When Is The Right Time To Transition Your Practice?

December 30, 2014

Have you found yourself thinking about any of the following?

  • Is this the right time for me to sell my practice?
  • How do I know when it is time for me to retire?
  • What is the market like?
  • Should I sell all of the practice outright or part of the practice to an associate?
  • Can my practice support both myself and an associate?
  • Am I willing to cut back my hours to allow for an associate to come into the practice?
  • What will I do with my time after I retire?
  • Do I have enough saved for retirement?

If any of this sounds familiar, it’s time to make some careful considerations, and start the early stages of transition planning with your trusted advisors.

First step: Am I ready?

While dentistry is a wonderful and rewarding profession, retirement is pretty great as well! Are you ready to move on to something new? Dealing with personal concerns and emotions will allow you to set goals and prepare for a successful transition. Without these goals, the transition won’t move forward.

It’s second nature not to move forward if we are not clear where we are headed. The future feels too confusing, cloudy and risky. For you to be successful, it is imperative that your retirement goals be defined with a strategy on how those goals are to be reached.

The following questions should be answered for you to prepare for the dental practice transition.

  • What is my practice worth? A valuation study will need to be completed.
  • How is this transition going to affect my taxes? After-tax cash flow should be projected.
  • Will I be willing to stay on part time? As a consultant? As a mentor?
  • Will I be willing to help finance the buy-out through an income shift over a period of time? Or does the candidate have to have 100% financing?

Once you are through this personal and emotional step, the next step is to determine if your practice is ready for the transition.

Second step: is the practice ready?

Once you are prepared for a transition, you should begin to focus on preparing the practice and its daily operations. Preparing the practice for a new dentist is extremely important for the success of the transition.

  • Are your dental fees set at a healthy level?
  • Is the balance between pay for fee and insurance patients at a healthy level?
  • Are your systems and policies written?
  • Are your patient demographics healthy?
  • Are you up to date on digital records and digital equipment in the office?
  • Have you prepared the staff for the transition?

Once your practice is healthy and ready for the transition, it is time to identify a promising candidate. If you plan on staying with the practice after the sale, you may need to blend the new candidate’s vision with your own legacy.

If you stay on for a period of time after the transition, you are positioning your practice for growth. In addition, you are able to mentor the next generation of providers. It also makes for an easier transition and adjustment for staff and patients.

Preparation for a transition involves yourself, your staff, and the new dentist from both internal and external perspectives. It would be difficult to over-prepare for a transition and yet under-preparing is too common, even though a great deal is at risk. It is extremely important that you consult your trusted advisors in the transitions. There is a lot to consider and a lot of planning to be accomplished. With the right plan in place, you will see your goals realized.