the portion allocated to “goodwill.” Goodwill represents the intangible
assets of a business—the difference between an established, successful business
and one that has yet to achieve success. In an established dental
practice, goodwill consists largely of the name, reputation and skill of
the dentist and team, which have led to a strong, loyal patient base and
consistent inflow of new patients. For the buyer, goodwill greatly
increases the likelihood of continued cash flow from retention of that
patient base and from new patients.
practice is paramount to a successful transition. A young dentist who
purchased an established practice in Southwest Florida recently said, “The
goodwill of the seller in my transition was priceless. His vote of
confidence to our patients has increased retention and allowed me to
succeed on a level I never would have been able to do otherwise.”
In order to assure that you retain goodwill not only prior to selling but also
through the critical transition time during and after the sale, you should
maintain your reputation and good name within the practice and
community at all times. Through the transition process and even afterward,
remain involved in study clubs, the local dental association, community
organizations and volunteer groups such as Rotary. This not only will help
ensure that you receive proper compensation for your years of practice
building, but also that your buyer receives full value. Even after you
retire, positive support and praise for the new dentist (such as in social
settings) will go a long way toward continued retention of patients in the new practice.
Choose the Right Broker
Working with an experienced and ethical transition broker is also invaluable in
preserving goodwill and value. The right broker will perform a legitimate
appraisal and value the practice in a manner that reflects the
true anticipated cash flow following the sale, rather than telling you
what you may want to hear and subsequently luring a buyer into a bad deal
that destroys goodwill. The right broker will also work to find a buyer who is
an appropriate fit for the practice, one whose abilities, ethics and
practice style match your own, preserving your reputation and the reputation
of the practice. Additionally, the right broker will guide the entire process,
working with lenders, accountants, and counsel who are knowledgeable in
dental transitions. The right broker will also work toward the ultimate
goal of having a satisfied seller and buyer, preventing negative
interactions that can sometimes occur when working with an inexperienced or
self-serving advisor.