You must first identify what you are trying to achieve and what is most important to you.
So, you have started to think about transitioning your practice or are ready to bring in an associate. Perhaps, it’s because your practice is too big for one dentist? Maybe you want to be prepared to transition the practice to a partner in the future? It might be that you need to sell for a personal reason, so you need to get your plan started immediately! Whatever the reason or timing, you are overwhelmed by the thought of transitioning your practice. You don’t know where to start or how to make your transition successfully. Henry Schein Professional Practice Transitions has effectively completed thousands of successful transitions for practice owners like you. Our consultants’ expertise, knowledge, and firsthand experience can help make it easier for you, thus giving you peace of mind. What follows is a partial list of the steps involved and some helpful hints to get you started:
1. Identify Your Goal.
You must first identify what you are trying to achieve and what is most important to you. Is your ultimate goal to maximize your financial return, so the timing of your plan is a little more flexible? Or do you need to transition by a particular date, thus placing time as the single most critical factor? How important is it to you that you find a buyer who will retain your staff? Sometimes you need to compromise, so it’s important to know what you will and won’t negotiate at the outset.
2. Conduct a Practice Valuation.
Know what your practice is worth today and how to maintain its value until you are ready to sell. Then you can determine a listing price (get input from your broker if using one).
3. Consider a Broker or Professional Assistance.
Discuss the appraised value, determine the asking price, and list the practice for sale. (The listing agreement gives the broker the “right” to sell your practice.) Often what you pay in commission, you can offset that cost by getting a more qualified buyer sooner or an offer closer to your asking price.
4. Implement Marketing Plan.
This includes advertisements, website listings, online marketing, and association websites (done, of course, in a confidential manner).
5. Respond to Inquiries.
Be sure to qualify candidates. Find out if they qualify for financing, check references of potential associates, and confirm their skill level.
The buyer must prepare the financing request (loan package), discuss the transaction with the lenders, and then secure the financing commitment. If you have a broker, often he/she can help, which is an advantage of hiring a broker since they know which lenders have the best terms for the buyer and can save considerable time in the financing process.
7. Final Negotiations and Preparation of “Practice Sale Agreement” (and possible Employment Agreement if you remain on).
Completed by the buyer, seller, and their representatives (e.g., attorneys and accountants).
8. Operational Preparation for Closing.
There are many small but important tasks that need to be completed prior to closing. Some of these tasks include announcements to patients and staff, ensuring the new owner opens a business checking account, making payroll arrangements, negotiating a new lease, insurance credentialing, etc.
9. Finance Closing.
Ensure final loan documentation is completed. One example is a proof of satisfaction of unpaid prior liens.
10. Close transaction.
The average practice sale involves 100-200 hours. A transition involving an associateship leading to a partnership may typically involve more than 200 hours.
While these steps can be accomplished with just the assistance of your attorney and accountant, it is best if your representatives include a specialist in dental transitions. Whether you do it yourself or with a broker, know your goal up front, take it step by step, and you can be relaxing sooner than you think.
About the Author: Dr. Tom Snyder, DMD, MBA, has consulted with dental practices nationwide in creating “win-win” practice transitions. He is the Director of Henry Schein Professional Practice Transitions. Dr. Snyder is a graduate of the University of Pennsylvania School of Dental Medicine and also has an MBA from the Wharton School of Business of the University of Pennsylvania. During his career, Dr. Snyder has lectured at every major dental meeting in the U.S., and is a contributing author to “Dental Economics.”