A few months ago I enjoyed a movie buy Clint Eastwood called the "Mule". The point of the movie was not exactly why I connected as I did. I was moved by the theme song sung by Toby Kieth " Don't let the old man in" I found my self thinking about how many friends and clients are doing as we age. I realized that most if not all have done extremely well as we have gotten older. Family, friends, health, and finances can be used as markers and we have had great careers to fuel the above. We are blessed and fortunate. Virgil 75 B.C. said " fortune favors the brave "
- Practice sale "get your money and go" This is the most desirable choice with the least stress. Most of my clients are collecting 1.5 to 3.5 M a year this could inhibit a new doctor from getting financing. Most large practice loans need to be unwritten by the SBA, and that's a lot of money to loan to an unproven Doctor. A proven doctor relocating or looking for a second practice would not pay the larger price as the purchasing doctor knows how to get new patients and build a practice. This choice may come about if the borrowers have strong financials and or co-signers.
- Practice Transition "old guy to new guy" if bank financing is not possible but you are confident that this new buyer is the person who could take your practice over, then proceed with caution. I have developed and managed several of these sweat-equity transitions in the past. Some were related parties and detail were very important as the deal matured over a 3 to 4-year period. The new doctor buys the practice over time with some equity from their earnings. The buyer usually buys the practice in three pieces the last financed by the bank after time and history take hold for the new doctor. The downside is this deal may feel risky as you are putting all your eggs in one buyer's basket for the next 3 years and the owner doctor is carrying the marker so the deal is not done for 3 years. The upside is you would get the best price for your practice and elongate the payout on interest while the new buyer pays you like a bank. You will have two doctors working in one practice which usually brings high profit to both doctor's production. It is in both the buyer and seller's interest to keep practice production humming. The new doctor has time to learn all other business aspects of practice development over the 3-year buying points.
- Sell to Corporate "sell to the company store" I can think of 3 or 4 national companies who are always looking to add more practices to their portfolios. They claim group-buying, management, training, HR, receivables, marketing, and many other practice building necessities ensure profit. Grouping up this way allows the company store to obtain profitability even after they have paid you for your practice. The sale happens quickly, but sometimes you are required to work in the practice for a time to recover all the funds offered. You will have no control over the practice, like pricing, marketing, staffing, training procedures both in dentistry and practice systems are someone else's decision. The time you stay to get more money will bring you to the awareness that you are just an employee. Cooperate seems to be filled with financially smart people who will find profit above all else. I have never had a past client sell to the company store and stay to the end while trying to get the best payout. The best option seems to be to sell it and leave.
- Dental Partnerships " group partner and manager " Some similarities to the corporate buying power and structure. However, very unique in that these groups seem to want you as a long term partner. Some more than others let you continue driving directing the practice with the company being more silent. My clients that went this way got a great buy out of about 60% 3 to 5 times EBITA. Also, my clients kept 40% ownership and future profit. These same doctors who partnered continue to pull a great percentage of their dental production as well. This may be a less stressful way to spend your remaining days in practice and set your self up for a complete sale later. If you are thinking along the cooperate lines, this partnering model seems to be a better option.
- Retire in practice " Keep your practice until you can no longer stay" Simply put you would manage an associate or two as you age and struggle to keep the day to day grind. The retire in practice doctor keeps managing, directing, marketing, staffing, motivating while keeping the finances in play. The downside is finding an associate to work hard without wanting ownership or someday doing this for themselves. A consistent desire in retiring in practice involves more travel and less time at the office and chair. You may find this difficult as an associate typically is paid 30% plus or minus of their production and when doing the bulk of the practice production you finding profit after that could be though. If you love dentistry and are classified as a workaholic this may be the ticket.
For my past clients who have in the past and continue to pay attention, I recommend you figure out the best way to end your dental career. Weather now or in the next few years, you should be thinking which road out of town so to speak is best. North, South, East, West or stay put. For sure you should plan your exit strategy right now so you do not get caught flat-footed. A few clients have hit some bumps in the road and needed to execute an exit strategy quickly. Now is the time to plan, I would love to spend a half-hour on the phone and help you zero in on your best road less traveled.