In the dental industry, it is widely believed that confidentiality is crucial when a dentist chooses to sell their practice. This notion is strongly advocated by dental brokers and has been adopted by numerous dentists. In fact, a few dentists have stated that they had minimal or no communication with the buyer of their practice until the transaction was finalized.
The logic goes that there are several things that will happen as soon as anyone knows your practice is for sale:
All of your patients will leave
Your staff will leave to work someplace else
Your competitors will actively poach your patients
These are all legitimate concerns. However, if the community knows that a dentist is considering selling their practice, there can be benefits to that transparency. Let’s examine the concerns one at a time.
Will all your patients really leave?
Some might, but those are likely patients who were considering leaving for other reasons. Research suggests that insurance acceptance and convenience (location and hours) are the most common reasons that patients switch practices.
The majority of dentists considering selling their practice are planning to retire. Patients know that a dentist in their sixties is going to retire someday. Is it better for patients to find out through a postcard after you are already gone – or worse, to call for an appointment and learn you are no longer working?
In fact, being upfront with patients may prompt them to finish out a treatment plan before you leave because they trust you to do the necessary work.
Many dentists reach a point in their careers where they are done with owning a practice. Some are tired of managing the financials, dealing with payers, chasing down suppliers, and all the other headaches of practice ownership. Others have physical limitations that make daily practice difficult. And some want to capitalize on a hot market for practice sales.
These doctors are not always done with patients, though. They love the art and science of dentistry. They still get a thrill from solving a tough case or restoring a smile. They just don’t want to do it five days a week, or they don’t want to manage a business anymore.
However, they know that if they start scaling back production in their own practice, the bottom line will decrease. Staff may leave if they’re not needed — and we know how hard it is to find/retain good staff right now! Patients will go elsewhere if they can’t be served in a timely manner due to a reduced schedule. All this will eventually lead to a lower sale price.
That’s why some dentists choose to sell sooner, while the value is high, and continue to work in some capacity. This can take many formats:
Sell the practice, but stay on to work part-time as an associate
Work in a community clinic, FQHC, or other setting on a more relaxed schedule
Teach, mentor, or pursue less physically taxing ways to practice
At ADA Practice Transitions (ADAPT), we speak with many dentists contemplating their next steps and trying to plan how and when to retire. If you’re thinking about retiring in the next five years, consider exploring some of these options.
By Dr. Suzanne Ebert. Dr. Ebert built a successful dental practice from scratch. After selling her practice, she became the dental director of a federally qualified health center where she provided high quality care to underserved populations. She joined ADA Practice Transitions as the ADA Advisor to provide real and tangible benefits to dentists as well as helping to address access to care issues across the country. She is currently ADAPT’s VP of Dental Practice & Relationship Management.
The answer to “what does it actually cost to sell a dental practice?” is as you’d expect – it depends.
Numerous factors play into selling a dental practice and make each sale unique, impacting the total cost. This article will discuss some of these factors, offer a range of costs, and explore ways to minimize or avoid those costs.
First, let’s consider an example I’ve encountered of a very low-cost and frictionless dental practice sale:
A dentist in the Midwest was starting to think about owning his own practice after working as an associate for a few years. The first step he took was attending a CE event about an hour away from his home, where he spoke to some supply reps about his interest in owning a practice. They mentioned that a nearby practice had been closed for about six months, which he checked out on his way home before calling the owner dentist. Both agreed it seemed like a good fit and decided to see if they could come to an agreement. In the following weeks, they negotiated a price, drew up all necessary documents, and completed the transaction without needing a broker or valuation. The negotiations were collegial and both sides were satisfied with the outcome. The buyer spent an estimated $2,000 on legal fees and the seller relied on the documents that the buyer and his lawyer created.
Having described his story as a “fluke,” the buying dentist is unaware of any other dentist who shares his experience. He considers himself very lucky for how smoothly his acquisition played out. Despite being on opposite sides of the transaction, taking the risk to trust the selling dentist resulted in a valuable mentorship opportunity. Meanwhile, the selling dentist was relieved to find the right person to carry on his small-town legacy.
I’ve also heard of situations where trusting the negotiating partner didn’t end well. The vast majority of dentists say that transitioning practice ownership is complicated and full of uncertainties. Unsettling questions arise, such as “Is this the right decision for me?” “Is this a fair price?” or “Are these numbers accurate?” As a result, many dentists end up going to companies like ADAPT or a broker for help. And most also engage some combination of lawyer, accountant, and bankers.
That being said, the primary cost drivers for an owner when selling a practice are consistent no matter the approach.