Posted on Oct 10, 2011
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Posted on Oct 10, 2011
By Larry M. Chatterly and Randon J. Jensen, CTC Associates
At some point in your career you will feel the need for change. You may have a need to overcome solo-economic dependency, improve staff relations, or find some relief from the stress of managing a private practice.
The following are among the most common reasons doctors give for considering a transition and when it may be the right time for selling a dental practice:
If you are motivated by one of these factors to make a change, then now is the right time to consider some type of dental practice transition.
Perhaps the best indicator is how you feel inside. Decide whether you are an “increaser” or a “decreaser.” If you can’t wait to get back to the office on Monday morning, if you still enjoy managing and motivating your staff, or if you are constantly looking for ways to grow and improve your practice and see more patients, then you are considered an increaser. On the other hand, if you have seriously entertained thoughts of cutting back the time you spend in the practice, if you experience a lot of stress and fatigue, or if you are bored with the practice and just marking time, you are probably a decreaser.
As an increaser the primary reason for considering a sale of any portion of your practice would be to bring on another equally committed doctor to help manage the growth. If you are a decreaser, you should investigate the possibility of a transition in the near future. Your primary motive will likely be to enhance your quality of life by making the most out of your remaining time in dentistry.
Keep in mind, if you decide to sell your dental practice, you don’t necessarily have to quit. You just need to know how to structure the right kind of relationship with a new doctor. Most dentists equate selling their practice with retirement, or a loss of control and status, and/or a reduction in income, and therefore often wait too long to begin the process. Across the country, we see more and more dentists selling their practices up to five years before retiring from dentistry.
If properly structured, these sale/work-back arrangements can be a very successful way to transition a dental practice. This type of transition allows a practitioner to sell the dental practice to another established practitioner, a new dentist with no patient base, or possibly an independent business entity. Depending on your needs and goals, these dental practice transitions can allow you to “cash in” on your practice equity and still work for many years to come.
A dental practice transition allows you to overcome what is called solo-economic dependency. This refers to the negative cash flow that takes place when you–as a solo practitioner–are away from the practice. Extra time away from the practice can help you discover or expand other interests and spend more quality time with family and friends.
In summary, our experience suggests that any doctor with a time line for retirement of five years or less who does not have a dental practice transition plan underway could be jeopardizing one of his/her most valuable assets. Far too many doctors wait too long and receive too little for their practices. This is a highly individual and complex issue worthy of very careful planning and consideration. A thorough and realistic evaluation of your specific situation and your dental practice transition options can be invaluable for arriving at the best decision. Partnering with dental practice brokers who are immersed in these efforts everyday will provide you the support to make the best deal.