Debugging the Myths of Practice Transitions/Selling Your Practice Part I

The internet is a wonderful thing. However, everyone should not believe everything on the internet. Nor should you apply everything you read regarding dental practice sales or practice transitions. Practice sales, just like patient care, are very personal and should be treated with a customized approach.

When I first started helping dentists with practice transitions over a decade ago, I noticed a troubling pattern. Highly intelligent, successful practitioners were making critical decisions based on myths, misconceptions, and outdated information. These weren't just minor misunderstandings—they were costly mistakes that could impact their financial future and professional legacy.

The Most Dangerous Myth: "I'll Figure It Out When I'm Ready to Retire"

Perhaps no myth is more pervasive—or more damaging—than the belief that practice transition planning can wait until you're ready to hang up your handpiece. This mindset has cost countless dentists hundreds of thousands of dollars and created unnecessary stress during what should be a celebratory time.

After my injury, I had the honor to work for the Pride Institute in their transitions department led by Hy Smith, MBA. Hy is an icon at the Pride Institute as well as an expert in transitions. His methodologies, of the "solo group practice," "buy in-buy out," and "percentage staggered sale," really allowed our legacies to continue intact and protected the proceeds from excessive taxation.

Myth #1: "I Can't Think About That, It's So Far Away"

The reality? Effective transition planning should begin 7-10 years before your intended exit date. Here's why:

• Market Timing Isn't Predictable: The dental practice market experiences cycles. Planning ahead creates flexibility to time your transition strategically.
• Practice Value Optimization Takes Time: The improvements that drive higher valuations—updated equipment, strong systems, reduced doctor dependency—require years to implement.
• Tax Planning Opportunities: The most effective strategies require years of advance planning.

Myth #2: "I Have So Much Debt to Pay Off First"

This backwards thinking prevents proper planning. The transition timeline should be based on your financial readiness to retire, ideally being prepared to retire 10 years before you actually want to stop practicing.

Myth #3: "You Can't Cut Back; Your Practice Will Suffer"

Believe it or not, you can have your cake and eat it too! There are avenues to continue practicing as long as you wish while beginning your transition process.

The Timeline Reality Check

Most dentists think about selling when they want to sell—unfortunately, by then it's often become an urgency rather than a strategic decision. The conflict between enjoying patient care and wanting to cut back makes us pause and kick the can down the road.

Retirement Timeline Myths to Avoid:

• Myth: Age 65 is the magic number
• Myth: Practice until you can't anymore
• Reality: Create a timeline that works for YOU

The cover of the CDA journal about a decade ago reported that at age 65, only 4% of dentists were able to retire in a financially desirable way. Why is that? We are an industry of one of the highest wage earners.

Creating Your Personal Timeline

Start by asking yourself:

1. Are you financially prepared to retire? (Consult a financial advisor)
2. When do you want to reduce your workload?
3. How do you want to exit dentistry?
4. What does your ideal successor relationship look like?

What's Coming Next in This Series

This series will systematically address the four major myth categories that trip up even the smartest dentists:

• Part 2 will tackle the critical importance of building the right advisory team (Preview: Your general business CPA and attorney aren't enough)
• Part 3 will expose valuation myths and show you the only two methods that actually work
• Part 4 will provide the complete documentation and planning requirements checklist

Don't navigate this alone—the right team makes all the difference. Ready to learn about the advisory team that can save you hundreds of thousands of dollars? Part 2 is coming next.

Please let me know if you need assistance with the above exercise. I would also be happy to schedule a call.

Michael Njo of the Practice Transition Institute will also be presenting a seminar at UOP on July 21st, 2023 - "Treatment Plan for Your Transition Into and Out of Practice". Please email me at dentalstrategies@gmail.com