Dental and Medical Counsel Blog

There are a million things to consider before you retire. That's true for anyone. If you own a dental practice, there are specific considerations about how to sell that practice and make sure your long-standing patients are cared for after your retirement. You'll also need to take steps to prepare for your own financial needs after retirement. 

For dental practice owners, the day-to-day work of running your practice often takes center stage. Retirement planning can be fairly complex for anyone, but there are added pressures to the task of selling your practice and making sure that all of your patients and team members are taken care of after you've stopped working. Then too, there is the personal side of retirement. You need to have a firm understanding of how you'd like to live after retirement. Do you want to travel, invest, move, or simply live off of your retirement without having to work? There are fiscal considerations involved in any of your planning.

Start Planning Your Retirement Early

People often put off retirement planning because it's complicated. There are a lot of things to consider, but that's why it's best to start early. The sooner you start your retirement planning, the better prepared you are to launch your exit strategy. You should also remember that plans can be changed. None of your retirement or estate planning needs to be set in stone. You can pivot with the market and different life changes. Preparing as far in advance as possible just gives you more information to make the best decisions.

Here are some things you should consider as you start your plans:

• Make a Plan for Your Retired Life. This is a personal choice. Some retired professionals like to keep working. That might include teaching classes or practice on a part-time basis. Other dentists want to retire and do something completely different. Whatever your plans are, it's important that you really assess what you'll need in order to live comfortably. Your retirement funds will need to cover all of your expenses, which takes some planning because there won't be the earned income that you were accustomed to when you ran your practice full time. Once you have a clear idea of how you would like to spend your retirement, it's a good idea to prepare a budget for those choices so that you have a good understanding of whether your retirement funds and assets will allow you to live comfortably for the remainder of your life.
• Take a Hard Look at Your Practice Finances. You likely analyze your practice finances on a regular basis. If you're planning to sell the practice, you need to assess your overhead and assets and make the practice as attractive as possible for future buyers. 
• Analyze Your Personal Finances. One issue that many people face upon retirement is an inability to live within their budget. You can guard against this by taking a good look at your personal finances in advance and developing a budget to keep from living outside of your means. While you're working, it's often less important to budget because your income is high enough to afford some extravagances. Like anything, budgeting is often habitual. Make it a point to maintain a good understanding of all of your debts and assets. Saving should also be a high priority as you move toward retirement.
• Create an Estate Plan. Estate planning is an integral part of protecting your personal finances. Work with an attorney to make sure that all of your assets, insurance policies and financial needs are considered. Estate planning can be revised as life situations change, as well. Your estate plan allows you to firmly plan for your retirement and for the needs of your spouse and family in the event of illness or death. The topic of estate planning and creating a will is often one that people put off. It's macabre and they don't like to think about their own mortality. The reality is that we're rarely lucky enough to get a warning of when we might become ill or pass on. You want to make sure that your medical directives and last wishes are legally provided for in advance.
• Have a Plan of Succession. As a practice owner, you need to plan for how the practice carries on after you've entered retirement. If you own the commercial property in which your practice is located in, do you plan on selling the property and practice together? Are you planning to sell the practice to another dentist? Do you have partners who you would like to sell your share to? Perhaps you'd like to sell to a Dental Support Organization (DSO). You might simply decide to close the practice entirely. All of these things mean taking steps to prepare the practice, your team members, and patients.

Preparing to Sell Your Dental Practice

You've spent your entire professional life working to build your dental practice into a success. Your practice can be as important to you as your family and children. And you have every right to be proud and concerned about how it will manage after you've stopped working. You also have your patients to consider. For many dentists, patients can be like an extended family. You need to make sure that their dental needs are met after you've stopped practicing.

Whether you are the sole practitioner of your dental practice or you have other partners, you'll need to take some time to prepare the practice for succession before you retire. With partnerships, it will often be a matter of selling your shares to the other partner(s). There can be a number of ways to address these considerations that meet with all parties' best interests.

Selling to a Private Practice

If you are the sole practitioner in your practice, there are some things to consider well before selling. Preparing in advance will help you maximize the practice's sale price. It's recommended that you start the planning process a number of years in advance, 3-5 at least. This will help you make the practice its most valuable and enticing for a new buyer.

Some things that you should concentrate on to improve your practice for sale include:

• Increasing the patient roster
• Reducing overhead
• Updating office décor
• Updating procedures, including administrative and technological
• Increasing revenue
• Improving team performance

Selling to a DSO

Another possible option might be selling to a Dental Support Organization (DSO). In most cases, a DSO will want you to stay on with the practice for a set length of time to make the transfer as smooth as possible. This will help them retain many of your patients and a lot of dentists find this to be a beneficial way to do things, because they have time to help their patients adjust, as well. 

Some things you should consider to successfully sell your practice to a DSO include:

• Due diligence when researching the DSO prior to engaging or finalizing a deal.
• Consideration of your post-sale role. Make sure that the terms are in line with your preferences in terms of ongoing work.
• Retirement strategy considerations. There is often a 1-3 year commitment of service when selling to a DSO, make sure that this is in line with your retirement plan.
• Patient care is often the highest priority in these sales. Make sure the DSO's mode of practice will best serve your patients after you've left.

When you are working toward preparing to sell your practice, you'll also want to consider how that impacts your team. You will also need to look at and adjust your insurance as needed, as well as verifying that your malpractice insurance remains in good standing as long as is necessary.

For more information on DSOs and what they value, read our article on Dental Practices that DSOs Value the Most.

If you're currently considering your retirement, or even if it's years away, contact the experts at Dental & Medical Counsel today! Our experienced team has a long history of working with doctors just like yourself and can help you plan for your best future.