Buying or selling a practice is one of the most significant financial events in a dentist’s career – with only one chance to get it right.
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New Blog Post: “Dear Doctor”
Whether it be by letter, text or a phone conversation, the message below is one we have to deliver way too many times. I regret the fact that my words are such a shock to most of the recipients as they have either chosen to not believe them or simply were oblivious to the market. If you are the owner of a small practice that is providing you with some pre-retirement income and deferring the dip into your retirement savings while providing good service to your patients, then more power to you. Don’t be surprised though to get a letter like this:
Dr. B. Boomer,
I am in receipt of you practice information and it was a topic of discussion this morning at our weekly staff meeting. While you and I have had some communication in the past, it was not until you disclosed your annual revenues that we were able to determine a course of action. You’re probably not going want to hear what I have to say.
Unfortunately, we will not be able to be of assistance to you. From a practical standpoint, the threshold of annual revenues for transitionable practices is around $500,000. We simply are unable to find buyers for practices below that number and frankly, in the Midwest the number is moving quickly towards $600,000. With Student Loan debt often $300,000 or more, our buyers need more immediate revenue in order to cover that debt plus any acquisition debt along with the practice overhead before they can take home a paycheck. For the same reason, unlike those of us from the ‘70s, there is not much stomach for start-ups as nationally only about 5% of the new grads go directly into ownership. Young docs would rather go to work for a “Corporate” office and get a steady income than risk starting cold.
Occasionally someone close to an office like yours might be interested in your files and phone number. We have had reasonable success in merging a small practice like yours with another local office. Be aware though that they will not want you or most of your equipment as part of the deal. Know too that this transaction has better not be the cornerstone of your retirement account. Otherwise (and I have to use this line way too often), work until you are done working, lock the door and put a notice in the newspaper to advise patients how they can obtain their records. I would recommend a call to the Dental Board to make sure you are in compliance.
I’m sorry I didn’t have better news for you but I’m sure you have provided a great service to your community. Best of luck to you.