Selling Your Practice: More Options Than Ever Before
When we started our first business in 1977, I purchased a life insurance policy to protect my family as we grew the operation. The salesman said to me –at the time I was 21-years old– that age 65 will arrive in the blink of an eye. I laughed at the thought, but as I approach that milestone in the next 4 years, I realize what he was saying. Virgil, the one we all read in our high school classics course said it best “tempus fugit,” (time flies); and boy, does it!
Talking to young people about the speed at which the decades will pass at the beginning of their career seems more like a hollow platitude, not a universal truth, because it is hard to imagine at that early point that the retirement will come, but it will. In the past, many general dental practices passed on to the next generation, wherein the adult child of the dentist took over for the parent and carried on the family business. It was a viable and honorable passing of the torch that worked well for all concerned, especially in small towns or rural areas.
How quickly times change. Ask any dentist who has tried to recruit a younger family member to take over and continue the practice, about just how hard it is to succeed at that goal. For a host of socio-economic reasons, many children of dentists are opting out of such an arrangement. They may not choose dentistry as a career, or they may not want to return to their hometown to take over the family operation. The days of the nuclear family staying in the same city, much less the same profession, are rapidly passing.
The same is true for dentists who are just trying to sell their operation to an able associate. Handing off and continuing a practice has become a very delicate proposition. So, what are the viable options for passing on a practice?
First is selling it to a retail chain, like an Aspen™ or Heartland™. Second is selling it to a Dental Service Organizations (DSO). In both cases, the dentist selling the practice may be invited or even expected to remain in the practice as an associate, but without the daily stresses of payroll, purchase of supplies and materials, and the multitude of other distractions and obligations that accompany a healthy practice. Many practitioners would be far happier if they could just practice their vocation without having to worry about marketing, purchasing and hiring staff.
Some selling dentists may only work during the transitional period to keep current patients from leaving the practice as the new ownership takes over. Whether the dentist stays or goes is determined by the conditions of the buy-sell contract between the franchise or DSO. However, there are several caveats about selling a practice in this manner: 1) The practice must be profitable (typically franchises and DSOs will not take over a non-profitable operation), 2) Location is important, but may not be as important as you think (DSOs will look at a successful rural practice that fulfills regional dental needs, regardless of the density of the population, whereas retail chains tend to remain in more densely populated areas), 3) The financial viability and the overall vital health of the practice are the greatest factors in determining the value (i.e. the selling price) of the practice for the buyer.
So, not only does a practice need to be profitable, but it needs to show growth and efficiency in its trend lines, not contraction or stagnation. That is where maintaining current patients and attracting new patients is everything! Using Concierge Contact Center to keep current patients feeling close to the practice, as well as scheduling new patients 7-days a week around the clock to your practice, can make a big difference. The cost is minimal while the benefits are huge. You show more profit, happier clients and growth that will make selling your practice far easier.