When someone is looking to buy or sell a practice, they are often presented with an appraisal of the practice that has been prepared by the other party in the transaction. While the results of the practice’s trading may be clear, there are numerous appraisal techniques to choose from, and often some creativity applied when using them.
A popular exit plan for many dentist practice owners is known as the Delayed Internal Sale.
The stakes are high in practice sale transactions. Financially, a practice usually sells for amounts in the hundreds of thousands or millions of dollars. There are also important non-financial qualitative aspects of the deal, like transferring staff, patient relationships and a reputation that has been built over decades, and post-sale work commitments for the vendor that can last from 6 months to 5 years. The transaction itself is usually documented with three or four legal contracts (1. a business sale agreement, 2. a premises lease contract or premises sale contract, 3. a work contract for the vendor post sale, and 4. a partnership/associateship agreement if there are equity partners/associates). With all of this at stake, you would think that a buyer or vendor would want to make sure that they get appropriate legal representation, to ensure that they get what has been promised to them and to protect themselves from future risk.
Once upon a time, buying a dental practice was a rite of passage that almost all dentist graduates went through after a few short years in the workforce. In more recent years however, statistics have shown that being an employee/contractor/non-owner dentist for life is a growing choice for dental graduates. There are many reasons that people give for this trend, including:
There comes a time for most successful practice owners when they get to a level of comfort with their first practice, and start to contemplate starting or buying a second practice.
