Building Your Dream Team: Essential Advisors for a Successful Dental Practice Transition

Building Your Dream Team: Essential Advisors for a Successful Dental Practice Transition

June 13, 2024

You have worked hard, and it’s time to start planning to sell your dental practice. Whether you are thinking of selling in one year or in ten years, the right time to start planning is…now. This is an emotional time, and the process can be stressful, but surrounding yourself with the right team of trusted advisors can ease the burden and allow you to focus on what’s most important: yourself, your family, your patients, and your staff. Below is a list of advisors we recommend adding to your dental transition team.

The Right Buyer

More important than the deal is the person in the deal. This mantra is perhaps most appropriate when applied in the context of finding someone to carry on the legacy you have worked so hard to establish. Be patient; don’t sell your practice to the first willing buyer who knocks on your door waving a check. Take the time to meet potential buyers in person, get to know their values, work ethics, and clinical skills. After all, you will promote them to your patients and staff as someone whom you trust and who will continue to provide the level of service they have come to expect.

How do I find the right buyer? Consider these options:

  1. Hire an Associate: Hire a recent graduate as an associate and include a future arrangements clause in the employment agreement outlining the plan for the future transition. This will give you, your staff, and your patients a chance to evaluate their clinical skills, personality, and ethics. It will also give the potential buyer a chance to evaluate you and your practice to decide for themselves if the practice is a good fit. Of course, the practice must be busy enough to support a new doctor.Tip: To find an associate who is interested in ownership, post a job with the local dental association, dental school, or other job posting platforms, and be sure to advertise that the job is an associateship leading to partnership/ownership.
  2. Post the Practice for Sale: List your practice for sale with the local dental association, dental school, or other platforms. Draft a narrative that paints a positive (but accurate) picture of your practice while avoiding specifics about the practice to maintain confidentiality.
    1. Hire a Broker: Brokers are skilled at finding potential buyers for your practice. They typically utilize the same resources and platforms available to you, so consider posting the practice yourself before engaging and paying for a broker.
      1. Talk to Friendly Competitors: Reach out to neighboring dentists or a dentist in your local study club whom you trust to keep your discussions confidential. A local dentist may be interested in your patient base, location, equipment, or all of the above. Choose someone whose reputation you know and respect.
        1. Do Nothing: This approach is not for everyone and should only be considered when all other options have been exhausted. If you have not found a willing buyer and you are close to retirement, you may consider working a few more years, then closing shop. Make arrangements for your patients’ care to avoid issues with patient abandonment.

Dental Specific Attorney

The foundation of any practice transition lies in the legal documents. A dental attorney can help you establish the proper entity, draft the legal documents, negotiate on your behalf, and ensure that your practice and personal matters are in order. They will determine the most appropriate transition structure based on your unique circumstances and goals. While it may be tempting to hire any business attorney, attorneys with specific experience in dental transitions can make the process smoother and more cost-effective.

CPA with at Least Some Dentist Clients

Your CPA can help analyze the practice financials, understand your major overhead expenses, advise on ways to maximize tax savings, and help you avoid financial pitfalls.

Broker

Hiring a practice broker is optional but can provide several benefits. Brokers can help you find a buyer, serve as a middle person between parties, and keep the process moving forward. They typically charge a fee between 7%-10% of the sale price.  Your attorney should review, and perhaps modify, the broker agreement before you sign it.

Dental Specific Appraiser

Find an independent, unbiased appraiser experienced in dental transactions. Appraisers use various methods to determine a fair value for dental practices. It's important to find an appraiser with a strong track record of supplying accurate, fair, and unbiased appraisals.

Tip: Appraisers typically use the average revenues and profitability from the past three years of practice data. Boost practice revenues and reduce overhead starting today to maximize your practice’s value.

Real Estate Attorney (if applicable)

Real estate laws vary greatly, so it's important to hire a local real estate attorney who knows the market in your area. They can help you draft and negotiate real estate documents and determine fair market value for your building or rent if you plan on leasing the space.

Banker/Financial Advisor

Your dental practice is likely one of the largest assets you own. Having an established relationship with a banker or financial advisor will help you make the right financial decisions based on your unique circumstances and personal goals. Your advisor can help you allocate the sale proceeds among various retirement vehicles to ensure a prosperous retirement.

Tip: If a potential buyer is a young doctor having trouble finding a bank to loan the funds, your banker may be willing to take the risk because they know the practice’s potential and trust that a buyer will succeed.

Practice Consultant

Practice consultants can provide valuable insights into improving the profitability and efficiency of your practice before the sale. They can help streamline operations, enhance patient satisfaction, and increase revenue, all of which can make your practice more attractive to potential buyers.

Marketing Specialist

Marketing specialists can assist in creating a compelling narrative for your practice, highlighting its strengths and unique selling points. They can help with branding, crafting professional listings, and promoting the sale through various channels to attract a wider pool of potential buyers.

IT Specialist

IT specialists can ensure that all your practice’s technology and digital records are in order. They can assist with transitioning digital assets, ensuring data security, and making the practice’s technological infrastructure appealing to potential buyers.

Final Thoughts

Deciding to sell your dental practice involves careful planning and assembling a strong team of advisors. Engage with financial advisors, accountants, and legal professionals to understand the nuances of each type of sale. They can provide a detailed analysis of offers and help you navigate the complexities.

At Collier & Associates, we bring decades of experience to help you navigate the complexities of selling your dental practice. Let us provide you with personalized insights and expert advice to ensure you make the best decision for your future. Schedule a consultation with us today and let’s explore your best options for selling your practice.

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