The landscape of dental practice ownership has changed over the past 30 years with corporate dentistry being more involved and the sheer demographics of the dental school graduates contemplating staying in their state or pursuing a residency or a specialty. Even the cost of a dental education today compared to a few years ago has changed the considerations for practice ownership.
First Step in Determining Your Exit Strategy
As an owner of a successful dental practice who is starting to consider an exit strategy, you might already employ an associate or have a future owner working for you. But it would be prudent to consider your options and proceed cautiously. Don’t assume you know everything you need to know, even if you did some prep work before you hired this individual. Before considering your strategy to sell to an associate in the practice, first get your practice properly and professionally appraised. This will benchmark the current value as the practice sits today.
Is Your Dental Practice Ready for an Associate
If you have not already hired an associate, you will still need to assess your dental practice. Review the practice in the following terms. Is the size of the practice, both in terms of the patient base and physical space large enough for another dentist? The practice should have at least 2,000 active patients and at least 20 new patients each month. You should be booked out for several months in order to refer some of the patients to the associate. The practice should have five or more operatories to support more than one dentist. In order to have space for an associate to work, there must be some creative thought given to scheduling, which may include the owner giving up operatory time, extending office hours, staggering schedules, and other deliberations. You might even ask yourself if the staff will react well to the associate and some of these changes.
If your dental practice does not meet all of these criteria, it does not mean selling to your associate cannot be accomplished. However, you might need to think about giving up some income in the interest of sharing patients, and perhaps take measures to further invest in your practice so that the space can support an associate. Location and technology are also essential factors. The associate will likely take into account their commute time and whether you have evolved into a modern practice that has embraced technology. In the hiring process, it is imperative that you properly assess the candidate as someone who could potentially buy out your practice in the future. After an initial six months, you should have enough one-on-one time with the associate to determine if they are the one you potentially want to carry on your practice and preserve your legacy. If they are not, you can either continue as is or let this person go and start the process over. If they are the ones, then the next step is to share your plan with them. If both parties are on board, then have written contracts completed to avoid any misunderstandings about how the practice will move forward
Are you thinking about selling your dental practice to an associate? Is it the right move for your dental practice? Let our dental practice transition experts walk through this decision with you. Our team has over 30 years of experience in the buying and selling process of dental practices with an extensive network of industry experts, accountants, bankers, consultants, and more. Contact us today to get the conversation going.