Avoiding the Pitfalls of Dental Practice Transitions – Part Seven

My last few blog posts have discussed the details of practice acquisitions where the retiring doctor (seller) is out of the practice from day one of the sale. Here is another twist on a practice sale where the selling doctor – perhaps two to three years away from retirement – stays on as an associate but merges his practice into the buyers location.

The list of benefits to the seller’s patient base might include the following:  that with this move there will be better coverage; it is a better location with updated technology; perhaps better parking; I (the selling doctor) was having trouble negotiating the terms of a new lease arrangement and this is a great opportunity, etc. The acquired doctor “appears” to just move his location, but in reality he has sold the practice. This is what I call a “below the radar” transition because to the community at large and to the patients, nothing other than the location has changed.

The selling doctor’s name is on the door and the letterhead. He continues to see and treat all of his own patients, including hygiene checks. Initially – space permitting – he works the same schedule with the same hours.  All of his staff — or most of them — come over in the transition. But the seller no longer shares in the hygiene revenue of his patients, and is paid a percentage of his own production or collections. That revenue is how the buyer leverages the purchase so that this sale can happen with bank financing and the buyer never takes any money out of his own pocket.

The advantages of this transition from the perspective of the seller is that the seller receives maximum value in a lump sum payment for his practice, yet still has the opportunity to continue to work and earn money, continue to make contributions if he wishes to a pension plan, and do all of this with no administrative responsibilities. The advantage to the buyer is that when the selling doctor eventually retires, all of his patients are used to coming to the new location and will of course remain.

This is a wonderful win/win situation that I have had the opportunity to facilitate many times. I feel it is worth your consideration.