I am privileged to enjoy lively debates with most of North America’s top advisors and Brokers of dental practices. The various experts each have their own unique view of transitions and most of them are now providing modern advice about how and why you should consider “transitioning” or “exiting” out of your practice over time, not suddenly.
The concept of phasing-out of your practice slowly is now being compared to the old-fashioned model of selling your practice outright and then making an immediate departure from the practice. I also have a view to share with you and hope that this article may further stimulate the debate about the perceived need for a “transition” of a dental practice.
Whose advice should we follow?
Consultants, accountants and financial advisors to the dental profession are doubtless well equipped to advise you on day-to-day practice management issues, accounting, taxation matters and personal money management. I recommend that the advice we receive from the various experts is most useful, so long as they are focused upon their core competency. However, it is my observation that specialization, as in dentistry, will lead to the highest quality advice.thus, it’s prudent to conclude that those who are exclusively involved in dental practice sales will have the empirical data and experiences with regard to transitions. To be very clear, I advocate that brokers who are licensed to sell dental practices have the most credibility in this arena, myself and my 16 associates, included.
Any time that a dental practice is sold, in part or in whole, a “transition” of ownership has occurred. This is an obvious definition of a transition and no debate should be required. Where the real challenge begins is with the question of what is the best type of transition?
Does the previous owner need to stay to help the buyer with introduction to patients?
If so, how long does it take?
What happens when there is no transition at all, as in the case of sudden death?
What pitfalls are there to having both a past and new owner working together?
Is a partnership the best method to effect a transition?
IT IS NOT NECESSARY FOR A SELLING DENTIST TO CONTINUE TO WORK WITH THE BUYER IN MOST DENTAL PRACTICE SALES IN ORDER TO EFFECT A SMOOTH
TRANSITION OF THE PATIENTS AND STAFF.
That statement may surprise many of you, especially some of the more mature readers. Regrettably, it must be pointed out that you are not as valuable to the buyer of your practice as you think you are. Dentists have a terrible habit of over-appraising themselves and often think they cannot be replaced. Patients are loyal to you, this is true. However, they are not going to be your patient forever and may have already changed dentists once or twice in their lifetime.they will accept that you have retired, perhaps reluctantly, but accept it they will. As a patient myself, I don’t want to see my dentist retire, but when she does, I will survive the change and will return to the same practice for many reasons. I authored a column titled Why Do Patients Return to a Practice When The Owner Retires and it clearly set out the reasons why a patients will return (for a copy, please contact the editor of this magazine).
As well, many dentists mistake their patient’s expression of trust and friendship as a permanent loyalty that cannot be broken. This is a false assessment of your position. unfortunately, we can all be replaced, often within weeks, and this has been proven many times over the past years, in many different dental practice transaction scenarios.
We have managed more sales across Canada than any other firm, and most of the others combined. In most of these sales, the selling dentist never spent a single day in the office with the new owner. in most instances, the seller was healthy and able to associate with the new owner yet the buyer stated that they were more than capable of managing the practice. In other instances, the seller simply wanted to make a clean break and did not wish to work many long days while explaining their decision to sell to the patients and being witness to the emotional “goodbyes” that some patients will make if you continue to practice after a sale. Sometimes a clean break is best.
A survey of clean-break-transactions produces commentary from the buyers such as,“I thought I would lose many of the patients because the previous dentist was not here but I am surprised how many patients were happy to stay with the practice.” Sellers often say that they wished they had not stayed on because the new owner is too different in their style and it hurts them to watch the practice be changed so drastically.
Are you ready to let go?
In other instances, we have heard that some dentists have great difficulty letting go. This can create a serious problem with authority and the staff often becomes conflicted between
an old loyalty and the new authority. It is very unfair when staff becomes torn between the two dentists and this can cause staff resignations that were entirely preventable.
Some young dentists have difficulty managing other dentists. It is unfair to expect a young dentist to manage every single ownership issue with ease in their first year. Staff, patients, suppliers, labs, along with the past owner working as their associate in the practice, will present multiple challenges to the new owner. Some decisions will be made with little or no thought, as that is common amongst young business owners. Unfortunately, the one area they tend to give the least thought to is the emotions and pride of the previous owner. They are primarily focused upon meeting the patients and they are highly motivated by the large debts incurred to buy the practice.they are also nervous and will make some
honest mistakes. The result is that the past owner (now an associate) may receive the least amount of thoughtfulness, as the new owner knows that you are only there for a short
time. If you do work for the buyer of your practice, expect the least and hope for the best.
Patients often demand to see the old dentist again if they know that he or she is still available, even if it’s only part time, and the new dentist has been heard to complain that they have paid for the business yet the past dentist is still holding on too much and preventing the new owner from implementing their philosophy into the practice. For example, many young buyers have different views about preventative programs and some of the older generation of dentists do not want the patients to be subjected to the new owners modern treatment planning. While this generational gap will always occur in dentistry, it is wise to remember that the buyer paid for the business and it is their right to modify the practice policies as they see fit. Resistance by the previous owner will only lead to serious conflicts that damage the staff’s confidence and enthusiasm for the transition.
Every dentist can be replaced, every single one of you. I can also be replaced; very easily i’m sure and within days if necessary. As professionals we must recognize that we are very
valuable when we are in our practice, yet once we decide to let go there will be someone else to take our place. Today’s young buyers are eager, willing and full of energy. They will do just fine without us – and hundreds of post-sale surveys* prove that they do indeed do just fine!
* Post-Sale Surveys as per the ROI Corporation empirical database accumulated since 1974.
Bottom Line: In this article, a broker advocates in favour of dentists, when selling their practice, should plan to make a complete break and to walk away from their practice on the closing date.