You never know when something can happen that will impact your ability to practice dentistry. Each year, many dentists find themselves facing the unexpected which prevents them continuing the professional career. Or, more commonly, retirement quickly creeps up on them. Whether it’s due to accident or illness, one can never anticipate what life may have in store. One of the biggest pitfalls of the dental practice transition process is failing to create an exit strategy. Lack of transition preparation can jeopardize a dentist’s retirement plan.
One of the biggest misconceptions for many dentists is that the proceeds from the sale of their dental practice will support them in retirement. If a dentist expects a substantial contribution from his/her practice’s proceeds, he/she should start by knowing the value of his/her practice. It’s important to outsource the help of a qualified dental practice appraiser to determine your practice’s value.
Another mistake is making the decision to hire an associate without completing the formal contractual agreement. Verbal agreements can lead to a headache of problems. Established and documented contracts define relationships and protect all parties involved. Before deciding to add an associate, cautiously analyze the needs and growth patterns of your practice.
In summary, the key to a successful transition is to plan and prepare. Knowing the value of your practice is a crucial part of creating your exit strategy. Try to avoid establishing associate relationships based on emotions, take the time to analyze your decisions and clearly define the relationship terms and dissolution provisions in writing. Plan your exit strategy well in advance to prevent from making impulsive decisions. Secondly, confirm that your financial planning will meet your retirement needs. And thirdly, decide how you want to transition out of your practice.
For more information, contact Ellen Dorner, the Managing Director of N/L Transitions. With over 25 years in the dental industry, Ellen’s experience will help guide you through the transition process from start to finish. She can be reached at 410-616-2042 or by emailing edorner@nltransitions.com