just didn’t work out. Andy, he had all the right answers, so that’s why we went with him.”
What was your experience with them?
“I definitely recommend going with him. It’s very difficult though for a specialist to find other people in a town like where we live, for them to come out into our smaller town. They want to stay in the big cities. But he eventually found out a way for it to work. I’m happy with it now. I’ve worked nine months into the 12-month contract now, so I’m just looking gradually a way of phasing out.”
Why are you glad that you chose ddsmatch Southwest?
“It seemed much more organized, more professional. They have different ideas and told us what to expect during the process, which, to me, an individual broker, I think, wouldn’t have been able to do that. And a lot of the paperwork was done without any problems. We also had recommendations on lawyers to look at the contracts, which I don’t know if we would’ve found without Andy guiding us in that direction.
Do you feel like it saved you any stress?
“Oh, if I tried to sell it on my own, it would’ve been crazy. It would’ve been really hard. This way, we found a qualified company to buy it that I’m happy with. We could’ve literally walked up and locked the doors. We’ve had employees that have worked with us for 20, 30, even 40 years in my group, so that was our biggest concern was how to handle our employees. We made it into the contract where they took them on, and it’s worked out well.”
It sounds like the transition plan has been pretty organized.
“Yeah, pretty. It has stumbling blocks, different philosophies and things, but the company that I’ve gone with has been just more than … they just bend over backwards to help me keep it going.”
You were purchased by a DSO. What are the pros and cons of selling to a DSO over what you think it would’ve been if you’d gone private?
“It’s more organized. They have teams of people that would come in, and that’s a good point, and it’s also a bad point because you’re used to just tackling a problem on your own, and now you have this human relations group come in and tell you how to do stuff. That’s different, but, like I said, my direct manager over the dentists in our area, they just said, ‘You just keep the practice just like you’ve been doing for 25 years.’ That’s the way it’s been going.”
You’re working essentially on their staff now, has that been a positive experience?
“You gotta be real careful with who they go with though. I mean, each DSO’s different. This one is a local DSO that was started here, and they’re just trying to build up the practices around the area, so that makes it a lot easier because they know the population. They know what they expect out of dentists. It’s just a lot better than some huge national company coming in there and buying you out.”
Do you have any other advice to someone who is in the early stages, thinking retirement is on the horizon?
“I had wished that, looking back, that I was able probably to sell to a private individual. This is nothing about the company. The company’s great. They’re going to keep the reins going and all the stuff. But the change from an individual practice to this corporate group, it’s been hard on the people in the office.
“So, I would give it a little more patience, even with Andy. Andy said, ‘Anything you want to do, you want to say no to this, let’s keep going out for a private buyer.’ We had a calendar set up where we wanted to go ahead and start moving out, so that’s why we went with this group. I know there’s buyers out there, but with the cost of school nowadays, it’s very difficult for someone graduating right out of school and a residency and being able to afford to buy a practice. To get them qualified to buy a practice would be very difficult.”
Could you tell me just a little bit about the area you’re in and how being in a smaller market impacts your practice?
[W]e’re a college city, population of about 250,000. [W]e’re in Lubbock. We have Texas Tech here, 40,000 students. The big thing about Lubbock is, we draw from all over eastern New Mexico and from Amarillo to Midland. We call ourselves a hub city, so people come from all over the area. My practice draws from about 120 miles around. People can hop on a Southwest and be in Dallas in 50 minutes. But they don’t see that.
How do you emotionally prepare yourself to let go of a practice that you built by hand? What kind of counsel would you give to somebody who’s really just saying, “How do I let go?”
“The way I look at it is, I look at my old partner when I bought him out. He stayed on with me for about seven years, eight years after, and I just pleaded with him not to retire, but he said, ‘It’s time.’ But I look at the mistakes that I made when I was just coming into the practice. You say some hurtful things. You make some wrong mistakes with staff. You buy the wrong things. You have to think back to then and what it was like and be a little more sympathetic to the new buyer and realize it’s time to start letting them take the reins and you moving out. It makes it a lot easier.”
The vision of what you want to do next is probably driving you. What do you envision you’re going to spend your time doing?
“Yeah, fishing. I’m a pilot, flying. We love cars, so we have a racetrack just a few miles away from the house. Just getting away from under that grind of the practice all the time.
“You gotta plan many, many years in advance though. I mean, we had our financial planner literally in sophomore year . . . and he goes, “I know you can’t start saving now, but be prepared for it when it’s time, and we’ll get you going.” It’s been 29 years now, and he got us prepared. You can’t just walk up the last five years and start saving. You have to be ready for it.”
Is there anything else that you wish you would’ve known or would want a dentist who’s or is getting ready to sell and considering ddsmatch Southwest to know?
“One thing Andy did for us that was really good was he talked to us about having a team on our side, the lawyer and my personal CPA. Andy and Randy all worked together on that, so when they would throw us a contract, if I didn’t have the lawyer, I would’ve been eaten up, the first time we saw it from the DSO. And it was a matter of negotiations over many, many weeks. They throw it at us, we go through, cross this out, cross that out, hand it back. We did that just back and forth for many, many weeks until it finally was acceptable for both of us.
“Without a real, nailed-in contract, I think it would’ve been a lot more difficult. I know to the tenth of a percent what my earnings are. I know what my hours are. Everything’s been written in, so there’s no question about it.”
Was it worth using ddsmatch Southwest ? And if so, why?
“I would definitely do it again. It was really a really good experience. I’m not just saying that for this interview. I wouldn’t have done the interview if I didn’t think that. But Andy just said, ‘Text me anytime of the day or night. Whatever you need, just ask questions.’ He would find an answer for it. We had many, many ups and downs all the way through the whole process. Andy even helped us when we had to have the meeting with the staff and say, ‘Hey, this is coming down the pipe.’ He ran the meeting and answered questions. A lot of people were worried and things. It just made it a lot easier. A lot of the uneasiness, he calmed it down a lot.”
Why would you recommend ddsmatch Southwest?
“I just think they’re highly accurate. They work for you. Very friendly, very knowledgeable, and they’ll take care of you. If you have any issues, you tell them, and they’ll watch out extra carefully, just to make sure those issues are covered before you actually sell. There was no time in the process where I couldn’t have walked up to him and said, ‘Andy, this isn’t right. We’re out of here.’ He would’ve said, ‘Okay, let’s go. Let’s move on.’”
You really felt like ddsmatch Southwest was on your side?
Don’t Put Your Dental Practice for Sale by Owner
Dr. Johnson’s experience with ddsmatch Southwest shows the real value of using a broker. With 30-years experience, no one knew his practice and his market better than him. But the market he knew was for selling dental services, not the market for selling dental practices. Instead of just assuming, “I can sell my dental practice on my own,” Dr. Johnson recognized the complexity of brokering a sale (legal, real estate, valuation, finding the right buyer, getting it done on schedule) is far beyond the expertise of even the most experienced doctors.
https://www.ddsmatchsouthwest.com/wp-content/uploads/2018/08/4-dental-practice-for-sale-by-owner-sell-my-dental-practice.jpg6281200adminhttps://www.ddsmatchsouthwest.com/wp-content/uploads/2018/06/DDSMatch-buy-a-dental-practice-sell-a-dental-practice.pngadmin2018-08-29 05:00:402019-03-06 01:21:17Need a Broker When Selling Practice?
Be Proactive in Listing Your Dental Office for Sale
Life comes at you fast. Everyone has their share of accidents, illness, and other life-changing events, some more tragic than others. We all share the dream of exiting our careers on our own terms and on our own schedule, but rarely do we consider how easily that can be derailed. If you’ve read our recent post, “ In His Own Words: How ddsmatch Southwest Helped Me in Selling a Dental Practice,” you recognize the need to be ready for whatever life brings your way. While you may very well enjoy a decades-long practice and retire on your own terms, not everyone will be so lucky. But, you can be prepared.
Below are five steps to help you be ready to put your dental office for sale in case of an emergency.
Hope for the Best, Plan for the Worst
No one has bemoaned being too prepared, but too many find out the hard way they were not prepared enough. Even if you never need a contingency plan, you’ll benefit from the peace of mind of knowing that, should the unexpected happen, the people you care about and the practice you’ve built will be taken care of.
Clearly Define Your Retirement Goals
First, you should have a reasonable retirement plan that can be put into place at any time. Wherever you are in your career, it pays to thinking about what you need to get out of a sale of your practice if there were an emergency, so you could be able to live and support your loved ones in the way that you want. This requires a fair amount of advance planning and outside help.
If you don’t have a dental CPA, find one. The same goes for a dental attorney, a practice broker, such as ddsmatch Southwest, and possibly an insurance advisor and a practice consultant. If you don’t know how to find qualified team members, your broker can help. Here at ddsmatch Southwest, we have a large team of strategic partners and can make referrals to experts based on our extensive experience in dental practice transitions.
Once you have your team in place, they can work with you to clearly identify the amount you think you need to net from the sale of your practice. Then have your dental CPA, insurance advisor, and practice consultant take a look at your books and your practice to determine whether its realistic with your current practice. If you need to increase collections or cash flow, your advisors can help guide you well in advance about what investments will bring the most reasonable returns, and which won’t. They can suggest or talk you through other changes that can help you maximize your earnings, investments, and savings, while reducing costs and taxes.
Maximize Value without Losing Value
The old maxim that it takes money to make money is true. If you need to invest in or expand your practice to meet your retirement goals, it’s going to require a capital investment. A common mistake is a dentist investing in growth without adequately protecting their current assets and practice. Also, value-saving measures don’t have to be austere. It can include non-compete agreements with your key staff members and associates. It can include an insurance review. It can include better tax planning to identify areas for savings. It definitely should include a solid plan to protect your personal and practice assets. Your advisors can help you make a plan that won’t overly burden your current practice, savings, or income.
Remember, your goals here are to grow the practice and increase cash flow, while still being prepared for whatever comes your way. There are established methods of doing this in the dental industry: grow your patient base, optimize treatment plan acceptance, improve your patient’s overall experience (customer service). You should regularly review your fee schedule and, when you do, negotiate those with the insurance providers. This simple step can add 5-10% on average to your revenue.
Finally, an important asset to your practice is your staff. Create an office culture that inspires loyalty and, when the time for transition approaches, work with your staff to ensure they stay on through the transition.
Figure Out What Kind of Sale You Want
Basically, this is about whether you want an outright sale of the entire practice to an outside dentist or whether you want to bring on an associate with a buy-in agreement.
An outright sale can be good, as it yields a lump sum payment for the entire value of the practice. It allows for a fast transition and, financially, is less risky than a buy-in. But there are things to watch out for:
Until you close escrow, it’s still your practice. Treat it that way. Don’t go into retirement mode before you close.
Don’t just take the first bidder. Get the buyer that you want to protect what you have built (brokers such as your ddsmatch Southwest team are experienced with finding and matching appropriate buyers).
Don’t try and hide negative news from your buyer. They’ll find it out eventually, and it may be much harder to manage and erode trust after the fact.
Conversely, a lot of information needs to be confidential, make sure you keep that confidence. Your advisors will help you determine which information should be held closely, and which is shared.
Don’t market your practice before its ready. A broker, business valuator (such as Blue & Co., a ddsmatch Southwest strategic partner), or an experienced dental CPA can advise on worthwhile investments that can maximize your practice value before showing it to potential buyers.
If you think retirement is still a long way off, you may want to consider an inside transfer. That would mean something like selling to an associate over a period of years, three to five being fairly typical. A benefit of this is that it allows you to grow the practice in the interim, and perhaps take more time for your own interests. It can also be motivating to associates and encourage them to stay.
Again, however, it will require diligence and careful planning in conjunction with your team of advisors. Your lawyer in particular will be key–you’ll need a solid agreement that clearly details the agreement and its terms: when the transition will be, how the transition will occur, what will be the measure for valuing the practice, how will everyone be paid, and how and under what conditions can the agreement be cancelled.
Contingency Planning for the Practice
The first three steps all apply when you are putting your dental office for sale on your own terms. This step, and the next one, address contingency plans for when you must do it on life’s terms, instead. If you pass away, are injured, or start seeing signs your body is not going to cooperate with your timelines, you need to ensure that your practice continues operating at the highest level possible until a sale can be completed. This will allow you and your family to get the full value of the practice, while protecting your employees and providing continued care for your patients.
Some contingency plans may include a buy-sell agreement. This is an agreement used to reallocate a share of a business if an owner dies or leaves the business and requires that the business share is sold to the company or the remaining members of the business according to a predetermined formula. Life and disability insurance plans also play a role. The proceeds from insurance can be used in a variety of ways, including hiring an associate to work in the practice until a sale is complete.
Your Personal Contingency Plan
If you haven’t done so already, work closely with your dental lawyer and dental CPA to get your affairs in order. If you have already done this, review it with your advisors and make sure its adequate to meet your retirement and contingency goals. It should be adequate to cover your family’s needs, but also to take care of you long-term in case of disability. If you are lacking assets to cover these costs, consider life and disability insurance plans. Your documents should also include things like assigning power of attorney and an advance medical directive.
Start Planning Now: Be Ready to Put Your Dental Office for Sale
A common rule of thumb is that two to five years is the window for planning for transitioning your practice. But, when it comes to being prepared, it’s never too early to start. Here at ddsmatch Southwest, we offer a free Practice Transition Assessment for dentists who are looking at transitioning in the next five years. It’s an easy way to get a professional look at your practice and what changes would be advantageous to maximize value before you put your dental office for sale. Contact us today for your no-obligation assessment.
https://www.ddsmatchsouthwest.com/wp-content/uploads/2018/06/DDSMatch-buy-a-dental-practice-sell-a-dental-practice.png00adminhttps://www.ddsmatchsouthwest.com/wp-content/uploads/2018/06/DDSMatch-buy-a-dental-practice-sell-a-dental-practice.pngadmin2018-08-22 05:00:062018-10-05 22:54:53Be Prepared for Life’s Surprises