Author: omniadmin

Want to Purchase a Practice?

By Megan Urban, Practice Transition Advisor

Want to purchase a dental practice? Here is a basic starting To-Do List to get you going!

– Where do you want to practice and where will you and your family be happy?

– Get your last 3 years of personal tax returns together.

– Gather your debt details: student loan, credit card, mortgage, etc.

– Start to look at your current production, or if you are in public health, monitor your procedure frequency report.

Talk with a transition specialist that can guide you through the process. They will look at some or all the following items in detail with you:

– Select a dental-specific attorney, bank, and CPA.

– Assist you to understand details of the practice, such as active patient count, expenses, insurance participation, recare, procedures completed and those referred out, potential marketing, cash flow, and due diligence in general.

7 Questions to Ask When Forming a Partnership

By Jim Vander Mey, CPA, ABI, Practice Transition Advisor

You and your friend from school want to purchase a practice together. Here are just a few questions to ask.

A sole owner is often an easier path to ownership, but partnerships can certainly be successful. But like any healthy relationship, it requires work. To help prepare consider getting together with your business partner, turn off the cell phones, meet in a closed room, and ask the following questions to each other.

How much debt do you have?

Does your business partner have a bankruptcy in their past?  Do they secretly owe their parents money for school? Do they drive a BMW 7 series, and you drive a Yugo?  (google it!)  Pre-existing debt could limit your financial flexibility for emergencies and growth. Will their spending and saving style affect how they run the practice?

How updated does the practice need to be?

We have seen state-of-the-art practices that have been remodeled every 5 years and converted 50-year-old homes.  Both can be profitable.  We have seen many practices that do not follow textbook expense percentages, but still have excellent reputations, and are extremely profitable.

Number of staff?

You want a Licensed Tech with you at all times, and your partner doesn’t.  You want to hire a cleaning service, but your partner wants to come in on Sunday afternoons and clean the practice to save money.

Equipment purchases?

You want a fully digital x-ray and a new surgical laser, and your partner is fine with a CR x-ray and a used ultrasound.  Now what?

Vacation? Sick?

You want to take 6 weeks off every year to coincide with your spouse’s vacation and your partner only wants a couple of weeks off. Does your compensation arrangement cover this? Even if you compensate for the difference, will you feel comfortable with this?

Skeletons in the closet?

Yes, you got along famously in school… Studied together, got along socially, have a similar philosophy regarding practicing, etc.  Do you both need to agree to a full background check, as in searching for bankruptcy and criminal activity?

How will you solve disagreements?

You probably won’t see eye to eye on everything. Assume you will be diametrically opposed to your partner on an issue – how will this be resolved?  What if disaster strikes?  Or what if you need to move out of state to take care of a family member? Or what if your spouse has an out-of-state opportunity, or a permanent debilitating health issue arises.  What if it ultimately leads to the point that you no longer want to be co-owners and you get to the point where you have the ultimate disagreement and just cannot get along? What is the break-up formula?

Answer Key to above questions

The answer to the above of course is – there are no set answers.  It will vary from partnership to partnership, person to person what will work.  Long before you make an offer on a practice, set some time aside to discuss the above questions – at the very least discuss the last paragraph. And of course, we recommend meeting with a veterinary attorney to form your partnership agreement.

Practice Owners Can’t Always Sell When They Wish

A recent and insightful Forbes article, “Study Shows Why Many Business Owners Can’t Sell When They Want To” penned by Mary Ellen Biery, generates some thought-provoking ideas.  The article discusses an Exit Planning Institute (EPI) study that outlined the reality that many business owners can’t control when they are able to sell.  Many business owners expect to be able to sell whenever they like.  However, the reality, as outlined by the EPI study, revealed that the truth is that for business owners, selling is often easier said than done.

In the article, Christopher Snider, President and CEO of EPI, noted that a large percentage of business owners have no exit planning in place.  This fact is made all the more striking by the revelation that most owners have up to 90% of their assets tied up in their businesses.  Snider’s view is that most business owners will have to sell within the next 10 to 15 years, and yet, are unprepared to do so.  According to the EPI only 20% to 30% of businesses that go on the market will actually sell.  Snider believes that at the heart of the problem is there are not enough good businesses available for sell.  In short, the problem is one of quality.

As of 2016, Baby Boomer business owners, who were expected to begin selling in record numbers, are waiting to sell.  As Snider stated in Biery’s Fortune article, “Baby Boomers don’t really want to leave their businesses, and they’re not going to move the business until they have to, which is probably when they are in their early 70s.”

The EPI survey of 200+ San Diego business owners found that 53% had given little or no attention to their transition plan, 88% had no written transition to transition to the next owner, and a whopping 80% had never even sought professional advice regarding their transition.  Further, a mere 58% currently had handled any form of estate planning. 

Adding to the concern was the fact that most surveyed business owners don’t know the value of their business.  Summed up another way, a large percentage of the business owners who will be selling their businesses are Baby Boomers who plan on holding onto their businesses until they are older.  They have not charted out an exit strategy or transition plan and have no tangible idea as to the true worth of their respective businesses. 

In Snider’s view, the survey indicates that many business owners are not “maximizing the transferable value of their business,” and added that they are not “in a position to transfer successfully so that they can harvest the wealth locked in their business.”

All practice owners should be thinking about the day when they will have to sell their practice.  Now is the time to begin working with a broker to formulate your strategy so as to maximize your business’s value.

Practice Owners Can’t Always Sell When They Wish

A recent and insightful Forbes article, “Study Shows Why Many Business Owners Can’t Sell When They Want To” penned by Mary Ellen Biery, generates some thought-provoking ideas.  The article discusses an Exit Planning Institute (EPI) study that outlined the reality that many business owners can’t control when they are able to sell.  Many business owners expect to be able to sell whenever they like.  However, the reality, as outlined by the EPI study, revealed that the truth is that for business owners, selling is often easier said than done.

In the article, Christopher Snider, President and CEO of EPI, noted that a large percentage of business owners have no exit planning in place.  This fact is made all the more striking by the revelation that most owners have up to 90% of their assets tied up in their businesses.  Snider’s view is that most business owners will have to sell within the next 10 to 15 years, and yet, are unprepared to do so.  According to the EPI only 20% to 30% of businesses that go on the market will actually sell.  Snider believes that at the heart of the problem is there are not enough good businesses available for sell.  In short, the problem is one of quality.

As of 2016, Baby Boomer business owners, who were expected to begin selling in record numbers, are waiting to sell.  As Snider stated in Biery’s Fortune article, “Baby Boomers don’t really want to leave their businesses, and they’re not going to move the business until they have to, which is probably when they are in their early 70s.”

The EPI survey of 200+ San Diego business owners found that 53% had given little or no attention to their transition plan, 88% had no written transition to transition to the next owner, and a whopping 80% had never even sought professional advice regarding their transition.  Further, a mere 58% currently had handled any form of estate planning. 

Adding to the concern was the fact that most surveyed business owners don’t know the value of their business.  Summed up another way, a large percentage of the business owners who will be selling their businesses are Baby Boomers who plan on holding onto their businesses until they are older.  They have not charted out an exit strategy or transition plan and have no tangible idea as to the true worth of their respective businesses. 

In Snider’s view, the survey indicates that many business owners are not “maximizing the transferable value of their business,” and added that they are not “in a position to transfer successfully so that they can harvest the wealth locked in their business.”

All practice owners should be thinking about the day when they will have to sell their practice.  Now is the time to begin working with a broker to formulate your strategy so as to maximize your business’s value.

Start Up Uncensored Real Estate Shark Week – Dental Specific Real Estate Brokers

Steve Kikikis talks with Michael Dinsio and John Bertagni about Real Estate and much more …