As a busy practice owner, you constantly make choices to keep operations moving smoothly. In one moment, you’re seating an implant crown. Next, you hire a new assistant after a series of interviews. Each move affects the culture and success of the enterprise. You may make mistakes, but there’s usually a chance to adjust and keep growing.
A practice transition is different; it doesn’t usually involve second chances.
Most dentists sell their life’s work once, and that milestone marks an unmatched time in the career journey. Unfortunately, we see too many mistakes that could’ve been avoided with minor adjustments before the sale.
You know that some patients you see in the office need the support of a specialist to complete treatment. Specialty care provides a predictable outcome for challenging cases; the same is usually valid for a dental practice sale. A successful deal requires complex, interwoven components, and it’s not the best time to experiment. But if a transaction is the final piece of a comprehensive design, you can move to the next phase of your life with satisfaction. Conversely, a wrong step or two could lead to fewer bucket list experiences.
We see a few common transition mistakes by skilled dentists, but you can sidestep critical pitfalls with the right insights. The last thing we want to see our clients do is to build an exceptional practice and miss out on the entire value they’ve created. Consider these seven mistakes as you look at your exit planning, and make sure you’ve discussed every scenario with trusted resources.
1. Moving Forward With Distorted Expectations
Your practice is valuable to the right buyer, but some dentists overestimate the final sale price by using inaccurate formulas. A distorted value can lead to projections that don’t fit reality, but an experienced transition specialist can help you stay on track. There’s a time and place for a formal valuation, but an accurate estimate is usually what you need to move through early planning. It’s always a good idea to include a discussion with your dental CPA to consider the tax implications of a sale.
2. Getting The Sale Timing Wrong
A dental practice is a significant asset for any owner and generates a steady monthly income. If you sell too early, you may find yourself with a cash flow shortfall. But if you sell too late, you may fail to capture the peak value and sell into weakness. A complete analysis by a transition specialist considers scenarios, timing, and various buyer types. Many dentists are unaware of opportunities in today’s markets, but there are multiple ideas to review.
3. Making Agreements Without Documenting Them
We can all hear what we want, and verbal agreements leave too much ambiguity and margin for error. Don’t make assumptions, offer promises, or allude to possibilities about a sale that aren’t documented. For example, a practice sale may or may not involve real estate, but both parties could form an incorrect expectation if it’s not clarified. Documentation protects relationships by dramatically reducing misunderstandings that can undermine the best deal.
4. Making Large Changes During Transition
Continuous improvement to the practice is an essential long-term strategy to grow profits and build future value. But upgrades should be planned for maximum impact if you’re moving towards a sale, and the timing could be critical. Full-scale change can disrupt a transition or add unnecessary debt that the seller must eliminate before closing the deal. Practice transition specialists know how to implement the right changes with the best timing, and this formula is different for every practice.
5. Overlooking Essential Communications
Dentistry involves critical relationships which deserve careful handling during a practice transition. A sale pulls together many objective pieces, including contracts, agreements, reports, and covenants. But none of it matters much without people, and change is often more complex than we realize. A thoughtful exit plan includes critical elements safeguarding your reputation, team, and patients. Empathetic communication pieces include print, digital, and verbal tools that support the entire process.
6. Exiting Without A Clear Direction Or Next Step
Many dentists enjoy the freedom to golf or travel whenever they want after they’ve sold their practice. But moving from a purposeful career and dependent patients to open-ended days can be more challenging than it seems. Clarifying your overall goals and purpose for the road ahead is critical. A little reflection can lead you to new volunteer activities, mentorships, or business ventures that you haven’t had the chance to explore in the past. This foresight will help you find fulfillment that maximizes your new freedom.
7. Accepting An Unsolicited Offer
Private equity has increased practice sales in the past few years, and dentist retirements have climbed since 2013. Plus, COVID’s long-term effects on dental transitions remain uncertain. This combination of factors has created a dynamic market with different opportunities than in the past. Some dentists are surprised to find an unsolicited offer made for their practice by a DSO, and the promise of a sale can be enticing. But these offers rarely favor the seller, and the details hold conditions that each dentist must explore carefully with a trusted advisor.
Stay Focused And Get Help
Like most dentists, you’ll probably only sell one practice in your lifetime. That transition involves intricate steps and is not the best time to make mistakes. You’ve given your best, serving patients, leading your team, and building a reputation. One unnecessary mistake can erode the value you deserve from your dental practice.
Choose resources that understand the dynamic markets and the orchestrated moves that go into selling your dental practice. In the process, you’ll protect your legacy, capture the highest value, and boost your savings for a future on your terms.
Click HERE to start the conversation about your exit plan, practice value, and options.