The path to retirement can look different for every dentist. Where you fit depends on your goals, lifestyle, preferences, and management philosophy, among other factors.

Dentists who are contemplating retirement and want to know the traditional options to stepping away from their practice, continue reading for practical scenarios that can help achieve your transition goals.

Sell outright

This is the most straightforward option. You find an outside buyer and sell your practice in one transaction: property, patient records, A/R, all of it. Be prepared to address different areas that may be lowering the value of the sale, like outdated equipment, high salaries, or high overhead numbers. Make sure to follow state rules regarding communicating the sale with your staff and patients.

Issues with this strategy that often arise include:

• Failure to anticipate the impact of taxes on the final sale
• Expectation that the practice sale proceeds can fully or almost fully fund your retirement
• Difficulty arriving at a mutually beneficial sale agreement

Sell to an associate

In this scenario, you hire an associate with the intent of selling him or her your practice. You both agree to that upfront. It’s recommended to have a two- to five-year contractual period between when the associate is hired and then takes over the practice, and make sure to include all necessary contracts, like employment, non-compete, and purchase agreements.

Issues with this strategy that often arise include:

• Disagreements with the associate, leading to him or her leaving and then you have to start the process over with someone else
• Transition of power
• The associate’s ability to buy the practice when the time comes

Either as a result of selling outright or selling to an associate, many dentists choose to stay on and work in the practice part-time in an associate role. This can work well, if you have the qualities of an employee and are comfortable with the decisions the new owner makes. Clearly communicate your expectations and needs ahead of time to ensure it’s the right fit.

Create a partnership

Either with another owner or a younger associate, dental partnerships can be an effective way of maintaining control and easing out of dentistry over time. The ideal partner will be experienced in practice management, match your clinical and management philosophies, and complement your skill set in a different area of dentistry.

Issues with this strategy that often arise include:

• Failure to utilize and enforce written partnership and employment contracts
• Disagreements over profit and procedure allocation

Merge with another practice

Perhaps there is another dentist in your community who is younger and wants to expand. If they have the capacity and it’s a good fit, merging your practice with theirs can be a gradual way to transition out of full-time management responsibilities. Your overhead costs would likely decrease, as common expenses like marketing and supplies would be split. Many dentists find that they can each work a partial week and still fully staff both offices, achieving a sense of balance for both dentists; or, a transition opportunity for you.

An alternative is to merge both practices into one office for added cost savings.

Issues with this strategy that often arise include:

• Mismatched expectations in practice leadership
• Disagreements over expense and profit sharing

Sell to a DSO

DSOs are becoming more popular across the United States. They offer an attractive alternative to practice ownership for many dentists, young and old alike. Benefits are a buyer that is usually able to pay top dollar for your practice and the option to remain on in a part-time capacity without the direct oversight of another boss. In effect, you could continue to run your practice part-time as long as the sales agreement states.

Issues with this strategy that often arise include:

• Common for DSOs to be less flexible with the terms in sales agreements
• Surprises in practice model and new budget restrictions
• Unintended impact to your reputation if the DSO is not well regarded

However you decide to transition your dental practice, enlist the help of a dental broker early on to avoid costly mistakes or errors. The broker will represent your best interests and can guide you during the entire transition process, from pre- to post-sale.  Contact us for questions.