Dentists Don’t Sell Their Practices, They Sell Their Leases By Lewis Gelmon Dentists are often shocked when I say “you don’t really sell your practice; you sell your lease.” This simple but disturbing reality has become clear to me through the thousands of leases I have reviewed for clinicians since 1994. Dentists spend decades building good will and providing excellent dental care. They spend hundreds of thousands of dollars on marketing, state-of-the-art equipment, and creating a comfortable environment for patients and staff. Unfortunately, all the money, time and effort spent on these initiatives do not necessarily translate into a high sale price. How can a dentist avoid this unfortunate fate? With a proper lease agreement that has been carefully crafted for a dentist planning to sell his or her practice. More and more dentists are finding themselves caught in a classic landlord trap. I receive at least one phone call each week from a dentist who is in the process of selling a practice and has run into problems with their landlord. These calls tend to sound the same. The dentist explains that he or she has tentatively sold the practice. When approached to transfer the lease, the landlord asked for a letter formally requesting the transfer. A few days after receipt of the letter the landlord determined that, according to the provisions in the lease, he or she now has the right to terminate the lease and
remove the practice from the premises. The landlord goes on to explain the dentist’s choices. The space can be vacated in accordance with the lease or the clinician can pay the landlord a fee for agreeing to waive the right to exercise their option to terminate, allowing the practice to be sold and remain on the premises. Depending on location and the value of the sale, this fee is typically somewhere between $75,000 and $250,000. Take a moment to process that. It can cost a dentist up to a quarter of a million dollars to transfer their lease. Property owners often understand the business of dentistry better than dentists themselves. Buried deep in the lease agreement is an “Assignment Provision” that governs the details of how to transfer the lease (change of control) when selling the practice. These provisions are often extensive and hard to understand. Most allow the landlord overwhelming control over who can purchase the practice, as well as the opportunity to prevent the sale or terminate the lease. In my opinion, the purpose of these onerous sections is simply to provide property owners with the opportunity to share in the sale proceeds of their most valuable tenants. The solution is simple. I like the overused but very true axiom—“An ounce of prevention is worth a pound of cure.” If you ever plan to sell your practice, you need to make sure you can sell your lease. This requires knowing where the risks are before putting your practice up for Continued on back…
2015 Seattle Study Club® Symposium
DENTIST AS CEO The Science Behind Financial Success The 22nd Annual Seattle Study Club® Symposium will deliver education that isn’t offered anywhere else in dentistry today. In four intense days, you will learn the skills necessary to become the CEO of your practice and secure your financial future. This meeting will immerse you in expert knowledge on everything from understanding the implications of your balance sheet to laying out a strategic plan. It’s Financial Intelligence for the Clinical Mind™. This special issue of Broadcast Views highlights just a few of the 30 presenters who will be sharing their insights January 21-24, 2015 at the Ritz-Carlton, Amelia Island, Florida. See you there!
Is Your Website Really Working? By Ian McNickle, MBA The world of websites and online marketing can be confusing. Dentists and their staff often feel their website could be doing more for them, but aren’t sure what to do about it. Online marketing is concerned with two primary processes— driving traffic to the website and converting that traffic to new patients. Driving traffic to your website is achieved by the use of SEO (search engine optimization), PPC (pay-per-click) ads, social media, internal marketing and various other methods. After people arrive at your website you’ll want them to contact your office via phone, email or by filling out an appointment request form. These actions are called website conversion. Drive Traffic to Your Website For your website to generate high traffic volumes it must rank highly on search engines (like Google) for key search terms related to your dental services and relevant geography. This is achieved by optimizing your website for search engines— a process called SEO (search engine optimization). Search engines are continually increasing their sophistication in delivering results. What they are ultimately looking for is meaningful content that matches the search criteria entered for each query. The best way to stay at the top of search results is to have fresh content that matches the search terms potential patients will use when looking for a dental practice. I recommend implementing a comprehensive plan that includes regular activities such as content creation, code optimization, link building, social media, video creation, etc. There are many things that need to be done every month to help your website rank highly. There are other significant drivers of traffic to websites in addition to SEO. PPC (pay-per-click) are ads on search engines that direct people to your website. Social media can also play a significant role. Traditional marketing methods such as internal marketing and direct mail can have a huge impact as well. Many (or all) of these items should be part of a typical dental practice marketing plan.
Maximize Your Website Conversion Rate Once people come to your website, the goal is to maximize the number of new patients you can generate from that traffic (i.e., maximize your conversion rate). Your website conversion rate is calculated by dividing the number of conversion activities (phone calls, emails, form submissions, etc.) by your total website traffic. For example if 100 people came to your website last month and you received 12 phone calls, 3 emails and 5 form submissions, then your conversion rate would be 20 percent (12 + 3 + 5 / 100). Following are some of the more important factors for website conversion: • Clean, modern website design that is easy to navigate. • Easy to find phone number on all pages. • Easy to find appointment request link on all pages. • Overview video of the practice on the home page. • Use of actual practice photos (minimal use of stock photos). • Well-written content. Track and Optimize Results Over Time Dental practices should make it a regular monthly activity to track website traffic and conversion to ensure they understand their performance level. Plotting these trends over time will allow practices to understand if their activities to increase traffic are working and determine the ROI (return on investment) for this portion of their marketing. Ian McNickle is a nationally recognized marketer, writer and speaker. He is an expert in digital marketing and a partner at WEO Media. He can be reached at ian@weomedia.com or by calling 888.246.6906. Mr. McNickle will be at the 2015 Symposium to answer any questions specific to you and your practice website.
Dentists Don’t Sell Their Practices, They Sell Their Leases Continued sale. The best thing you can do is to have your lease properly reviewed to ensure it’s structured correctly for a sale and follows good leasing guidelines for dental offices. Lewis Gelmon will be at the 2015 Symposium sharing detailed information on this topic and answering your specific questions. Mr. Gelmon is a former landlord, lease negotiator and shopping
center manager. Now a dental tenant advocate, he regularly lectures for dental groups across North America and the U.K. He is the most published author on the subject of dental lease negotiations. His mission is to raise awareness among dentists on the risks hidden in their office leases. Mr. Gelmon can be reached at lewis@lewisgelmon.com.
Lewis Gelmon has generously offered a complimentary lease evaluation for any Seattle Study Club® member. This service, typically offered for $1500, is particularly relevant for clinicians who will be renewing their lease within the next two years or considering a practice transition in the next five years. To take advantage of this opportunity, contact Mr. Gelmon directly at lewis@lewisgelmon.com.