Transitions
February 2022
Experience, Information, Consultants You Can Trust
Congratulations! Huntington Beach General Dentistry Practice, Huntington Beach, CA Santa Barbara General Dentistry Practice, Santa Barbara, CA Alan Kingston, D.M.D. to Steven Darley, D.M.D., Altamonte Springs, FL Omar Osman, D.D.S. to Ernesto Llerena, D.M.D., Bonita Springs, FL Two Rivers Family and Cosmetic Dentistry, PA, Orofino, ID Akira Nakada, D.M.D. to Family Dynamics II, LLC, Nicholasville, KY Harry Keith Treiber, D.D.S. to Daniel Green Dentistry, PLLC, Lakeview, MI Shelden Sacks, D.D.S. to Michael Grossman, D.D.S., Oswego, NY Myra Petras, D.M.D. to David M. Maconi, D.D.S., Havertown, PA Robert D. Argentieri, D.D.S. to Cristian Alcantara, D.D.S. PLLC, Springfield, VA
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Focus on the Team During a Transition
One of the most significant contributors to highly successful practices is a dentist’s ability to lead and manage a great dental team. We always see prosperous dentists who are willing to spend time working “on” as well as “in” their practices. Using this mindset, practices often have team members who stay with the practice for many years, becoming part of the practice legacy along with the dentist — even after a dental practice transition.
Be considerate of “legacy” dental team members When an established practice is ready to be transitioned, the working relationship that has developed between long-term “legacy” dental team members and the selling doctor can present an obstacle if not carefully managed in advance. One major factor in the transfer of patient loyalty (goodwill) from the selling doctor to the new dentist during a dental practice transition is the relationship the dental team has with the patients. This relationship partially originates from a dental team member’s loyalty to the selling doctor. In some cases, the selling doctor is the only dentist that individual has worked for, so over time, the dentist’s practice philosophy and work style become as much of a part of the “legacy” employee’s philosophy and work style. Additionally, the way the doctor, as an employer, interacts with a long-standing team member develops from years of knowing and trusting that individual and the confidence of consistently being able to rely on them.
During a dental practice transition, ensure goodwill by communicating openly The team’s role in the sale of a practice and the subsequent dental practice transition is a major factor that can significantly influence the goodwill of the transition. When patients perceive that the team fully supports the new doctor, they tend to transfer their trust to the
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new doctor, which often leads to them staying on as patients. Once the selling doctor is no longer present, patients will rely on their long-term relationship with the “legacy” dental team members for guidance. Both the buyer and seller have a responsibility in the successful transition of the staff as part of the overall dental practice transition. The selling dentist has a responsibility to assist the new doctor with transferring patient loyalty, and therefore, goodwill and should communicate to the team how significant their role is in the dental practice transition. Once the team is aware of the pending transition, the seller must plan ample time for the team to meet the new doctor prior to the first day of becoming that doctor’s employee. The seller should help prepare the new doctor for the inevitable concerns the team will have; the most common of those concerns is the status of their jobs, compensation or some other individual perk that the seller has allowed such as having a certain week off each year,
Begin conversations early in the dental practice transition process As the new dentist, you have the responsibility to enter the practice with a planned strategy to address the uncertainties and anxieties the team will have. Prior to taking over the practice, you and the seller should discuss how to meet with the staff. This gives you a chance to communicate your goals and expectations to them. We always suggest that at the first meeting the purchaser ask the staff for their help in the transition process since most purchasers do not yet understand the internal practice routines. This also gives the team an opportunity to express their concerns to you. Establishing an open line of communication in which their ideas and concerns are valued will be paramount during the dental practice transition and to your continued success as the practice owner.
Transitions | February 2022
What-if? Planning for the Unexpected We are frequently involved in practice sales triggered by unanticipated emergencies. Many of the doctors we’ve worked with did not have a practice valuation in their records and in many cases no wills were even prepared. You can only imagine the significant turmoil that was created for the practice owners or families. That is why it is imperative that no matter your age, you develop an “Emergency Exit Strategy” that applies should something unexpected happen leaving you or your family needing to sell your practice quickly. Are you aware that when a dentist passes away the practice’s value can decrease approximately 5% per week? Fifty percent of all practices go unsold upon the untimely death of the practice owner because of delays in getting the practice listed for sale. Additionally, 95% of all dental practices remain unsold 90 days after the owner’s death. This does not have to be the case. The transition sales consultants at Henry Schein Dental Practice Transitions place a premium on planning not only for the long term, but for addressing unexpected tragedy. It is important for a business owner to know what their practice is worth. Early financial review also allows for suggestions on how to possibly improve a practice (yielding greater net income now and higher value down the road). So, here are some recommendations to assist you in developing your “Emergency Exit Strategy.”
Step 1 – Have a will, do not die intestate! The repercussions on your family will result in prolonged uncertainty in the office, and patients as well as staff often seek new dental offices when there is no quick or apparent successor. Practice value will decrease.
Step 2 – Have your practice appraised. Most dentists only consider having their practice appraised when thinking about a practice transition. Since your practice is probably your number one financial asset, don’t you think you should know what it is worth? We recommend that you get your practice appraised now and share that information with your family and trusted advisors. We strongly suggest having your practice appraisal updated annually but at the minimum, every few years, especially if you’ve been experiencing steady growth or have made major purchases of equipment and technology. Knowing the practice’s value can make the difference between selling your practice and having it become unsellable.
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Step 3 – Prepare a Letter of Instruction. A Letter of Instruction is a document that will provide your heirs with a quick and orderly way to set the “wheels in motion” to sell your practice immediately. A Letter of Instruction should contain a list of key advisors who will need to be contacted to take appropriate action. Advisors can include your accountant, attorney, dental supply rep, and, if you’ve been working with a transition consultant, include them as well. Within this document you can also include information about your life and disability insurance policies as well as the insurance agent’s contact information. A Letter of Instruction is also applicable in the event of a severe disability whereby you may be incapable of making sound business decisions regarding the disposition of your practice.
Step 4 – Include a Codicil for Your Practice in Your Will. A Codicil is a supplement to your will. In this case, it is meant to give direction on the operation of your practice if something unexpected were to happen to you. It allows for you to designate someone to ‘take over’ the management of your practice. While this could be anyone, we generally suggest that you avoid placing a family member in that role as they will have many other things to think about and take care of at that time. Although no one likes to think about these tragedies happening to themselves, they do in fact occur. It is sound business to reemphasize the importance of acting today to protect your family. Now is when you should be proactively taking the steps necessary to minimize financial losses in the case of disability or death. To take the first step in preparing, download a complimentary Letter of Instruction at HenryScheinDPT.com/WhatIf. Next, contact your local transition sales consultant at Henry Schein Dental Practice Transitions to inquire about receiving an up-to-date appraisal for your practice. One of our colleagues who instantly went from being a fully functioning practitioner to being unable to practice because of a hand injury has summed it up best. “Remember, serendipity is not a plan. Prepare now,” he states in an article he recently co-authored. This most accurately summarizes the need to expect the unexpected.
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Is 2022 the Year to Sell your Practice?
WHAT OUR CLIENTS SAY: “There are many options when selling
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a practice. I have sold 13 during my
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the best supplies and equipment
Practice Transitions Sales Consultant,
experience during my career. There
Sara Marterella, made it appear to be
Hear from Senior Director of Transition Services, Thomas Snyder, DMD, MBA for an update on practice values and considerations for successfully selling your practice in 2022. A nationally recognized speaker, author, and consultant who has been advising dentists for more than 30 years in dental practice strategic planning, practice valuations, and dental partnership formation, Dr. Snyder discusses:
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Dental Practice Transitions on the
was successfully completed during the
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early reopening phase of COVID-19,
a series of associates doing dentistry.
Sara certainly demonstrated that
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she had, “her fingertips on the pulse,”
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of Michigan dental practices and
be the dentist at this office. The
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• How 2022 practice valuations will likely be conducted
performing practice. Josh Griebahn did
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• Using a broker to sell your practice
minded dentist. A few months back,
• The key elements of a practice purchase agreement
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To watch this pre-recorded webinar, visit HenryScheinDPT.com/webinars
a great job during this “rehabbing” of the office performance. He understood that my goal was to sell it to a qualityJosh told me that he had a qualified smoothly, and Josh got the deal done. It will be a win/win transaction. I got the price I was looking for and the buyer purchased a practice with huge upside potential. Thanks to Henry Schein and Josh, I can relax and enjoy some time away from dentistry.”
Dr. Paul Dabney – Seller Round Rock, TX
Dr. Craig Blogin – Seller Ann Arbor, MI
“Jay Harter was a consummate professional! He was always available and managed to close my practice sale despite the Covid lockdown, especially in California! Then there was the Caldor Fire, which almost took out my office and the City! Through it all, Jay calmly kept the process going! I would highly recommend Jay and his Staff for a practice sale. Great professional and now a great friend.”
Dr. Kevin Cassidy – Seller South Lake Tahoe, CA
“Great experience working with Greg Auerbach, he was able to get me the best deal for a practice and recommended the best contacts for a smooth transaction.”
Ernesto Llerena, D.M.D. Bonita Springs
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