ADAPT Blog

Whether you’re hoping to sell your practice ASAP or just planning ahead, you have probably thought about the person who will eventually take over. 

After all, that person will hopefully care for your patients for years to come. 

Have you considered what they want from your practice — and what you can do to make your practice more attractive to them? 

Through my work with ADA Practice Transitions™ (ADAPT), I’ve worked with hundreds of prospective buyers. Some are just out of dental school while others have been planning a purchase for years. 

When you get down to it, they all want the same thing: a financially sound practice where they can do the type of dentistry that excites them and keeps them engaged.

However, that can be a bit nebulous. So how can you demonstrate that your practice will allow a buyer to succeed? 

Think about the story that your practice tells a potential buyer. What does a buyer see or infer when they look at your practice, from the physical office to the financials? By looking through a buyer’s eyes, you can begin to identify things that need a bit of sprucing up. Consider how your practice stacks up on these 5 key attributes. 

For many, dentistry is a family business. Children grow up helping around the office and eventually work side-by-side with their parents, ultimately taking over. Handing a practice over to an adult child can be exhilarating and rewarding. Unfortunately, it doesn’t always go quite as planned. 

Let’s look at a few scenarios where these parent-to-child practice transitions failed. I’ll then offer tips on avoiding some common pitfalls.

Once again, Chris Mayer of The Heimat Group is answering your questions on practice valuations. Check out his previous No Stupid Questions answers: 

Why (and when) should I get a practice valuation?
What are the three approaches to dental practice valuation?
How does someone determine what my practice is worth?

This time, we asked Chris which documents a professional valuator needs to conduct a valuation.  

Chris responds:

To help your practice valuator determine an accurate estimate, you will need to show detailed practice information.

Typically, a valuation professional will want to see:

Of course you love doing dentistry. And everyone is even happier when the pay is appropriate for the work that is done!

Yet I hear from far too many associates who don’t really understand how their pay is calculated — and owners who haven’t fully thought through how much their associates’ pay can vary.

It’s pretty easy to understand a straight salary, which is common for those working in public health, academia, or government agencies. 

It gets more complicated for those paid in whole or in part based on some percentage of their overall productivity in the office — which is the more common scenario for dentists employed in private practice or DSOs. In these cases, pay is typically based on total production, billable production, or total collections.

Five years into his dental career, Dr. Jerry has a very clear vision of his ideal practice. He has perfected his skills and is ready to buy. He knows he wants to stick to high-end cosmetic procedures. And he does NOT want to be beholden to any insurance companies for payment.

Now comes the hard part: finding the right practice. Since Dr. Jerry and his wife plan to relocate across the country to be near her family, he must rely on numbers to decide which practices are worth pursuing during his limited visit time.

Right now, he is torn between two practices.

Let’s look at some of the variable expenses against Dental Economics industry benchmarks to see what we can learn about these practices and which one may be a better fit for Dr. Jerry’s vision:

“It seemed like a great interview, but I never heard from him again.”

“She said she would let me know her next steps, but it’s been three weeks.”

I hear comments like this from owner dentists all too often! As an ADA Advisor, I suggest potential matches between practice owners (who are selling or hiring) and incoming dentists (who are buying or job hunting). Then I coach them through the process. 

Some of the younger dentists I work with defend their lack of response, saying they didn’t want to “lead on” a potential employer or seller. Or there was something they didn’t like about the practice — the dated décor, the commute, the owner themselves — and they don’t want to say so, for fear of being rude.

Practice valuation is an essential part of any sale. But do you know how to thoroughly evaluate a dental practice that's for sale? Are you ready to understand how a buyer will perceive your practice's value?

In this recent Dental Economics webinar, What's This Practice Actually Worth?, I joined Chris Mayer, Director of Mergers & Acquisitions at the Heimat Group, to explore practice valuations.

Watch the replay below to learn about the process and find out how to evaluate less tangible items to ensure you're choosing a practice that fits your lifestyle and practice approach.

Are you staring at your to-do list, wondering how you can ever get through your practice transition?

You don’t have to go it alone. Build a team of professionals who can help you with the more technical or complex aspects of your transition. That will free up your time and energy to focus on the most important aspect of your transition: finding the right person to carry on your legacy or the right practice for your goals. (And we at ADA Practice Transitions (ADAPT) can help you with that part!)

In my work at ADAPT, I sometimes hear a dentist say that they want to save money by doing the legal themselves, just adjusting a colleague’s contract. Or maybe they plan to enlist their brother-in-law/cousin/neighbor’s best friend as their real estate broker. While I applaud that DIY attitude, it can lead to expensive mistakes, missed deadlines, and, ultimately, failed transactions.

The proposed spending bill currently making its way through legislation brings with it some big changes to capital gains tax rates. What does this bill mean for dental practice owners looking to sell?

For nearly the past decade, the top tax rate on capital gains has remained steady at 20%; however, the proposed $3.5 trillion spending bill currently making its way through Congress includes substantial changes to capital gains tax rates that would significantly affect the tax burden for someone selling their dental practice. That may influence whether and when they want to sell.

Selling a practice has always been a complex decision that generates many previously unthought-of questions for practice owners. One of the most important being: What will the tax implications be from the sale?