Prepare the foundation for your retirement
Maybe you’re at the other end of the spectrum, a new dentist who’s worked at a group dentist office but feel ready and able to make the jump to your very own practice.
While there are wildly different issues at stake in both scenarios, some common ground exists that both a seller and a buyer should realize and prepare for.
Prospective sellers will be happy to hear that the market for dental practice sales is improving, according to Andrew Hinrichs, a CPA and partner in the dental CPA firm HinrichsZenk+Pesavento.
In an article just last year in DentistryIQ, Mr. Hinrichs said mergers and acquisitions, bottled up since the 2008 economic downturn, were on the increase “as doctors who are ready for retirement feel confident their retirement portfolios are in a better place and can provide the stability they need to list their practices.”
Financing is looking up as well for new dentists looking to buy another “single-doctor practice,” he said. “This is significant because the rate at which younger doctors were graduating was far exceeding older doctors retiring in recent years, therefore allowing new corporate dental offices to absorb a lot of the overflow and fill their ranks easily.”
At this juncture of improving sale/buy opportunities, experienced, clear-eyed dentists should assess how their practice of 25 or 30 years looks like to the next generation of dental professionals, who not only have been schooled in a tech-savvy era but also may have different goals while practicing dentistry.
Josh Killian, vice president of marketing, technology and equipment for Patterson Dental Supply, sees the issue through the lens of new procedures, products and services.
Writing in the same 2015 DentistryIQ article, Mr. Killian said he sees something different at work too. “We have also started to see shifts in the demographics of providers (e.g., Millennials, Generation X, Baby Boomers), which bring a whole new vision for the practice of the future and how technology will impact dentistry.”
Experienced dentists, take note:
“The dental student graduating today has dramatically different views of and expectations about technology than the dental student of 10, 20, or 30 years ago,” Mr. Killian added. “This new perspective will surely have an impact on procedures and technology adoption in the practice. The patient and provider of today and tomorrow place more value on the in-office experience than they have in the past because the patient is more educated than ever before.”
So where does that insight put the dentist pondering retirement in the next five to 10 years?
With some time to plan your exit, Timothy Giroux, a dentist who now operates a dental brokerage in the Western U.S., you can make sensible investments that will improve the marketing and desirability of your practice in the eyes of that Millennial.
Giroux outlined some of his tips in a June Dental Economics article:
- If you are eight to 10 years away from retiring, it might be a good idea to spend your money on new equipment and new leasehold improvements. Use it, enjoy it, and depreciate it! Your practice will still look good for the 8 to 10 years you have left.
- If you have three to eight years left before you retire, it still might be a good investment to upgrade the equipment in the office if it extends your career and enjoyment of your surroundings. At the very minimum, it might be wise to convert to digital X-rays. Most graduates in the past five to eight years have never even seen a processor!
- If you have three or fewer years, you will not get the return on your investment from upgrading your equipment or leaseholds. The purchase price is based mostly on your collections, not your equipment. However, common-sense cosmetic upgrades and cleanliness are worth the small effort and expense.
The views expressed in this column are those of the writer and not necessarily the opinions of the Chicago Dental Society. CDS presents Front Desk, a column addressing problems dentists and staff members experience in the office. Front Desk is prepared by Stephanie Sisk, a freelance journalist. Suggestions? Email suggestions for topics to be covered to the Chicago Dental Society.