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PROPERTY

Should I stay or should I go

By Ray White Practice Sales

T his is one of the questions we frequently encounter from dentists looking to sell their practice in 2023. e team at Ray White Practice Sales has been involved in dental practice transitions for over 20 years. We often nd that both the buyer and seller can bene t tremendously by agreeing on post-sale working arrangements. e bene ts for the buyer are quite obvious, especially in a tight labour market where nding an associate dentist can be challenging. Having the existing principal dentist stay on for a period of time ensures continuity, minimizing the impact on both patients and sta . Patients have the opportunity to become accustomed to the ‘newguard,’ andwhenhandled correctly, having the departing dentist assist in transitioning patients can signi cantly reduce the likelihood of them seeking dental care elsewhere. A sudden and poorly communicated exit of the familiar and trusted principal dentist can lead to a mass exodus of patients who are now receptive to marketing messages on social media that they previously ignored. However, what is less documented are the advantages for the selling dentist. Even when nancial need is not a factor, practicing part-time in the practice the dentist formerly owned provides additional income to cover living expenses. It also helps reduce the necessity of tapping into retirement funds, thereby extending their longevity. But even beyond that, there are intangible bene ts to continuing as an associate in the former practice. If the seller still genuinely enjoys practicing dentistry, working part-time can facilitate a transition from active dentist to full retirement. is enables the selling dentist to maintain a sense of purpose and ful lment. After all, there is only so much golf one can play in a day. As with most things, there are potential pitfalls to consider as well. e most common pitfall we have observed over the years is not nancial, although we will address that shortly, but rather cultural. Blame for an unhappy post-sale working relationship does not solely rest on one side of the equation. We have witnessed sellers becoming quite hostile

also desires the current owner to stay on, we recommend considering a ‘Bonus’ structure instead of an ‘Earn Out’ structure. Most of us prefer a carrot to a stick. e idea of receiving a bonus in one or two years seems more appealing than losing something promised due to circumstances beyond our control. As the seller, if you are receiving a fair market price for your practice today, plus not only the income generated by working going forward but also a bonus if both parties successfully cross the nish line, neither party will feel short-changed if the nish line isn’t reached. As always, we advise thorough due diligence by both parties. For sellers, forward planning is crucial if possible. While we can’t halt the passage of time, we can prepare for the outcomes we desire. If you want to be o the tools by the age of 60, start seeking a buyer around age 55. Doing so will likely yield a more favourable outcome for your personal life plan compared to leaving the process too late. u For a private and confidential discussion, as well as a complimentary appraisal of your practice, contact Ray White Practice Sales on 1800 032 801 or e-mail kelli.hughes@ raywhite.com

post-settlement, and we have seen buyers making unreasonable changes that render the working environment untenable. Like any business relationship, e ective communication is key, along with robust documentation. If the buyer says they won’t stop the seller from using their favourite dental lab post settlement, then they should not have a problem putting that in writing. Financial risks may also come into play, particularly if part of the sale price is linked to an ongoing working arrangement for an agreed-upon period. is arrangement is often termed an ‘Earn Out’ and is common when selling to dental corporations. Such agreements are not inherently unreasonable, as dental corporations often pay a premium compared to what might be attained from a private buyer. However, some corporations have been known to make radical changes during the earn out period, even selling to other groups. Hence, these factors should be considered when entering into such agreements. In short, look beyond the number on the cheque unless it is a ‘walk-in, walk-out’ arrangement. When selling to a private buyer who

PRACTICE SALES

104 AUSTRALASIAN DENTIST