Selling your dental practice could be something you are considering as you edge towards the golden years of retirement.
As you approach retirement age, there are several things to consider when it comes to selling your dental practice, especially if there is simply not enough income to retire.
At Blatchford Transitions, we believe that both parties should be set up for success.
Selling Your Practice and Continue Working
The advantages would be that the seller now has some capital and patients will have continued care. However, the disadvantages to both the buyer and seller outweigh the advantages.
You have a net from your practice on which you have paid taxes. Has that net increased recently to support two dentist salaries? Do the math. How will your recent buyer be able to make the practice payments to the bank, pay the taxes, support himself, and pay you a salary for working? How will the team get paid, if the practice cannot support two dentists? Do you really think that is going to work?
While in your dream, the buyer is working side by side with you and the same team, but who would be in charge? Whom will the staff turn to? Who really is, “The boss?” Whom would the team ask if there is a question? You, as the senior dentist, would be the natural, as they would know your response. The new buyer has all the responsibility for the practice bills, but really no authority to make changes or make things happen.
If you follow the Blatchford Transitions Blog, you will know that this is not a good choice for either the buyer or the seller because there are not two net salaries available tomorrow. Because the selling Doctor is staying, there is likely a confusion of leadership, even to patients.
Also, consider this. Now that the selling doctor has, “officially,” sold his practice he is an employee. If the numbers do not add well, who really needs to be released from this employ? You can bet it won’t be the new buyer. What’s more, the new Doctor can actually fire his very expensive employee, and that would be you.
The other choice for the purchasing Doctor is to continue to borrow money to make ends meet. She/he would not want you to leave because, in the new Doctor’s perception, you are the link to success and continuity with your patients. So, they hold on, the bank says, “no more,” and there is a financial crisis, probably meaning one of the Doctors needs to leave.
This scenario is offered by many brokers saying to the selling Doctor, “You can sell now, and continue working, making the same net you have been making.” The broker receives the handsome commission and you never see the broker again.
The only way this sale will work is for there to be in a contract with the selling Doctor as to how much production can be produced annually. It is a numbers game and since the Doctor sold his practice, the new buyer is in charge and needs to limit this expensive employee to a production number, not a percentage and not to a number of days.
A Better Way to Sell Your Dental Practice
A better sale is to have the selling Doctor evaluate the numbers carefully and conclude that this scenario will not provide what is needed. In order to be successful, the purchasing Doctor needs no other Doctor in a one Doctor practice.
At Blatchford Transitions, we will not put the purchasing Doctor in a position of forced hiring. This scenario equals unlimited production and authority. The purchasing Doctor needs to be set up for success. Integrity is our message and delivery.
Retirement is right up there with marriage and children. It really is a life altering decision that will affect both your personal and professional life. When it comes to retirement, you don’t want to regret your decision. Blatchford has been helping dentists, “Transition,” by selling your dental practice with as little disruption as possible.
You really can make the right decision if you are considering selling your dental practice.