When the time comes for you to begin the transition process out of your dental practice, there are two parts to that decision. The first is that you are ready to start the process because you are at a point in your life where you want to do all the things on your bucket list, or you want to at least cut back on practicing. The second aspect is whether your practice is ready to start the transition process.
The typical scenario is that the Dr. decides they are going to retire in the next year or so. At that point the Dr. starts to work a little less, taking some of those longer vacations that he/she has been planning over the years, or, in some unfortunate cases, has had health issues that have caused them to be out of the office more than in the past. Because of those different situations, the revenue of the practice, in many cases, has started to decline.
While you are certainly entitled to take more time off, that will have an effect on what you will end up getting for your practice when you do sell it. Buyers are looking to purchase dental practices that are continuing to grow or, at the very least, that are stable. And it is not only the buyers who are looking for this, but the banks are also looking at steady or growing revenue. When a lender is determining whether they will loan money for a dental practice purchase, they become very concerned when there is a decline in revenue and may decide that it is not a good investment.
So how do you avoid this becoming a roadblock to a profitable sale? One of the main ways is to PLAN AHEAD. It is imperative to start planning for a transition at least 2-3 years prior to the actual sale. Marketing of the practice should continue as should maintaining the physical aspect of the practice, keeping equipment in perfect working order and as up-to-date as is fiscally possible. Starting to “check out” during the last couple of years of your dental career in terms of keeping up the practice will only reduce the value of the practice when the actual time comes to sell. You have worked too hard over the years to allow this to reduce the return on your investment.
For more information, contact Ellen Dorner, the Managing Director of N/L Transitions. With over 25 years in the dental industry, Ellen’s experience will help guide you through the transition process from start to finish. She can be reached at 410-616-2042 or by emailing firstname.lastname@example.org.