Posted on Sep 26, 2011
Image Credit: © Dreamstime.com
Posted on Sep 26, 2011
By Sean P. Hudson, Hudson Transition Partners
Just like everything else in life, the key to a successful dental practice transition is to have a plan and to plan early. Many times by the time a doctor comes to me there is already a significant reduction in their practice’s value. With good intentions, they have cut back their time in the office to spend more time with their families, travel, or pursue other interests.
The first step is to select a time-frame for the practice transition. If the doctor is planning to retire at 65, then he or she should plan on transitioning the practice about two to five years prior. The reason for this is it generally takes time to find a buyer. Plus, more often than not that buyer is going to want the retiring doctor to stay on as an associate for a period of time to assist in the transition. The important thing to consider here is to select a time frame that will allow the doctor to sell his or her practice at its “peak,” before they start slowing down and the practice begins to lose value.
The second step is to have a professional dental practice valuation completed. This can be done by a professional dental practice broker and/or an experienced dental consultant. Again, this stage should take place at least five years prior to retirement. Many times, valuation specialists will offer a free update to their dental practice valuation. This affords the doctor the luxury to have the valuation done early to see what improvements can be made to either increase or stabilize the value of the practice.
When it is time to sell a dental practice, the dentist can reap the rewards of a higher valuation. The important thing here is to find a qualified person to value the dental practice. While assessing that person, the doctor should also find out how many practices they have valuated in the past, request to see a sample of their work, ask what organizations they belong to and call on their references. A lot of times a doctor will be surprised to know that their friends and colleagues have already started the process and are more than willing to share their experience.
The third and final step is for the owner to decide how he or she wishes to sell their practice. In many – but certainly not all – cases, the buyer would like the selling dentist to stay on as an associate for a predetermined period of time to smooth the transition process.
Just remember, the key to all these dental transition phases is to establish a plan and to plan early. If it’s time, talk to your family, financial advisor, accountant and professional dental practice broker. Your life’s work is worth it.