"Selling" and "Retiring" Are Often Not Synonymous
Many of our clients do not fit into the cookie cutter mold of what is traditionally thought of in our industry as a “seller”. What I mean by this is many of our most successful sales have been for clients who are well under the “traditional” or “normal” age of retirement. In fact, some of these clients happen to be not only excellent dental practitioners but extremely savvy businesspeople also.
By way of example, protecting any past or current client’s identity for confidentiality reasons, we will examine two past clients.
She bought her first practice from our company about 9 years ago. At the time of this purchase, she had little if any money to put down on her purchase but did have excellent credit. She purchased a 5- chair office for approximately $450,000. At the time of her purchase the practice was collecting over $600,000. She had looked at many practices before making this purchase and knew that this practice was well under it’s potential. She shared with me some of her thoughts how she came to this conclusion. The practice had tremendous hygiene flow with 2 ½ full-time hygienists. The facility was in need of a minor “facelift”, which she knew from her experience that would mean aesthetics only, such as paint, new carpets and possibly resurfacing some worn chairs. She saw this a positive though in her search criteria, as she felt that some minor decorative and aesthetic improvements would be viewed very positively in the eyes of the existing patient base. She felt patients would feel her vision was long term and that in turn would result in easier case acceptance because patients felt that they were in the place where they would most likely receive the very best dental care.
I listened intently and was curious to see how her practice financial forecast would turn out a year after the purchase. One year later, I checked in with her. Most of the staff had remained with her after her purchase. That was good... But I was most interested in what she had collected for the year. As it turned out, the practice collected over one million dollars her first year of ownership and the new patient count had grown by 20%. I was impressed. Whether or not her intentions were to build up the practice and sell it were part of her plan from day one, 2 years later, she called me to sell the practice and we did so at just under 800K, with the seller almost doubling her net investment while earning about 400K a year as the owner. I was impressed. This same seller went on to replicate this same scenario in the next 4 years and each time, bought high potential practices, helped them to reach their potential and sold them at a huge profit.
He was in his early 40’s, was single but had recently gotten engaged and had a tremendously successful in Northern New England. He was well on his way to attaining his professional goal as a successful owner of dental practice except...he hated winter in New England. He owned land in the Carolina’s and dreamed of one day moving there and setting up a practice, but thought that more likely than not, this would not happen until he was in his late 50’s. Fortunately for him, he shared this vision with me after attending a lecture I gave to his dental society and I told him if he was serious, he should consider selling and moving now before his roots grew too deeply entrenched in the town where his practice was located. I felt that he had plenty of years to buy another practice where he wanted to be, before children came whereby he would be able to get a much better return on his investment for the years of ownership in his new practice he would own someday.
I told him, “let’s start slow so you can make an informed decision,” meaning let’s take a look at his current practice and do an appraisal. After completing this, I presented to him what I thought the practice was worth and he was pleasantly surprised that it was worth more than even he had estimated. Additionally, I told him I had a buyer. By pure coincidence, we had recently sold a practice close to his and a very qualified buyer who had placed an offer on another practice but was too late to another buyer but had told me he wanted to purchase a practice in the exact town where Client B’s practice was located. Skipping many of the details and flashing forward 3 months later, Client B had sold his practice and real estate and was on his way to building his new start where he wanted to live, while he still had a lot of time to reap the benefits of what many would see as a “gutsy” but admirable move for the sake of being happy. Additionally, Client B took our advice and did what the IRS calls a “ 1031 Like Kind Exchange” when he sold his practice and deferred a huge portion of the taxes he would have owed on the sale, saving him tens of thousands of dollars in taxes that he applied to his purchase in the Carolina’s.
These are just two examples of the many practices we have sold of seller’s who did not see selling as retiring but as opportunity to achieve their goals and dreams. Their dreams of financial independence, emotional happiness while staying in the business of dentistry were not going to be stopped by the stereotype that selling and retirement are synonymous.