Thinking about retiring and selling? If you’re like many owners weighing this decision, you may be asking yourself: how do I protect the legacy I’ve spent my lifetime building? And how can I ensure my patients are cared for long after I’ve retired?
I recently spoke with Ross Brannon of the Financial Flossing podcast to discuss this, along with related issues about practice transitions. Listen to our conversation.
As I discussed with Ross, the average retirement age of dentists has been dropping. New data from the ADA’s Health Policy Institute shows that as of 2021,it is now 67.9, down from a peak of 69.1 in 2018. Several factors are driving this trend, many stemming from the COVID-19 pandemic, such as staffing challenges, higher costs of PPE, and so on.
In my role at ADA Practice Transitions, I talk to many owners who report that they’re simply done and ready to retire. Dentists today have more options than ever before for selling. Some owners want simply to maximize their profit. At the other end of the spectrum, there are those who are more concerned about finding just the right dentist to take over. They want someone who will take a similar approach to care for their patients, someone who will work with their staff in the same way. This is where ADA Practice Transitions shines. We know long-term success is achieved when the practice flourishes long AFTER the papers are signed.
In this podcast, I shared my own practice transition story in which I sold my practice to someone with a completely different approach. I also offered advice to owners considering a sale.
How to think through what’s most important to you
By thinking through your goals and best-case scenarios, you can recognize a good opportunity when it comes along, or decline one that does not quite fit your long-term needs.
For example, if you are planning to sell in five years, you have several potential paths. You could maximize your sale price by maintaining a full schedule and updating the office. You might grow the practice by adding operatories and staff – maybe even hire an associate to groom to take over. However, maybe your current goal is to spend more time with your family and you would prefer to cut back your hours and maintain the status quo in the office.
Make sure you understand the impacts of your decisions. Recognize that reduced production and a less updated facility will affect your sale price. Is the tradeoff of a less ‘salable’ practice balanced out by the additional time spent with family? Only you can decide what’s truly most important to you. (Read two stories of retiring dentists who had to make these decisions — and live with the consequences.)
The very first thing you should do when considering a sale
If you’re even considering trying to sell your practice, take a good, hard look at your practice from an outsider’s view. It’s easy to overlook things that you pass by every day, so you may want to enlist a trusted friend or colleague. What’s their first impression? Is everything bright and clean, tidy and welcoming? Or are things looking a bit faded and dated? Fortunately, many relatively inexpensive, easy fixes can spruce up your space to appeal to a buyer. See 5 Easy Ways to Boost Your Curb Appeal.
What buyers want
I've written at length about what buyers want. Ross and I discussed just how important it is to have organized financials. I’ve seen deals fall through when the seller couldn’t deliver financial reports in a timely manner. After all, a practice should update these documents annually. Buyers worry if a seller can’t provide the reports quickly — and they wonder how well the practice is actually run.
And yes, buyers expect digital radiology.