Through the turnstile: The sale of my dental practice
Dr. Douglas Wright shares the personal account of the very unexpected sale of his dental practice. And he couldn't be happier.
In January 2017, the associate dentist in my practice gave me notice that he was leaving. Dr. Mike had been a great fit for me. He had been in private practice in his own office in California for 26 years before selling his business and moving to Virginia. He had great clinical and communication skills. He was perfect with the staff and the patients, but he and his wife decided they wanted to live in Richmond, more than 100 miles away.
I started my practice in rural Virginia in 2003. As the practice grew, I found I needed another dentist. I hired an associate dentist in 2011. She was a local woman right out of dental school who had great skills and brought a lot of her friends and family to the practice. When she left to start her own business, she took a lot of her patients with her, but not all of them. I was busier than ever. I soldiered on for a while and then Mike joined the team.
With Mike leaving I had to find another associate. I ran a report in Eaglesoft. I had about 3,500 active patients with a total of almost 8,000 patients of record. We were averaging about 30 to 40 new patients a month. I was seeing patients five days a week and doing lab work and paper work evenings and weekends in order to keep up.
I ran a couple of ads on the Virginia Dental Association website. The results were disappointing. One dentist wanted to know how close my office was to Washington DC. (I live about 120 miles from DC.) Another interested dentist could only work two days a week. I received several other inquiries from dentists who would have been unsuitable.
One afternoon in the office, my dental supply rep stopped by. I asked him if he knew of an available associate dentist. He told me about a colleague of his who was operating a dental brokerage firm. Bill Shultz with Commonwealth Transitions had once been with the company who provided my dental supplies. In fact, some years prior, Bill supervised the installation of some of my dental equipment. I got Bill’s email address and went back to work seeing my patients.
Bill suggested we meet for dinner. Over dinner I told him I needed a dental associate. I shared some generalities about my practice and told him the number of patients was overwhelming. He asked me detailed questions and listened carefully to my answers. I had undergone a lot of training in implant dentistry. I was having trouble finding time to provide dental implant care while handling the emergencies and simple restorative dentistry. New patients were having to wait longer and longer for appointments.
Bill knew I had some back troubles. “How’s the back?” he asked. I had been to the physical therapist recently. The therapist told me, again, that I needed to stick to a program of regular exercise. There is a nice swimming pool and gym close to my home, I just couldn’t find the time to get over there. I told Bill my back was OK, but I needed some time at the gym.
“Doug, I think you’re ready to sell your practice!”
I was surprised by Bill’s statement. I was only 59 and still had two kids in college. My wife and I have always put money away in our retirement savings accounts, but we were not ready to retire at the lifestyle we currently enjoyed. At first, I thought Bill might have been looking for a sales commission and not really looking after my best interests.
“What you need to know is that your practice is big. Most young dentists will be somewhat intimidated if you were to sell them the practice and just walk away,” Bill said. “I think a better scenario for you is to sell your business to a dentist who would like you to stay on as an associate. This way, you still have an income stream. You can focus on the implant and restorative denistry you want to do. The young dentist will like having you there to introduce him or her to your patients. You can cover for each other during vacations and holidays. You lose the headaches that come with running a practice, and the younger dentist will not move along like your previous two associates did because he or she is the owner.”
He continued, “Doug, think about it. Your business is like one of the businesses listed on the New York stock exchange. The values of those businesses go up and down dependent on a ton of different variables. Right now, your practice is very valuable. You and your associate had a great year. Without another dentist to help you, your numbers are certain to level off. In addition to this, if you need to take a month off because of a back injury, this will have a negative impact on the value of your practice. Look at it another way—your practice is close to the top of its value. You will soon need to stop taking new patients to keep up with what you have built. When a stock is at the top of its value, it can be a good time to sell.”
This was huge. I confess I was so wrapped up in building the practice and being involved with my wife and kids that I never really considered an exit strategy.
“It may take a couple of years to sell your practice. In the meantime, you continue to run your office. Once a new owner is on the scene, you offer to work another four or five years. That will take you to age 65 or 66.”
The idea was starting to grow on me
Bill Shultz used several methods to determine the value of my practice. He gave me a questionnaire to fill out. Getting him the information was pretty easy, I had everything from the practice on Eaglesoft dental management software. My accountant had the required financial information.
Once the questionnaire was complete, Bill and I met to discuss the asking price and how we would market the practice.
Once it was listed on the broker’s website, there was immediate interest. A few dentists came by to visit. Finally, late in the spring, Bill asked me to take a phone call from two interested dentists. They were a husband and wife team. They had met in dental school and had completed a general practice residency at a hospital not far from my hometown. They moved on after their residency but really missed living in the Shenandoah Valley.
After a couple of phone conversations, they came to the office for a visit. We had a super first meeting. I took time to show them the area. Of course, we spent several hours over two days in the office reviewing reports, charts, and talking about our goals for the future.
Bill was right, the two young dentists both said they wanted me to stay in the practice. This presented a bit of a problem. My office had only seven treatment rooms. With three rooms for hygiene, we did not have enough room or staff for three dentists to work at the same time. This is where I started to see what a great match this would be. The young dentists were natural problem solvers who thought of win-win solutions. We agreed to each work three days a week, and this way there would never be more than two dentists in the office working at the same time.
The solution of three working days each was a good one. The process we went through to get to this solution told me I could work as an associate for them as new owners.
The sale of the practice was complete about 18 months ago. Of course, there have been some challenges, but the three of us have a relationship of mutual respect. I have offered suggestions when asked and I have been incredibly impressed at the level of knowledge the new owners have about running and growing a dental practice. I still get to see my patients and I get to the gym on a regular basis.
Bill was right. I was ready to transition my practice. I confess I was so caught up in the day-to-day issues that I did not have a strategic view.
For me, my patients, my staff, and the new owners, the transition worked out very well. A broker who was a good listener and who understood my practice and the business of dentistry was a huge help to me.
AUTHOR’s NOTE:I would enjoy writing about other dentists who have transitioned their practices. Do you have a dental practice transition story to tell? I think our colleagues will all benefit from hearing from those of us who have recently passed through the turnstile. Please email me at firstname.lastname@example.org you have a story to tell. If you prefer, your name and location can remain confidential.