For many dentists, owning your dental practice consumes the majority of your energy, finances, and professional life. Your practice is more to you than just a profession, its years of blood, sweat, and tears…decades of staff and patient memories. These factors have caused you to form an emotional attachment to your practice. For many dental practice owners, the dollar value represents a significant portion of their financial assets. It’s taken years to develop a solid patient base and maintain a substantial cash flow. These various values make your practice extremely attractive to potential buyers.
Whether your need to transition out of dentistry is due to a career change, desire to cut back on responsibilities, or need to retire, it’s important to establish a transition plan. The achieved success of your transition is directly linked to the amount of details listed in your plan and your ability to successfully execute those details.
The first step in developing a transition plan is to identify your actual transition goals and assign an order of priority to achieve each goal. Prioritization will have a significant impact on certain aspects of your transition plan. Here are a few common goals to consider:
- Preferred transition timeline
- Transfer of patient care responsibility
- Secure future employment for staff or set clear expectations to facilitate a smooth transition of leadership to the new dentist
- Maximize practice equity
There is no right or wrong to selecting the area in which you decide to place emphasis. If your health \is the main reason for your decision to transition, this should be what dictates the order of your priorities. If your practice’s sale price in the driving factor, then maximizing your financial return should be at the top of your list. In addition to considering the components of your unique transition plan, also take the time to research the current marketplace. Be aware of the going rate in your area, many buyers are motivated by location.
Another important step in formulating a transition plan is appraising the practice. The information gathered during this process will assist in determining your transition options. Options may include an outright sale, role reversal sale, partnership, merger, or production acquisition transaction. Conducting an appraisal will also provide a comparison to other practices involves in similar transitions processes. Finally, an appraisal will provide ideas on how to enhance the value of your practice.
Regardless of how soon you plan to transition, it’s never too early to develop an exit strategy. Getting your practice appraised is the first step in the process. Your transition planning should begin the day you acquire your practice. After all, your exit strategy is part of the potential financial reward of practicing.
For more information on planning your transition out of dentistry, contact Ellen Dorner, the Managing Director of N/L Transitions. With over 25 years in the dental industry, Ellen’s experience will help guide you through the transition process from start to finish. She can be reached at 410-616-2042 or by emailing edorner@nltransitions.com.