Dentaltown November 2017 - 101

THESE SIT UAT

IONS COULD H

AVE BEEN AVO

IDED.

Scenario B
In another real example, a selling doctor
who was tired of leading a practice decided to
sell it but continue to practice dentistry. The
younger dentist who purchased the practice
saw the selling doctor as a gift to help him
meet the new patients and mentor him.
After several months, however, the new
owner discovered the extra capital he borrowed
was gone and expenses were very tight.
Production was fabulous at $1 million, but not
his production; the former owner was gathering
35 percent of undefined production, usually
doing all the larger cases with no set limit.
We've seen many situations like the above
in which the younger dentist realized he
couldn't afford the older, and had to discuss
the financial realities. But the selling doctor
said he needed to continue practicing so he
could earn $40,000 a month. "These are
my patients and they need me," he said. "I
know I have a covenant not to compete, but
I'm not moving."
Lesson 3: This was a single-doctor practice, but before the purchase no budget had
been determined to indicate how much the
new doctor should be spending on his team
(including the selling doctor, who had become the most expensive member of that
team). Before purchase, selling dentists
should be asked about financial expectations for income-not a percentage, but
an actual figure. At the same time, new
owners need to figure out how much they
can afford to pay an earning team member.
And do they really need the former owner
to continue to work in the practice?

Scenario C
The parent who's a dentist is so proud of
a son or daughter in dental school, and very
much wants the two to practice together. Yet,
what does it take for a single-doctor practice
to become a viable two-doctor practice?
Lesson 4: The parent has four years while
his or her child is in dental school to prepare
a plan of marketing, skill enhancement and
capital expenditures that will work when
the new dentist comes aboard. Relationships go sour when money is stretched too
tightly-but with the right planning, most
of these situations could have been avoided.

Scenario D
A dentist's skill set was not matched
with the purchase. If a general dentist does
IV sedation and implants, you can't afford
to pay the selling doctor to do that major
treatment. The insurance profile also needs
to be examined.
Lesson 5: Before purchase, check the skill
set to see if it is a match. Also, check referral sources. If there is one major referral
source, will that continue for you?
Buyers need to check out everything
before they purchase a practice. As the buyer,
they're in the driver's seat. Do your due
diligence-and have a broker to represent
you vigilantly. ■

FREE FACTS, circle 11 on card

dentaltown.com \\ NOVEMBER 2017

101


http://www.dentaltown.com

Table of Contents for the Digital Edition of Dentaltown November 2017

Dentaltown November 2017 - Intro
Dentaltown November 2017 - Cover1
Dentaltown November 2017 - Cover2
Dentaltown November 2017 - 1
Dentaltown November 2017 - 2
Dentaltown November 2017 - 3
Dentaltown November 2017 - 4
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Dentaltown November 2017 - Cover3
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