Seller Articles

There are a number of reasons that doctors sell their practices.  Some are good reasons, like when you have reached a point where you have enough money to live comfortably the rest of your life while you are still healthy.  Other situations may not be good.  Those can include failed health, a practice that is quickly losing production, or the worst-case scenario — you suddenly pass away.

If you are still in good health but are not sure if you are in a good financial position to be able to live comfortably the rest of your life without working, we recommend you speak with your financial planner.  They can analyze your situation and see how much more you may need to work.  Or, if you can sell your practice, put the money into a retirement account and work at a practice and continue to make an income while harvesting the equity you have in your practice.  This is one of our favorite transition strategies.  It’s like selling your house, but you get to continue to live in it.  Just because you sell your practice does not mean you need to stop working or retire.   You can still work clinically if you still enjoy dentistry but don’t enjoy the management or dealing with insurance companies continuing to lower reimbursements.

Another time to consider selling is when your practice is continuing to go down in collections or net income.  We have numerous examples of when a doctor could have sold two or three years prior and made another $200,000, $300,000, or even $400,000 more if they would have sold at the height of their practice production.  Instead, they watch the production numbers and patients go down year after year after year.  Even though the owners knew they were getting tired, referring more work out, or simply seeing fewer patients, they continued to hold onto their practice thinking they can sell it based on what the numbers were at the height of production. 

The worst time to sell is when you have to sell, say when you or a family member have failed health, or you suddenly pass away.  In this scenario, you or your family are left trying to quickly get the practice sold before all of the patients leave and there’s a skeleton of a practice left to sell.  That can be a devastating situation, especially when the funds from the sale of the practice were counted on as a source of future retirement income.  At a minimum, you should keep an emergency contact list for your family in your office that includes your attorney, accountant, practice broker, supply company, etc., that can alleviate some of the burdens on your family.

Whether you are 20 years from retirement or 2 years from retirement, you should be always be prepared and have an exit plan.  We are always available at no charge for either a phone call or a meeting over a cup of coffee to help you put together that plan.

In the September 2017 subscription of JADA, there is an article titled “Practice Ownership is Declining” by Marko Vujicic, Ph.D.  As the title reveals, the article is about the decline in practice ownership by dentists.  If you have not read the article, I highly recommend it.  The statistics in the article support what we are seeing in the market for dental practice and some of the articles I’ve written recently.  If you do not subscribe to JADA, here are a few of the highlights.

There is a steady decline of practice ownership, especially amongst male dentists.  Approximately 80% of dentists currently own practices.  Rising student debt, the emergence of corporate dentistry, shifting work-life balance preferences were just a few examples of why there is a decline in ownership.  One of the big questions brought up is whether the trend is a big deal.  It was pointed out that practice ownership is highly coveted and one of the reasons that dentists got into dentistry in the first place.  All else being equal, owner dentists earn more than non-owner dentists.  The question is, is practice ownership no longer as coveted as it used to be by younger, early career doctors?

The decline in practice ownership will continue for years to come.  A comparison to the decline in ownership by physicians, which is now below 50%, was used as a comparison.  Hospitals and groups have taken over the ownership of physician practices.  The study states that physicians’ net hourly income is significantly higher than for dentists; Although, I would say that the annual income is higher for dentists, all things being equal.   The author also claims that physicians are happier as a result of not being an owner of a practice.  With reimbursements continuing to decline, dentists will be asked to do more with less.  An emerging emphasis on quality and value will spur changes in dentistry. 

If you have not read the article, I recommend you take a look.  Email me at rod@omni-pg.com and I will send you a copy. You can also go to jada.ada.org and search for “Practice Ownership Is Declining.”

Here are 10 Things To Do To Prepare For A Transition
​By Rod Johnston, MBA, CMA and Jim Vander Mey, CPA, ABI

You have had a great career and now you are thinking about selling and transitioning out of your veterinary practice. You would like to get the best value for your practice. Do you just walk away?  Being prepared can not only help you get the best price, it will help ensure a smooth transition.

Here are a few things you can do to help prepare for your veterinary practice transition:

1. Know your Financial Situation – Meet with your financial advisor, CPA, or whoever gives you financial advice to get a good picture of where you are with your savings and investments.
2. Get a Practice Valuation – A practice valuation will help you see how much equity you have in your practice.  Additionally, a CPA can help you figure out what the taxes and net proceeds from your sale will be.
3. Update Technology – Buyer’s like to see new technology in a practice.
4. Cosmetic Updates – Have you updated the interior with paint and carpet in the last 20 years?  If not, it’s time.  Buyers like a practice with a fresh feel to it.  A 1970’s feel was good in the 1970’s.
5. Review Accounts Receivable Aging – Collect any past due accounts, send to collections or write them off.  Also, review credits to either pay back to the patient or send unclaimed property to the State.
6. Review Staffing – Are you over or understaffed?  Adjust accordingly.
7. Clean Up your Financial Statements – Make sure the expenses you’re running through your veterinary practice are related to your practice, or at least identifiable as an adjustment.
8. Consider Ramping Up Production – If you are not sure how then hire a veterinary consultant.  Ramping up your practice when you’re 3 or more years out will pay dividends on the sales price.
9. Review Your Fees – Do you have the lowest fees in the area?  Consider a fee increase to catch up.
10. Harvest your Equity – Maybe you are a few years away from retirement but tired of being an owner.  You should consider selling now, take the equity out of your veterinary practice and work back as a veterinary associate.

We’d be happy to answer your questions, give recommendations, and talk through the process of your transition. Contact us if you’d like to get together for a free consultation and a cup of coffee or lunch. Email info@omnipg-vet.com or call 877-866-6053.

​You have had a great career and now you are thinking about selling and transitioning out of your veterinary practice. You would like to get the best value for your practice. Do you just walk away?  Being prepared can not only help you get the best price, it will help ensure a smooth transition.

Here are a few things you can do to help prepare for your veterinary practice transition:

1. Know your Financial Situation – Meet with your financial advisor, CPA, or whoever gives you financial advice to get a good picture of where you are with your savings and investments.
2. Get a Practice Valuation – A practice valuation will help you see how much equity you have in your practice.  Additionally, a CPA can help you figure out what the taxes and net proceeds from your sale will be.
3. Update Technology – Buyer’s like to see new technology in a practice.
4. Cosmetic Updates – Have you updated the interior with paint and carpet in the last 20 years?  If not, it’s time.  Buyers like a practice with a fresh feel to it.  A 1970’s feel was good in the 1970’s.
5. Review Accounts Receivable Aging – Collect any past due accounts, send to collections or write them off.  Also, review credits to either pay back to the patient or send unclaimed property to the State.
6. Review Staffing – Are you over or understaffed?  Adjust accordingly.
7. Clean Up your Financial Statements – Make sure the expenses you’re running through your veterinary practice are related to your practice, or at least identifiable as an adjustment.
8. Consider Ramping Up Production – If you are not sure how then hire a veterinary consultant.  Ramping up your practice when you’re 3 or more years out will pay dividends on the sales price.
9. Review Your Fees – Do you have the lowest fees in the area?  Consider a fee increase to catch up.
10. Harvest your Equity – Maybe you are a few years away from retirement but tired of being an owner.  You should consider selling now, take the equity out of your veterinary practice and work back as a veterinary associate.

We’d be happy to answer your questions, give recommendations, and talk through the process of your transition. Contact us if you’d like to get together for a free consultation and a cup of coffee or lunch. Email info@omnipg-vet.com or call 877-866-6053.

​Just like any successful sports franchise, in order to have a successful transition, acquisition or startup, you need to have the best players on your team.  There’s no “I” in team (I hate that phrase) and there’s no “I” in a transition.  You can’t do it all yourself and do it well.
The first team member you need to bring on board is someone who can help evaluate a practice.  That can be an accountant, consultant, or broker that specializes in dental practices.  Those last four words of that sentence are critical.   Specializes in dental practices.  They have to know what they are doing and how to analyze and value a dental practice.  I once was representing a seller who had a practice collecting $800,000 with a net income of $300,000.  The buyer’s consultant put together an offer of $280,000 when we had it valued at $550,000.  The consultant ruined the deal.  The seller was so upset with the buyers low-ball offer that the seller refused to even work with that buyer even with a higher offer.
The second team member is the attorney.  Again, use an attorney specializing in dental practice transitions.  It’s critically important.  Do not use your cousin, friend, neighbor etc., who are divorce, bankruptcy or personal injury attorneys who took a contract class in law school.  I’ve seen “friends” charge the dentist $25,000 for a review of a contract where a dental attorney would charge around $5,000.
You also need a dental CPA to help you with the numbers.  They can help with the valuation, analyze the payroll and tax returns, help with the purchase price allocation and set up your legal entity.
Fourth is your banker.  There are a number of banks that finance practice acquisitions and startups, and they all have their pros and cons.  It’s important you work with someone you trust who will give you a fair deal.  Sure, banker B may have a slightly better rate, or a cool toaster give away for new accounts, but go with someone you like and can build a relationship with.  They’ll be there in the good times and the bad times to help you out.
If you need some names of good team members, let us know.  We work with a lot of CPA, attorneys, consultants, bankers and brokers.  We have a good feel for who will be looking out for your best interest and will do a good job for you.  Give us a call and we’ll help you build your team for your practice acquisition or startup.