by Dr. Joe M. Piazza
I was not planning to sell my dental practice and stop practicing when I did. As the sole owner, I was enjoying treating patients and managing my two-dentist, three-hygienist practice. I had spent the last 37 years establishing my ideal dental practice using my personal formula consisting of excellent clinical skills, a well-trained and team-oriented staff, and good business acumen.
My sudden need for cervical spinal surgery changed everything. With my doctor’s advice to significantly reduce my work hours came the realization that I needed to begin plans for transitioning my practice. I immediately arranged for a meeting with my associate to see if she was ready to take over the reins, and with her agreement, we began the transition process. The plan was to reverse roles after the purchase, where she would own the practice outright, and I would continue to work in the practice as her part-time associate.
With this plan in mind, I began my search for an experienced transition broker. I investigated the possibilities of brokering my practice. I found that there were many different parties involved in the process. Some brokers were better at finding buyers and most refer you to CPAs and lawyers to help complete the process. I previously had worked with Frank Brown of Watson Brown, who had drafted my associate agreement ten years earlier. He held law and accounting degrees as well as being a broker, so I made the decision to list my practice with him to keep things simpler. He immediately counseled me as to what to expect from my current situation, taking into account that my associate was a potential buyer for the practice.
Many concerns came to mind for ensuring a successful transition process. I wanted the valuation of my practice to be accurate in order to maximize my sale price while also making sure it was fair to both parties. I also wanted to be fully informed regarding tax implications in order to have a clear understanding of the net proceeds. My other concerns were to mitigate undue legal issues such as non-compete covenants and drafting an associate agreement for myself. Informing and considering the staff and patient notification were essential to enhance the goodwill of the practice transition.
Our conversations began by educating me on the appraisal process to arrive at a reasonable win-win situation for my associate and myself. I learned that practices are valued in many different ways, and a composite of all approaches works best. It is important to perform a sound analysis and prevent your emotions from clouding your good judgment but in the end it is a balancing act between the owner’s interest and the buyer’s needs.
I also learned that, with an accurate appraisal, financial institutions are willing to lend 100% of the purchase price, which amazed me. What a great opportunity for buyers today, as I can assure you it was not that way when I began my practice. Another benefit my broker brought to the table is his sound and reliable relationship with many lending sources that allows for a smooth working relationship with the banks.
The successful transition begins much earlier than in the final sales process. It is a process that needs to be started in advance with an end goal in mind. Improving your practice in as many ways as possible, creating upward trends in practice growth and profitability, go a long way towards maximizing your sales amount. Experienced coaching of the dentist-owner can go a long way to help bring about a successful transition. I have gained a great deal of knowledge and experience in this area and am happy to share this with my colleagues.
In the end, I was certainly glad I had chosen an advisor that could assist me through all stages of the transition. During our many conversations, he patiently walked me through the entire process while maintaining a calm and knowledgeable presence when sensitive issues arose. Also, an experienced broker has first-hand knowledge regarding all of the issues that may come up and are ready to offer a way to carry the transition to completion.
As we know, owning a dental practice is rewarding and challenging. Starting a practice presents many opportunities for growth, so does ending practice ownership. I hope you can start the process earlier than you feel the need to do so. Don’t wait for the day that a crown doesn’t fit and you need to remake it and you decide you have had enough and say “I’m done.” Make a plan of action and do your best to complete your years of practice in a successful transition into your next phase of your life.
Dr. Joe M. Piazza, Jr. has been practicing family dentistry in West Houston for over 37 years. He is a member of the American Dental Association, Texas Dental Association, Greater Houston Dental Society and the Academy of General Dentistry. He earned his DDS from the UT Dental Branch in Houston and strives to continue to provide patients with the most updated techniques and technology. Dr. Piazza participates in many volunteer dental activities in the community such as care for patients at Casa Juan Diego House of Hospitality and Texas Missions of Mercy. He is also an active member of the Knights of Columbus and St. Elizabeth Ann Seton Catholic Church.