Dental practice succession planning
Proper succession planning is a vital step for securing your financial future and protecting your legacy when the time comes to sell your practice. Don’t wait until the last minute to start thinking about what’s next. Most dental practice attorneys recommend you begin working on your plan at least five years before retirement, if not more.
Given that profit is one of the key factors used in determining the sale price of your dental practice, it’s a smart idea to keep your business growing when nearing the time to sell. This presents unique challenges as you may be working less once retirement is in view. Consider hiring an associate dentist or ramping up your hours towards the end to make sure you’re getting the full value out of your work.
Have a successor in mind?
If you plan on selling to a partner or an associate dentist who works at your practice, it’s a good idea to lay out a succession timeline to better prepare your successor for continued success. The transition doesn’t have to take place overnight and, in many cases, slowly transferring responsibility and decision-making capacity over to the new owner makes sense. Stay flexible, keep an open mind and have candid conversations with your successor to craft a plan that works for both of you.
Selling on the open market
If you do not have a successor in mind and will be selling your practice to a buyer on the open market, start building your succession team well in advance. You’ll need accountants, brokers and lawyers with significant dental practice experience to facilitate the sale and minimize your tax burden.
Working for your successor
If you’re tired of practice management but not quite ready to hang up dentistry for good, you could work out an arrangement with your successor to continue working as an employee. Staying on the payroll provides a smoother transition for the new owner while giving you the flexibility to work part-time.
Have something to retire to
The prospect of retirement is an exciting thought for any hard-working professional, but some dentists forget to map out what they’d like their retired life to look like. Be sure to give some thought to what you’d like to do with your time post-retirement so that you don’t end up bored or stir crazy.