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Dental Practice Transition – Essential For Expansion of Business

Author: Jeny Marter
by Jeny Marter
Posted: Jun 19, 2015

The US dental industry is pegged at 100 billion dollars a year, and is expected to cross 168 billion dollars by end of 2020. Consequently the 170,000 existing practices are gearing up for this increased business potential. Transitions happens through many modes such as entering into a partnership through part sell of ownership, adding an associate and eventual retirement of the owner or one or more partner is a part and parcel of the business life of the practice.Structured planning will help protect the interests of various stakeholders financially as also protecting the practice as a whole from possible internal discord or exit of any of the stakeholder.

Circumstances for transition

There are various circumstances that necessitate a transition in a business. A dental practice is no different. The existing structure might not be suitable to changing times and may need to be fine tuned through infusion of new people. As the existing stakeholders age their priorities in life change and they may at some point of time decide to exit the business. A transition is essential and often inevitable. So accepting them and being prepared for it is crucial to meet these transitions smoothly when the time comes. An attorney is an essential aide in this process.

Bringing in a new partner

With increase in practice size it often becomes unmanageable for one person to manage the business. The primary owner may at that time decide to sell off a part of the business and introduce a new partner. These will help split some part of the over head costs and may be structured so that there is no major revenue loss to the primary practice owner but through overall higher revenues it’s a win-win for all concerned. Dental practice transition where a new partner is welcomed, isn’t just about finding on boarding a partner and working together. It requires clear detailing in terms of:

  • Proportionate cost share
  • Revenue Share
  • Management responsibilities
  • Holiday planning protocol
  • Discord resolution
  • Future exit options and plans
  • Protection of partnership on eventuality of acrimonious exit of partner

Partnership mode of business

Introducing a trainee as an associate and grooming him is one of the most common forms of expansion of a practice. This allows the owner to increase his strength at a lesser cost than introducing a partner. It also allows him to evaluate the associate, groom him and eventually progressively allow him to buy in greater proportion of the business, till the primary owner may exit the practice and retire. The associate in turn benefits by earning while learning. He is also able to evaluate the efficacy of the practice and by progressively taking on greater responsibility learn to manage the practice better. Dental practice transition will ensure that he has sufficient insights as to whether he should buy the practice in the future or not.

Chalk out your future

Dentistry requires long hours especially bent over the patients. It starts taking its toll on an individual both physically and mentally. Slowly priorities change and what was once the focus of life slowly subsides. It is then time for an exit. A road map to that eventuality needs to be in place covering bases like financial security, leisure activities and reduced income factored in. This is a critical process akin to giving away your daughter in marriage and needs to be planned and carefully implemented. An attorney could help you in the various aspects of this.

Get hold of transition specialists

Transition specialists fulfill various roles to make the process of transition, whether that be for exit or introducing a new resource in the partnership, a smooth one. They help in a proper valuation of business and hence the stake that is being transited off. A proper marketing plan to reach potential buyers and their due diligence is also done. Successful negotiations are converted into appropriate letter of intents, agreements and eventually deeds depending on the form of transition.

Look ahead in glory

Transition is the process of moving on. It ensures that the juggernaut of the practice keeps rolling. Change is inevitable and hence has to be planned for so as to meet it at the right time and allow for a smooth transition rather than an unplanned floundering. A transition specializing attorney plays a critical role in ensuring that various criticalities are properly ironed off.

Source: Click Here

About the Author

Author is writing various blogs and articles on dental practice about Buying or selling a Practice. Through this article author is sharing some information about Dental practice transition.

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Author: Jeny Marter

Jeny Marter

Member since: May 21, 2015
Published articles: 7

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