Many people think that retirement planning is an exact science. Sophisticated financial calculators will spit out numbers down to the cent, creating the illusion of being able to calculate roughly when you'll be ready to quit working for good.
Reality, however, isn't nearly as exact, or predictable. Retirement isn’t just a financial decision; it’s also an emotional one. There’s a big difference between being able to stop working, and being ready to stop working.

When Practice Sale Search talks to dentists who are nearing the end of their careers, there are, of course, natural financial concerns about:

• What they will need financially to retire and maintain their lifestyle.
• Whether selling now will yield better financial results than selling in 2-3 years

But, more often than not, they have underlying emotional considerations as well. Younger dentists would be surprised to learn that many of those nearing retirement fear they are not emotionally prepared. Even if, financially, selling makes sense, it is sometimes put off because they are thinking:

1. That it will be difficult to give up their careers, when it has defined them for decades
2. They are going to miss patients and staff who they have had relationships with for many years
3. When they return from the post-sale holiday, how are they going to fill all that extra time?
4. They aren’t sure they want to spend all day, every day, with their spouse
5. Retirement is an indirect reminder (for some dentists) of their mortality.

As a result, they often phase into retirement and slow down, rather than stop working altogether.

From one year to the next they do fewer hours per week in the practice, and take more time off on holidays. They justify to themselves that any reduced remuneration is more than made up for by their improved lifestyle…that is, until it comes time to sell. When they eventually decide to sell it often dawns on them that they haven’t just been reducing their remuneration each year, but also severely depreciating the value of their practice - to the point where the asset is worth far less than it was. They are often, therefore, faced with the choice of postponing retirement, or cutting back on their post-sale lifestyle. 

There is of course another way to slowly phase into retirement that doesn’t compromise the value of your asset, and that is to sell first. The advantages of this approach are:

For the purchaser

Most purchasers would appreciate having the previous owner stay on post-sale in a part-time/diminishing capacity. Keeping the ex-principal dentist in the practice post-sale:

• Reduces the usual patient attrition that occurs when a practice changes hands
• Allows the new owner to transition into practice ownership, rather than be thrown in the deep-end
• Gives patients and staff a feeling of continuity, which should bring with it feelings of loyalty
• Gives the new owner a resource that can brief them on issues with staff, patients, supply reps, landlords, etc.
• Gives the new owner an extremely qualified contractor dentist, who already has a rapport with patients

For the vendor

Many vendors would be in favour of staying on post-sale as they would:

• Sell at the business’s peak, maximizing the return for their asset    
• End their career doing the dentistry – and not the admin, HR, marketing, etc, that came along with ownership  
• Get the ability to fade into retirement at a pace that they are comfortable with, without compromising the sale price of one of their most valuable assets

Structuring a work relationship post-sale is one of the many functions of a good dental practice broker. 

For more articles like this one please click below:

• If I am not a dentist - Who am I?
• Retirement: able, but not ready.
• Leaving a Perfect Legacy: Putting the Cart Before the Horse