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.