Dental Practice Broker Articles
Creative Dental Practice Transitions: Invest your Dental Practice into your Retirement Fund
As the dental practice landscape changes, there is no guarantee of cashing out a practice when you are ready for retirement. More alarmingly, at that point, there may not be enough capital to retire and that can affect both timing and day-to-day life in a negative way.
With an unpredictable marketplace (as the result of simple economics, HMO choices, and competitive marketing), it can be challenging to take care of your patients while simultaneously improving your work/life balance. It’s an even greater task to get yourself into an advantageous position for retirement when you’re a sole practitioner.
While their intentions may be admirable, many doctors find that the reality of being able to sock away cash is hindered by the impact it has on their life. The choices are the following:
- Work more hours,
- Lower your current standard of living, and/or
- Work a greater number of years.
Consult with an NAPB dental practice broker to gather information, even if you are years away from retirement. One creative solution is to sell the dental practice in stages. With the help of your dental practice broker, you structure an agreement to sell a portion of the practice to a younger dentist and you continue to working at the practice for another three, seven, or even twelve years. At each interval, you can sell another portion or work towards a buyout at the end of the agreed-upon term.
In this scenario, problem-solved. You can fund your retirement without having to add hours to your work schedule and without sacrificing your quality of life.
From a sheer economic standpoint, just look at the math:
| SEPARATE PRACTICES | SELLER | BUYER |
| AGE | 47 | 32 |
| INCOME | $235,000 | $85,000 |
| HOURS (PER WEEK) | 32 | 36 |
| EXPENSES | 65% | 75% |
| GROSS REVENUE | $590,000 | $280,000 |
| PARTNERSHIP | SELLER | BUYER |
| AGE | 47 | 32 |
| INCOME | $200,000 | $182,000 |
| HOURS (PER WEEK) | 24 | 30 |
| EXPENSES | 40% | 60% |
| FUNDED RETIREMENT | $48,000 per year | $12,000 per year |
| GROSS REVENUE | $590,000 | $280,000 |
By selling the practice in phases, the seller accomplishes the following:
- Works fewer hours,
- Keeps current standard of living,
- Works for fewer number of years,
- MOST IMPORTANTLY, funds retirement plan on an annual basis.
The buyer is also benefiting because they are working fewer hours, their income has increased, and they are investing in their retirement at a much earlier age.
Contact your local dental practice broker today for a free consultation. There are a myriad of creative ways to ensure a successful dental practice transition.
DENTAL PRACTICE BROKERS
| Dental Practice Transitions | Selling a Dental Practice |
|---|---|
| Dental Practice Valuation | Dental Practices For Sale |
