You’ve poured your heart into your practice, cared for patients year after year, and built a team you’re proud of. Thinking about what happens next can feel daunting, whether that’s retirement or scaling back. But planning ahead doesn’t have to be scary or complicated.
In fact, the sooner you start your dental practice succession plans, the more control you’ll have over your future and the value you’ve worked so hard to build.
We’ll walk through the most common ways dentists transition out of their practices and some early steps you can take to make that transition smoother.
Selling To An Associate Or Partner
If you already have an associate working with you, you’re in a great position to do a gradual sale. Typically, the associate buys a small share of the practice first and then purchases the remainder over time. This approach lets you mentor them, ease patients into the change and keep staff morale high. It also allows you to set a pace that feels comfortable for you rather than handing over the keys all at once.
Selling To A Dental Support Organization (DSO) Or Outside Buyer
DSOs and private buyers often bring cash to the table and can complete a purchase relatively quickly. That can be appealing if you’re looking for an immediate exit. Or want to reduce your management duties but keep practicing for a period of time under contract.
On the flip side, the culture and systems of your practice may change once the deal closes, so it’s important to read the fine print and understand exactly what you’re agreeing to.
Passing The Practice To A Family Member
Some dentists dream of handing their practice to a child or relative. This can be a wonderful legacy but only works if the family member has the proper education, training, and some experience outside your office. Clear conversations about roles, timelines, and compensation go a long way toward avoiding future misunderstandings or hard feelings.
Merging With Another Practice
Joining forces with another dentist or practice can increase your scale, improve purchasing power, and make the combined business more attractive to future buyers. But mergers also mean sharing decision-making and profits.
If you’re considering this route, work with advisors to draft an agreement that clearly spells out governance, exit options, and how the practice will be valued in the future.
Closing The Doors
Sometimes, despite your best efforts, there isn’t a buyer. Closing the practice is always an option, but it usually yields the lowest financial return. If you’re leaning this way, plan well ahead for patient record transfers, staff notifications, and winding down contracts to make the process as smooth as possible.
How To Make Your Practice More Attractive To Buyers
You don’t have to wait until you’re ready to sell to start boosting your practice’s value.
Here are some concrete steps you can begin today:
- Clean up your books. Make sure your financial statements are accurate and easy to understand. Separate personal expenses from business expenses and keep tax filings current. Buyers are much more confident when they can see clear, consistent numbers.
- Normalize your compensation. Pay yourself a steady, reasonable salary so buyers can see what the practice truly earns. Big swings in owner pay can make earnings look unstable.
- Write down your systems. Document your key processes, from scheduling to billing to patient follow-up. Having a manual shows that the practice can run smoothly without you, which makes it more valuable.
- Strengthen your patient base. Work on hygiene recall, case acceptance, and membership plans. The more predictable your revenue, the more attractive you’ll be to buyers.
- Secure your lease. If your lease is close to expiring, try to extend it or make it transferable. Uncertainty around location can scare buyers off.
- Keep equipment records. Create a list of your major equipment with ages and service histories. Buyers want to know what they’re getting and what will need replacing soon.
- Build a strong team. Identify a key office manager or clinical lead who can help keep things running during the transition. Consider retention bonuses to encourage staff to stay on through the change.
Getting a professional valuation a few years before you’re ready to sell can also be eye-opening. It gives you a baseline and highlights the areas with the biggest potential to increase value.
Taxes: What To Ask Your CPA
Taxes can make a big difference in how much you actually keep from the sale.
A few key questions to discuss with your CPA include:
- Will the deal be structured as a sale of assets or a sale of ownership shares?
- Should you take all cash now or receive payments over time?
- How will the purchase price be allocated between equipment, goodwill, and other items?
- What state or federal taxes will apply, including the Net Investment Income Tax?
Your CPA can model each scenario so you see the after-tax numbers, not just the headline sale price. This kind of planning can save you a lot of money and headaches later.
Your A-Team For The Transition
You don’t have to figure this out on your own. Bring in advisors early to give you more options and guidance in specific areas.
Here’s who you’ll want on your team:
- A CPA who understands dental practices can help you plan ahead, clean up your numbers, and coordinate with your attorney and broker.
- An attorney experienced in dental transactions can draft buy-sell agreements, employment contracts, and non-competes.
- A financial planner can help you look at how the sale fits into your retirement and estate plans.
Ready When You Are
Planning your exit isn’t just about cashing out. It’s about protecting your patients, your team, and the legacy you’ve built over years of hard work.
By starting early, taking small steps to strengthen your practice, and surrounding yourself with trusted advisors, you can create a transition plan that feels right for you and your family.
When you’re ready, Virjee Consulting can walk you through the numbers, explain your tax options, and help you build a plan that lets you step into your next chapter with confidence.
