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The Practice is Priority One: Multi-Partner Dental Practice Transitions

A+ A- The Practice is Priority One: Multi-Partner Dental Practice Transitions

There are many factors to consider when thinking about the possibility of a dental practice transition, especially when selling the practice involves multiple partners. Each partner will likely have different priorities. For example, the exiting partner may be concerned with the maximum gain on their investment while the remaining partner may be thinking about the additional financial responsibility and shift in office dynamics.

Consulting with an NAPB dental practice broker is advisable because, especially in the case of a dental practice sale involving multiple partners, the interests of the practice must be the top priority.

One way to ensure a smooth dental practice transition is to observe some of the following suggestions:

  1. Gain a clear snapshot of the current cash flow for the practice, and work together to arrive at agreed-upon projections for the future. This will assist in the dental practice valuation and determining the exact buyout amount for the exiting partner.
  2. When deciding on a buyout amount, build in some flexibility with the payment schedule. Usually a buyout schedule is for a fixed term (5 to 7 years is standard). As you progress, it is sometimes necessary to extend the term for a year or two. The remaining dentist(s) may encounter unforeseeable challenges, and the exiting doctor will know with certainty the entire amount they are owed, but building in some fluidity preserves your dental practice transition.
  3. Cap the amount paid to the exiting dentist each year. For instance, base the annual payment off of a percentage of the practice’s income for that year.
  4. Set a minimum for the remaining partners’ salaries each year so they can depend on consistent income during the dental practice transition.

Occasionally, within the buyout period, it makes sense to add an additional partner to the practice. Flexibility of terms is crucial at this point. It provides a landscape where the exiting partner is guaranteed a repayment on their venture, and the remaining partners have room to make decisions that grow and improve their business. It’s a win-win.

Making the dental practice the #1 priority is the best way to ensure a streamlined dental practice transition for a multi-partner dental practice.

Please contact an NAPB dental practice broker to consider your options for selling your multi-partner dental practice.

Posted on Feb 11, 2013
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