Working with a local, reputable practice broker to locate the right dentist to join your practice as an associate and eventual buyer is just the beginning step in structuring a successful associate to purchase transition. When selling a dental practice, once a selling dentist and potential purchaser decide to move forward and enter into an associate to purchase arrangement, there are a few additional considerations that will help to ensure a smooth transition:
Honeymoon Phase: It is important that both doctors share similar practice philosophies and have compatible personalities since they will be working together for an extended period of time. A “honeymoon phase”, in which the potential buyer works 1-2 days per week at the office for a period of a few months, allows the doctors to get to know each other and determine whether or not the relationship will be a good fit moving forward. At the end of the “honeymoon phase” the parties can choose to move forward with formal agreements or part ways without any obligation to the other.
Set Clear Expectations Upfront: In order for this transition strategy to be successful, it is crucial to establish clear expectations as to how the transition will be structured prior to the associate joining the practice. Therefore, if you are selling a dental practice, it needs to be clearly communicated that the associate will be expected to enter into an agreement to purchase the practice upon completion of the “honeymoon period”. Once the parties agree to move forward with formal agreements, it is important to discuss the purchase price or formula for determining the purchase price, the date of the sale, the seller’s involvement in the practice after the sale, and any other important factors that could potentially derail a successful transition if left discussed until the closing date. We have heard horror stories from both associates and sellers that can almost always be attributed to not setting clear expectations at the start of the relationship.
Communication: While this may seem obvious, it can mean the difference between a successful or failed transition. When selling a dental practice, the transition period from the time the associate joins the practice until the sale occurs or the selling doctor leaves the practice can last anywhere from one to five years. Communicating issues and setting expectations prior to and throughout the process will help to ensure that a positive relationship between the doctors is maintained and the goodwill of the practice is effectively transferred at the time the sale occurs.
Before investing the time in building a relationship with an associate that will eventually purchase your office or with an owning doctor that will eventually transition out of their practice be sure to address these key issues and establish the foundation for a successful transition.