- Be Ready To Transition
The most common reason dentists decide to transition is because they are ready to retire. Whether or not this is your reason, you should begin the planning process three to five years before your target retirement date.
- Divorcing emotional attachment will help you make smart decisions and be ready to make the change.
- Determine your goals and transition plan. Are you ready to fully leave dentistry or are you still interested in staying on as an associate? Your goals will help determine the best approach for your dental transition plan.
- Determine Your Dental Practice Worth
Focus on obtaining an accurate market assessment of the practice, this will determine your transition options. Having solid practice data will help you make management decisions to grow your investment.
- A buyer will perceive more practice value when they can see its ability to generate long-term income. Goodwill, which includes patient charts, recall systems, staff longevity, noncompeting covenants, and the owner’s reputation within the community also contributes greatly to the value of the practice.
- New owners can purchase equipment and furnishings, but they cannot buy the relationships that the current owner has developed with the patients and other dentists in the area. The best assets of the practice are:
- Active patient count (Patients seen within in the last 18-24 months)
- Strong re-care system
- Long-term staff
- Documents needed to assess market value of the practice
- Last 3 years of business tax returns and P&L’s, practice management reports, A/R information, fee schedules, Associate contracts, Insurance Plan participation, lease Information and insurance reports.
- Build a solid team
Build your team of expert advisors, reading an article or two on transitioning will not prepare you enough to handle everything on your own. Partner with a trusted Dental Broker, Dental CPA, and Attorney. Professional advisors that understand the dental industry will help the process go smoothly. It’s important to keep them in the communication loop throughout all phases and stages of the transition.
- Structure your plan
Based on your market assessment, you have a better understanding of your practice’s worth. If you are comfortable that the net proceeds from the sale of your practice will allow you to transition at this point, then it’s time to move forward and set plans into motion. If the projected proceeds are not what you expected, you may want to see what can be done to increase the value, realizing that it may take a year or so to bring the value up.
Tune next week for Part II of What’s Involved in the Dental Transition Process. To get started on your transition plan today, give us a call at 410-616-2042 or email edorner@nltransitions.com