Maryam Beyramian, DDS
In part 2 of transitions, we discussed distressed sales where the practice owner is not the sole decision maker, hence causing the due diligence process to be unpredictable and accelerated. Traditional sales, however, allow the purchaser more freedom to gather and analyze the information over a period of time in order to determine if this practice is the right “fit.”
In a traditional dental sale, the practice owner(s) has autonomy in the entire process of the sale. As varied as dental practices can be, so can transitions of each practice.
Three Common transition types between seller and buyer
- Initial and complete break from the seller.
At closing, the seller introduces the purchaser to the staff and has no further involvement, besides warranty work.
- The transition is quick and clean.
- The team will need to immediately accept the shift of power.
- Purchaser can build a new “tone” in the practice immediately.
1. The patients will not have an opportunity to slowly adjust to the new owner doctor’s style.
2. The team may resist changes implemented by the owner. This may lead to animosity and negativity in the work environment.
- Seller transitions the purchaser for a limited period of time.
After the sale of the practice, the seller stays a few days a week in the practice to transition the new owner to the patients and the staff for a period of time, typically 30 to 90 days.
- The team has an opportunity to get to know the new owner over a period of time and slowly adjust to the changes implemented.
- The patients have a chance to get introduced to the new provider over a period of time.
- The new owner has a chance to become somewhat familiar with the tone set by the previous dentist with the patients and team members.
1. The team may resist direction from the new owner when the previous owner is still in the office
2. The patients may request treatment from the previous dentist and resist the transition to the new owner.
- Seller stays on as an associate for an extended period of time.
The previous owner dentist is retained by the purchaser as an associate for an extended period of time, ranging from 6 months to 5 years.
- The team will not feel any significant pressure to change their routine.
- The patients have a chance to meet the new provider and not necessarily feel pressured to have treatment rendered by him/her.
- The new owner becomes completely familiar with the tone set by the previous dentist toward the patients and team members.
- The new owner can be mentored by the senior doctor, in terms of business practices and patient care.
- The team may resist direction from the new owner when the previous owner is still in the office.
- There may be a “power struggle” between the new owner and the staff to set a different tone in the office.
- The patients may request treatment from the previous dentist and resist the transition to the new owner.
- The new owner doctor may not feel fully in control of the office until the previous owner is completely transitioned out.
Practice mergers occur when dental practices are physically combined and can be highly profitable for both parties involved. Dentists seek mergers for a variety of reasons, including: to increase the patient base, acquire a different population of patients, decrease nearby dental office competition, and/or acquire a new facility. The transitioning process is similar to a traditional sale. Most mergers result in an increase in revenue for the purchasing dentist as long as the increase in overhead is well controlled. Before committing to a practice merger make sure that you are not only aware but in control of your practice’s numbers and have set clear goals for the outcome of the merger process.
After the Transition
In the last of the 4-part series, we will discuss the stressors associated with practice ownership. It will include tips on how to help overcome the stressors in dentistry that can weigh down and prevent the achievement of our emotional and financial potential.
There is no right or wrong approach when it comes to transitioning a dental practice. Any type of transition can be successful if the buyer and seller are both on the same page and have realistic expectations. It is important to remember that in any transition, both parties need to walk away from the deal feeling that the process was fair and mutually beneficial. No transition will ever be perfect because the concept of perfection is subjective. If the transition is right for you, then it was the right choice and you should make the best of your new investment.