By Bob Rojas, CPA
Selling a dental practice requires negociation and agreement on many issues. This article will cover the transition period. This is the period between settlement and when the seller exitits the practice. One major variable is how long the seller would like to continue practicing, and when the seller would like to retire. There is an entire spectrum of possibilities to include retiring as soon as the practice is sold to working full time for a period and phasing out gradually. Keep in mind if the seller wants to keep practicing there needs to be enough patients to keep two doctors busy. Practices with two or more offices make scheduling easier two doctors easier.
If the seller stays it is important to list hours, days, benefits and compensation in the agreement. Generally the seller is paid a percentage of collections as would an associate. If the seller stays a period shorter than six weeks, generally there is no compensation and it is just considered a quick transition.
A common myth is a seller must stay a minimum of six months to help introduce the new doctor to the patients. My experience is that the staff is equally effective at introducing the new doctor or seller. Most patients stay with the practice even when the doctor is deceased and a new doctor takes over with no transition period. A letter to the patients is normally adequate transition. Patients want to know that their records are safely maintained and the staff will remain with the practice.
A specialty practice is one which relies on referrals from other doctors. This requires the seller to spend time introducing the buyer to referral sources. This can actually require more involvement than transition in a practice with recurring patients.
I have found a flexible seller in the transition negotiation makes it much easier to find a buyer and put a together a great deal for both doctors.