Exit Strategies for Dentists and Doctors Selling Their Practices

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Exiting a dental or medical practice is a significant and important decision that requires careful consideration and structured and detailed planning. Whether your circumstances have changed or you’re retiring or wishing to pursue other opportunities, a successful exit from your dental or medical practice is vital to protecting yourself and your reputation and ensuring a smooth transition for you and your patients. Expert planning is vital to approaching this process successfully. It is extremely important to understand this process’s challenges difficulties and possibilities in relation to optimising a dental or medical practice’s value. 

Early planning and starting the process. 

The key to a successful dental and medical practice exit is planning well in advance. This will allow the practitioner to think carefully through the process and identify problems challenges and address these systematically. This again will help increase and optimise value in the potential sale price of the clinic. Careful advanced planning allows better chances of informed decisions and successful strategies implemented towards a medical or dental practice sale process.  

Practitioners by now should have identified what outcomes they are looking for in terms of post-selling, including financial goals and personal situation including any future employment. At this stage, practitioners can engage with their professional advisors including legal and financial advisors to put successful strategies in place that are able to provide valuable professional advice.

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Exit Strategies to consider when selling your clinic. 

A. Consider selling and leaving the practice soon after or only staying on as a locum for a short time (3-12 months).  

 B. Consider selling and staying on working for new principal. 

C. Delayed sale where a purchaser works for principal for a set period and then agrees to purchase the practice from the principal. 

All three situations have advantages and disadvantages.  

A principal may wish to leave soon after selling if they are retiring. The purchaser could be at a disadvantage of not having the previous principal show them the ropes and may result in more patients leaving the practice. Purchasers may wish to ask the seller to stay on for at least 6-12 months to help facilitate the transition. 

When the principal stays on as an employee or subcontractor, clients may be less inclined to leave, and revenue and goodwill are preserved while new principal establishes themselves. The seller is able to help guide the new owner through administrative procedures in a hands-on role. If a purchaser works for the principal initially, they will have the advantage of being familiar with the running of the practice well in advance of ownership. This situation can also be counterproductive as there may be disagreements with practice administration prior to sale.  

Making sure there is a solid team of professionals and advisors in place.  

We need to contemplate and understand the likely value of a medical or dental practice and the appraisal and valuation methodologies professionals use. There are several methods of appraising and valuing medical and dental clinics and practitioners should be aware of these and seek professional advice from their team of suitably qualified experts here. Specialised advice can be required as medical and especially dental business can be unique in their transactions and value so suitably qualified experts need to understand uniqueness and other intangibles involved in appraising these businesses. Once we have organised a team of experts familiar with dental and medical practices they can help to guide and advise you through the process and steps through to the exit process.

As well as financial, accounting and legal professionals assembled for the team, practitioners should engage the services of a dental /medical practice business broker who specialises in these types of businesses and sales  Their expertise and experience can prove invaluable in navigating the complexities and challenges of selling a medical or dental practice, from gathering suitable qualified potential buyers to negotiating contracts, gaining offers, liaising with others in the team and understanding the importance and criticality of the timing. Dr Philip Baker, a retired dentist with nearly 30 years’ experience can thoroughly understand the sale process and advise here due to his experience with the sale and purchase of several large successful dental clinics. Mr Eddie Letico a licenced Business Broker and Estate Agent has overseen the sale of numerous large and successful businesses over the last 25 years.  

Making sure we are complying with current regulations.  

Compliance with regulatory requirements is ultra-important when leaving or selling a medical or dental practice. Again, working with experienced lawyers and accountants who have dealt with medical and dental practice sales is a critical step to ensure regulations are adhered to. These can include licence agreements, contracts with staff and other less obvious legal requirements. Compliance at this stage will avoid legal challenges and pitfalls and headaches for the seller post-sale. Obviously, with patient files and records there are privacy regulations and administrative steps that must be taken for any change of ownership. 

Making sure we communicate with patients and staff. 

It’s very important to have open and transparent communication pathways and discussions with your staff and patients during the exit process. It is important to have open and frank conversations with staff so everyone can be reassured and work towards ensuring a smooth transition post settlement. Patients also need to be communicated with and advised that despite new ownership their ongoing care will remain at the forefront. There are also of course regulations here for patients and their records and their privacy.  

Successfully exiting a medical or dental practice requires detailed strategic planning, preparation and liaising and cooperation with a team of fully qualified professional advisors and pertinent staff members  

By starting the process early, appraising the value of the clinic business, building a professional team, making sure of compliance with regulations and maintaining open communication with staff and patients, we can successfully proceed through the difficulties and challenges of leaving the ownership of a dental or medical clinic so that there is smooth transitional process for all interested parties. 

Written by

Dr Philip Baker

As a former healthcare professional of 28 years, Dr Philip Baker is now a registered Sales Agents Representative and Business broker. Philip has been involved in numerous sales and purchases of large successful dental clinics. Philip is a Licensed Agents Representative and a member of the REIV and is also a member of the Australian Dental Association (35 years), Australian Institute of Business Brokers. Phil’s extensive experience and knowledge, along with his professional manner will help his clients achieve their ultimate aims and help achieve successful sales and purchases for their health care businesses.

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