Dental Practice Transition: What Are Your Options?
Successful dental transitioning involves several different aspects. One of the most important decisions to make during the process is the structure of the transition. Do you want to have an internal or external transition? Or would you prefer to still have a say in the business after selling? Or do you want a complete sale with no other strings attached? There are numerous ways to structure the transition, depending on the seller’s preference and potential buyers. In this article, we’ll be telling you more about what internal and external transitioning means. Let’s get right into it.
As its name suggests, this type of transition involves handing the practice over to someone already working in the business. Generally, internal shifts involve selling a part of the practice’s equity to a younger associate or partner. This younger associate usually gets the bulk part of the equity value and gradually becomes the main man in charge of the business. The seller can decide to gradually reduce their presence in the business by becoming a part-time worker or just retire altogether.
There are some advantages to internal transition. Firstly, it makes sure that the person taking over the practice is competent enough to keep it running. Usually, with internal transitioning, the younger dental associate initially enters into the business to eventually take over when it is right. As such, all contract negotiations, valuations, and other transitioning details are concluded when the associate initially enters the practice. It’d be best to consult professionals like a legal rep and a dental CPA San Diego to handle details of the deal, including how long before the complete takeover happens, the practice’s value, and other contractual negotiations.
If an internal transition isn’t desirable, you can look towards trying an external change for your dental practice. This transitioning process involves selling the practice to a dentist outside your practice or other individuals. Selling a dental practice to a more prominent dental company, a group of companies, or merging it with a healthcare brand is also classified as external transitioning. With this selling option, you have to put in a lot of work to ensure that your practice is desirable to potential buyers. Work with your dental CPA San Diego to ensure that the books are balanced, and revenue is coming into the business. Working with a CPA helps increase the value of the practice to potential buyers.
With external transitioning, you’ll not need to worry about showing the buyer the business’s ropes. Most external buyers already have plans to keep the dental practice running after the change in ownership.
One thing is sure in every transitioning process; sellers need to have good plans to get the best value for themselves. And this is only possible when they have a team of seasoned professionals advising them on maximizing the operational, legal, and financial aspects of the transition in their favor. So whenever you decide to sell your practice, ensure you find an excellent legal counsel and dental CPA in San Diego for the best financial advice.