Theodore C. Schumann, CPA, CFP
You may be thinking: Who is this guy to say that selling my practice is not about money? While getting a fair price for your practice is important, I can tell you that after 30 years of putting together over 600 successful transactions, money is almost never the most important factor in the sale process. In fact, when problems arise in a deal, the issues are nearly always emotional ones. We find that the closer we get to finalizing the deal, the more real it becomes, and the more likely the seller is to doubt whether he or she is doing the right thing.
Transitioning your practice is more about the emotional satisfaction and the orderly process of adopting out your baby. Often, selling dentists are somewhat surprised at the emotional toll this process takes on them. This should be no surprise because for most sellers the transition is the culmination of a life devoted to their practice. A practice is not just the business and income the dentist created; it is also the hundreds, maybe thousands, of people the dentist treated and the relationships developed over the years. Many retired dentists tell me what they miss most after retirement is the day-to-day contact with their patients.
One of the key things we find that tends to drive a deal is the seller's net emotional feelings toward the buyer. A seller needs to feel he or she can trust the buyer to treat the patients and staff well. It is important to the seller that the buyer respects the practice philosophy. The seller needs to know that the buyer respects what the seller has created. The most successful transactions tend to happen when the buyer and seller genuinely like each other and have respect for each other's expertise.
It is probably worth mentioning that buyers may also be facing emotional issues as they consider purchasing a practice. Most are carrying a fair amount of debt from dental school and will understandably be cautious. Since most buyers have never been business owners, they will look to you for comfort and guidance. In this realm, it is OK to be a mentor. However, make sure you avoid putting yourself in a position where you are guaranteeing the buyer's success.
As you plan your transition, here are some questions to consider:
1. Have you accumulated enough money to retire comfortably?
2. What are you going to do with your time that will be as relevant to you as the practice of dentistry?
3. What are some of the things that you want, other than money, to make your transition successful?
4. Are you ready to stop being the doctor?
5. What characteristics would you like to see in your buyer?
6. Are you willing to walk away from the deal if you learn something about the buyer that gives you great concern, even if that buyer has met your price?
7. What factors are going to make it easy for you to relax after the transition?
One of the most important questions you need to resolve before you start your transition process is: Are you emotionally ready to sell your practice? It is my firm belief that you should not begin the process until you know for sure you are ready. An experienced transition consultant can often help you determine whether you're ready or not. There are only a few rare instances when you have to sell before you're ready. The time to sell is when you're sure you're ready. If you have doubts, put it off for three to six months and then revisit selling your practice.
Theodore C. Schumann, CPA, CFP, is the CEO of the DBS Companies. The DBS Companies is a full-service financial services firm providing accounting, tax planning, financial and estate planning, practice transitions, practice management consulting, and leadership coaching for dentists. Ted has been helping dentists reach their financial and personal goals for more than 30 years.
