Happy New Year! Many people look at the new year (or new decade) as a time to make changes. If the fresh calendar has you thinking about your own dental practice transition, review my lessons learned in 2019 and then read on for tips to make 2020 your year.
Think of a transition as a process, not an event
A practice transition encompasses so much more than all the involved financial and legal paperwork. A successful practice transition starts with months or years of careful planning and continues long after the transaction closes.
The key to success is to start early. Think through your goals and best-case scenarios so that you can recognize a good opportunity when it comes along, or decline one that does not quite fit your long-term needs. This early start should also include financial planning.
The key to success is to start early. Think through your goals so that you can recognize a good opportunity when it comes along.
If you own a practice, you can use this planning time to make smart updates that will improve the practice’s appeal. (Many of these updates are low cost and just require some effort.)
Starting early will help you understand how all the elements of your transition will work together. With this understanding, you can better grasp the ramifications of the decisions you make.
For example, if you are planning to sell in five years, you have several options. 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 an associate who you can 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.
You get to choose which route to take, but make sure that you understand how those decisions will affect the future of the practice. Recognize that reduced production and a less updated facility will affect your sale price. Only you can decide whether the tradeoff of a less ‘salable’ practice is balanced out by the additional time spent with family. (Learn from two dentists' mistakes on their own roads to retirement.)
Of course, there are other options that can provide some balance. Talk with your financial advisors to gain clarity on what is right for you over the next few years.
No matter what type of transition is ahead, if you are planning to start in 2020 or 2021, fill out your ADA Practice Transitions profile now.
Educate yourself and invest in a team to help the transaction go smoothly
It can be tempting to try to manage the legal and accounting elements of a practice transaction all by yourself rather than paying fees to lawyers or accountants. However, you would not expect a lawyer to handle their own dental work! It is worth engaging professionals to provide their expertise to keep everything on track.
That said, the more you educate yourself on the details of your individual transaction, and the more you are able to do behind the scenes, the less costly the fees will be. ADA Practice Transitions provides educational materials and a toolkit that helps you understand the important elements of the transaction so you are prepared to discuss those details with the other dentist and come to an agreement on key issues. By doing this preparation, your lawyer just needs to draw up the appropriate paperwork.
An accountant or lawyer with practice transitions experience will know what needs to happen and can help you stay organized. Your interests will be well represented and you will have more peace of mind. Your ADA state association has names of professionals in your state who have experience in dental transactions. You can also ask colleagues or your ADA Practice Transitions Advisor for referrals.
If you are financing a practice, the financing company should have good connections and resources. It is in their best interest to help the transition succeed, so ask for their recommendations!
While it costs money to hire good professionals, it will be money well spent when the transaction closes on time without errors. Plus, if you are working with ADA Practice Transitions, you will pay lower fees than you would through a broker. You can afford to spend a bit on a team to make your life easier.
Watch this video from the ADA Center for Professional Success for more on how a lawyer can help the transition process, and check out our webinar on the legal side of a practice transition.
Protect your future interests
The average dentist will go through multiple practice transitions during their career – perhaps an associateship or two, some form of ownership, hiring an associate, selling a practice, etc. If you plan ahead, you may be able to avoid mistakes that require making multiple moves in the future.
I have seen dentists jump into new roles just to make a change rather than waiting for the right fit. But within a couple of years, they are unhappy and ready to move again. That is why half of all associateships fail within two years, and it is tough on everyone – dentists, staff, and patients.
Half of all associateships fail within two years. Think about your long-term goals before settling for a role that may not be a good fit.
Instead, stop and think about your long-term goals. If you want to eventually own, an associateship with no option to purchase may not be the best fit for you. Instead, look for an associate-to-owner situation where you can satisfy your goals without needing to jump ship.
Regardless, make sure you put everything in writing and understand what you are signing. Work with a lawyer to ensure that any contract you consider signing protects your interests. Discuss the tough stuff before you sign, such as how to get out of a contract or leave the practice. This is all much easier upfront.
2020 is poised to be a great year for dentists working with ADAPT. If you are ready to find a new job, purchase a practice, sell a practice, or hire an associate, start your profile today!