Pictured above is Dr. Mike Robinson and his daughter, Dr. Molly Weiandt of Father Daughter Dentistry in Anderson, Indiana.
Mike was preparing for retirement and wanted to start planning the transition of his dental practice to his daughter, Molly. They worked with several advisors, but got sick of being forced into a process that didn't fit their needs.
Mike and Molly called Four Quadrants and discovered a firm with 20+ years experience creating custom dental practice transition plans.
Retirement and transition planning go hand in hand. According to 2017 data from the American Dental Association, the average age a dentist retires is 68.9.
Most dentists wait until it's too late to start planning their practice transition. Many have to sell to corporate dental companies.
If you want to transition your practice on your terms, then start planning 10 years before you want to retire.
This gives you time to create a custom transition process on your terms. Then you can find the partner who’s best suited to carry on your legacy and protect the parts of your practice you value the most.
Knowing when to retire takes some soul-searching. Ask yourself these questions:
Many practices think the only option is to sell the practice and walk away, but there are many more options to consider. To build a transition that fits your lifestyle and retirement goals requires a plan. If you don’t plan appropriately, you may be forced into an arrangement that puts your legacy at risk.
Most financial advisors will tell you there’s a practice transition formula. That's not how we see it. Each practice has different styles, locations, patients and cultures that requires a custom transition approach.
We apply the tiered, 2-part practice transition process when customizing a plan around practice owner needs.
Benefits of a custom transition
Requirements of a custom practice transition
Not every practice can handle the requirements of a custom transition. This is what we ask practice owners when they’re thinking about getting 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.
If you'd like a complimentary practice assessment or to reach out to discuss your questions, let's connect!
What is your practice worth?
This involves a 2-sided valuation process. How much do you want to sell (maximum profit) vs. how much does the buyer want to pay (minimum cost). A two-sided valuation process should find a figure somewhere in the middle, where both the buyer and seller come to an agreement. We do in-house valuation as well as utilize external 3rd party valuations based on the needs of the client and the dynamics of the transition.
Will you need a broker?
A dental valuation may be conducted by a private individual or a broker. Some dentists resort to using a broker if they don’t have a buyer lined up or they haven’t planned for transition, or any number of reasons. If you use a broker, you will have to pay a hefty percentage of the sale to the broker. (Typically 10% of the sales price.) We want to get people on the track of a good transition to a partner/associate so you can avoid using a broker. There are situations where using a broker can be helpful but most times there are better avenues.
Knowing your market is key.
The location of your practice will determine how easy or difficult it may be to sell when the time comes. If you’re in a rural, isolated location it may be more difficult to find a partner/associate or potential buyer who wants to relocate, compared to a more populated area.
How long will a transition take?
Again, it is different for every practice, but six months to a year would be a reasonable benchmark (not too fast, not to slow) once a suiter is selected.
The way a practice is structured as a business will have a major impact on your tax obligations after selling. There’s a significant difference between what you’ll owe after selling an S-corporation and what you’d own from, for example, selling a sole proprietorship.
2 ways to sell a practice
Negotiate price and financing
If done right, all of this planning will help your staff, patients, and revenue make it through the transition cleanly. But if not, you’re likely to end up looking for a new associate.
There are a lot of reasons behind that, but one of the primary ones is that many practices fail to devise and implement a good transition strategy. Not enough preparation is accomplished beforehand to make sure the hiring and the full transition process goes smoothly from the beginning.