Gary A. Sherman, CPA

July 15, 2016

If you’ve been thinking about selling your dental practice, you’re not alone. According to the American Dental Education Association, more than a third of practicing dentists are age 55 and over. Many are expected to sell their practices during the next 10 years and retire.

Retirement is not the only reason dentists are throwing in their saliva ejectors. Stress and burnout are factors, too. Getting patients, keeping patients, dealing with insurance companies, doing the same thing day after day, and dealing with staff issues often drain the enthusiasm from practitioners.

There are physical ailments that go with the job, too. Lean over a reclined chair all day long, year in and out, and pretty soon you are rewarded with chronic neck, back, hand, and arm pain. After a while, it’s hard to keep going when various body parts are begging you to stop.

Regardless of your reasons for wanting to sell, it’s a good idea to have a definitive exit strategy in place–well before you hit the “escape” button.

Worthy Advice from Paul Simon

If you occasionally find yourself humming Paul Simon’s “50 Ways to Leave Your Lover,” you are probably close to saying “adios.” The only question is what exit strategy is best for you. You can sell your practice and walk away; work as an associate for a potential buyer; hire associates; sell partnerships; build multiple practices; or structure different combinations within these options.

It all depends on what you want to accomplish and how you want to spend your time after the sale. Some dentists choose to sell their practices and then work as salaried employees to escape the relentless and growing practice management headaches.

Succession Planning for Dentists

Whether you want to keep the business in the family, sell outright, or try some other option, we work with you to ensure that a smooth transition occurs between you and any future owners of your practice. In general, we first recommend conducting a business valuation of your practice–similar to taking a complete set of dental x-rays—before developing a treatment plan or exit strategy.

We value your practice using the same methodology used by hedge funds, venture capitalists, and famed billionaire investor Warren Buffet. First we start with a four-part quantitative analysis. We look at average earnings over the last three to five years and then calculate potential future cash flows. We also look at comparable sales and calculate a value for goodwill. From there, we take into account qualitative factors, such as location, equipment, current staff, patient base, local competition, and macro trends in practice revenue.

Knowing the value of your practice will help you to plan for retirement and other ventures. It can show you income gaps in your exit plan. In addition, valuation information can help you to address transition issues, such as tax implications.

We know that building and implementing a transition plan for your practice isn’t easy. What’s more, we understand that you want to see a smooth transition.

Our goal is to help you ensure that the practice you worked so hard to develop, lives on, and that your patients will be well taken care of once the transition is complete. We understand there may be 50 ways to walk away, but only one way may be right for you. Let’s explore your options together.