Our limited time becomes increasingly apparent the further on we progress in our careers. Yet it can become an abstraction when a large offer to purchase your practice is being placed in front of you over the course of a compelling sales pitch that can sometimes be months or even years in the making. The associated purchase price should no doubt reflect suitable compensation for you to part with an asset you have poured your professional heart and soul into, but as in all cases timing is everything and the devil is in the details. Successful transitions require aligned expectations. Tread lightly to avoid being cramped into an overarching strategy.
The corporate model has become a popular divestment strategy for selling dentists in recent times. Different buying groups can offer a lot. Economies of scale, a fulfilling career, publicly traded securities, continuing education for all staff and, of course, access to capital. The corporate model is, however, inherently lacking in its limited ability to leverage human capital. The gifted hands of an owner and critical staff members of an acquisition target can often become an intrinsic component to justify a transaction. The commoditization of the dental business does not alter the high expectations that both staff and patients demand. When conceptualizing retirement transition and relinquishing ownership of your practice, the reality of your involvement in at least the medium term should absolutely be in your minds eye.
When making big life decisions, it is important to disassociate oneself with the immediate present. The rationale when selling your business is less linked to today than it may be linked to a decade from now or even a time and place where you are no longer here. Obviously purchase price is a massive factor, but continually and often with the 20/20 clarity of hindsight, it is often under appreciated by selling dentists that there will be a personal obligation to a going concern in 12, 24, 36 months and beyond. Can you keep pushing at the pace you have been? Be honest with yourself, your family, your staff and your future employer about what you are willing to give. Often there will be little or no change in the day-to-day operations and you will need to maintain that “skin in the game” mindset after you sell.
Selling a practice should be an act of control, where somebody will leverage decades of hard graft to pay forward for a better future. Often it can be the smart career move for some to commit to a 3–5 year obligation because they are still in that push phase of their career; however, many may be unwittingly committing to a level of duty that they have very little agency over.
Most dentists grow into a crystalized working routine, where maybe 10 years ago they used to work 5 days a week and perhaps now they have reduced their presence to four days to golf or enjoy long weekends. Perhaps now they are entertaining the idea of taking more time off to travel, spend time with their family or take on a new career challenge. These individuals should think long and hard about becoming a custodian at a practice they used to call their own.
A big purchase price coupled with a commitment to being a long-term associate subject to revenue targets with contractual claw backs, does not equal a big purchase price and being able to dictate if one wants to work at the practice they sold. Please know that despite the current vogue, private buyers are very capable of digging deep and reaching the multiples private equity backed management organizations can.
After all, they have an acute advantage of being able to invest in their own professional skill set and not in yours.
A lot like compounding interest, time is a variable that can work in your favour. To the contrary, when time is not on your side or part of your plans, it can also be a massive cross to bear. To be clear, the vast majority of dental transactions will ordinarily require the person selling goodwill to make themselves available for a transition. After all, much of that goodwill is attached to you and your endorsement is expected. I instruct clients that they will likely get much better outcomes if they make themselves available for a reasonable transition. The key distinction when a dentist purchases your office is that they are bringing clinical weight and the fire of financial obligation to the equation that will significantly lower their necessity to have the outgoing owner committed at the same level once needed. The mantle is happily seized and in natural order the former owner sees an immediate fall off in their commitments at the practice.
A reasonable associate period will look like half the pre-acquisition schedule for a 6-month period. Buyers are often very accommodating to any reasonable nuance. Conversely, relinquishing this role is also a big consideration and one that sellers should be aware off. When selling your office to another dentist, have a plan – both financial and occupational – and be prepared to have a lot more time on your hands. Most individuals I have this conversation with are very much ready for a new chapter.
Selling a practice should be a dignified exercise and not a painfully long goodbye for a reluctant leader. Those hoping to move into retirement or a different professional lane after selling to corporate dentistry would do well to check their own internal narrative. You will still be working; except now you will not be making the decisions, and the previous dynamic where you controlled the operations and culture at the office will be a distant memory.
In my conversations and with the anecdotal evidence presented to me, the level of commitment required post-sale to a dental consolidator can be overbearing to many. If you have a colleague that took this route, or your accountant tells you to take this route, ask them why and understand your motivations versus theirs. People who have made their bed are usually eager to paint a pretty picture. Add up the lost revenue associated with not being the practice owner in the 3/5 year of obligation you are more or less in the same role. What is the opportunity cost associated with not being able to chase down your personal and professional aspirations? The sale of your practice should always be about you. Once sold, it has no business being about you.
About the Author
Robert Spillane, BA is a Sales Representative for ROI Corporation. He has the privilege to use his international management consulting experience to guide practice owners at critically important stages in their career. When a practice owner is ready to sell their practice, Robert and the team at ROI Corporation take immense pride in bringing industry leading outcomes to their clients. Additional information can be confidentially obtained by phone (647) 622-5102, e-mail firstname.lastname@example.org or visit the ROI Corporation website at www.roicorp.com