When you’re ready to sell your dental practice, you want to ensure a smooth transition for you, your patients, and your team. That could mean finding an associate who wants to purchase your practice—ideally one who is compatible with your existing staff and current office setup.
If you’re ready to sell your dental practice, there are several key steps to finding the right associate to buy it. Remember, both you and the associate want this transaction to be a success. As a result, you need an arrangement that benefits both parties.
Try a Partnership
When you’re ready to sell your practice, it doesn’t have to be all or nothing! As you age, you may romanticize the idea of free time. You’re increasingly eager to reduce your workload, but you aren’t ready to give up that source of income—or your successful practice, familiar patients, and hardworking staff—just yet.
Instead of selling your practice completely, consider trying out a partnership. This arrangement will allow for a flexible transition to retirement while still protecting the equity in your practice, maintaining your patient base, and keeping your employees engaged in the business.
In a partnership arrangement, you’ll sell off a percentage of the interest in your practice as you bring in a new dentist. This will allow you to:
- Reduce your hours while still maintaining your patient base and even taking on new patients
- Make sure that you have enough work to maintain employment for all of your office staff, hygienists, and other employees
- Stay active in the practice that you’ve nurtured all these years without forcing you to work full-time hours
Many dentists feel that a partnership arrangement is one of the most effective ways to transition to the retirement years. It’s the best of both worlds, especially as you’re less interested in working full-time. You may also choose to sell part of the interest in your practice early, long before you’re ready to retire.
This will give you time to nurture a new dentist, teaching this protege everything you know and providing that mentoring relationship many new dentists need. Then, when you’re ready to retire, you can either sell your partner the rest of the practice or arrange for another party to buy in. This can often earn you more money over time, since it will allow you to sell interest in the practice twice and continue to build equity after the first “sale.”
Set the Stage for a Successful Arrangement
To have a successful arrangement—one that works for both the incoming dentist and you, as the one who is leaving—you’ll need to have several key factors in place.
First, determine the purchase price prior to the start of the arrangement. You need to know how much you stand to make from the sale of your practice, and the incoming dentist needs to know whether or not they can afford to buy out your practice. You don’t want to put the perfect agreement in place, only to discover down the line that you can’t agree about the make it or break it price factor.
It can be useful to value your practice early in the process, since this will give you a solid idea of what it is actually worth and how much you can sell it for. Remember, most new associates will prefer to purchase a practice with a known value, not one that’s been arbitrarily assigned.
Second, make sure the important details are written down in a contract. A verbal agreement is worth the paper it’s written on if things go wrong or if there’s a disagreement later in the process—that is, it’s worth essentially nothing. Once the two of you have come to an agreement, make sure that it’s written down. That way, both of you have the important details to refer back to later.
Third, check your patient base. You may want to continue working for the practice for a period of time, whether that means taking care of your favorite patients or working with your new associate to help them learn the ropes.
If you’re going to stick with the practice, make sure there are enough patients to support two dentists! You’ll also need to make sure that there’s enough space for both of you, whether that means expanding the practice or utilizing creative scheduling.
Fourth, examine your personalities. Do the two of you have compatible skills, personalities, and philosophies? Do you have the same basic standards of treatment? While your skills don’t have to be identical and you may have different specialties, you want to be sure that you’re leaving all of your patients in good hands. Meanwhile, compatible personalities will make it easier to work together throughout the process and help create a better transition for patients.
Finally, set a time frame and stick to it. When do you want to sell your practice—that is, when do you expect to have the final payment in hand? More importantly, how long do you want to take to phase out of your practice? The associate buying your practice will be grateful to work alongside you short-term, but as a long-term plan, they want to take over the practice for themselves! Set a timeline for when you will work your way out of the practice, and make sure that you stick to it once the practice is no longer yours.
When you’re ready to sell your dental practice, it’s important to work with dental lawyers who know how to arrange a great sale and protect your legal rights. If you’re ready to sell your practice, contact us today to learn more about how we can help draw up the paperwork and get things moving in the right direction.
Mr. Oromchian, JD, LLM, is one of the nation’s leading dental lawyers on topics relevant to dentists. He is the founder of Dental and Medical Counsel PC, which is regarded as one of the preeminent dental law firms devoted to dental entrepreneurs. He is also recognized as an exceptional speaker and educator. Additionally, he is the author of The Strategic Dentist, which serves as a guide to dentists looking to purchase or start their own practice. He can be reached at firstname.lastname@example.org.