By Brogan Baxter Chief Operating Officer, Senior Analyst Four Quadrants Advisory
We’ve shared many eyebrow-raising statistics in this space, but here's one the American Dental Association reported recently that still makes us shake our heads in disbelief: only one in four doctors hired as associates become partners in the dental practice that hired them.
One. In. Four.
That’s especially shocking when you consider part of the reason an associate is hired is because the Dentist sees them as partner potential. For a Dentist especially, your practice is your legacy. With so many swings and misses, how do you go about finding the right partner and eventual successor for your practice?
Do you sell your practice in parts, or all at once? Do you even know if you have a choice? How do you make sure you get your money’s worth without gouging your successor? When’s the right time to make the switch?
In our experience working with dozens of dentists and practice transitions over the years, the Four Quadrants team came up 5 points to consider before you hang a "For Sale" sign over your practice:
1. Stop waiting, start planning: Most dentists wait until it's too late to start planning their practice transition. Don't make that mistake. How much time are you losing? Start planning now, so you don't risk letting your life's work disappear—we suggest starting the process 10 years before you want to retire. This still leaves all options on the table and allows for you to find the right successor. Even if you do everything right, what happens to your practice immediately after you sell it and retire is up to you. You can have a custom transition process, and ensure that everything is executed to your liking; this is not a square-peg/round-hole situation. That allows you to find the partner who’s best suited to carry on your legacy, and to protect the parts of your practice that you most value.
2. Make a rigorously honest self-appraisal: Not every practice can handle the requirements of a custom transition. Do you have enough production? A large enough facility? Do you have low enough overhead to be able to take on an associate? If not you may be forced into a walk-away sell – zero to six months of preparation, then you hand over the keys and leave. That may not sound like what you want, so your priority should be to get your finances in order so that you can transition properly. Again, doing this over 10 years before you plan to retire is ideal. In a way, you’re preparing the nursery for a new bundle of joy, so to speak.
3. Visualize success: If you could write the script, or maybe a time-line, for how the ideal transition comes together for you; how does it play out? What’s most important to you, what do you want to dictate? Don’t try to ask for too much – there will be a lot less interest in joining up with you if you’re perceived as a meddler. Nobody wants to run a practice if they won’t actually be running it.
4. Don’t hide blemishes from your successor: Many Dentists don’t think about how they leave their practice to their successor impacts the rest of their life. But we’ve been worked with dozens of Dentists for decades and let me be the first to tell you - IT DOES! Be up front with your successor, both with your philosophy as a dentist and with what things are important to you. You need to find the perfect successor to your practice, not just the first person who’s willing to come in that’s willing to give you a check.
5. Ahhhh! The Tangled Webs We Weave: Finally you need to evaluate the way in which you want to unwind yourself from the practice. Are you going to quit cold turkey? Are you going to phase yourself out, and gradually sell the practice to your new associate? From our experience, the best for all involved is for you to leave gradually. You get to keep working until you feel totally ready to leave. Your patients get to meet your new partner, and see you work together as a team. And your successor gets the increased goodwill those interactions create. As a result more of your current patients stay and that only creates positive value for your practice.
In the end, a custom transition isn’t just best for you, it’s best for everyone. Keep in mind it’s a transition, not a transaction. If you need help visualizing how your practice will transition successfully call us today at (877)720-6213,Send us An Email, or fill out the form below.