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Top Considerations For Your Practice Transition

Posted Apr 13th, 2022 in 2022, the wire, thought leadership

Michelle McAra, Senior Vice President, Partnership Development, dentalcorp

It’s never too early to think about the future of your practice. Having a long-term plan ensures the hard work you put into building your business continues to pay off when you’re ready to transition and sell your practice.

To make sure your team and patients are well cared for, keep these key considerations in mind as you plan for the future.

What involvement would you like to have in the practice after a sale?
The sale does not have to be the end of the road – think about how you would like to transition.

  • Timing – are you planning to continue working for several years after the sale of your practice, or is your preference to retire immediately? The answer to this question may impact the terms of the deal.
  • Your role – if you plan to continue working after the sale, consider what role you want to play. Would you prefer to remain the key decision-maker, or take on a less involved role as an associate?

Who are you considering selling to?
The ideal prospective buyer should be able to offer you stability and support.

An individual buyer:

  • Experience – a buyer with previous, proven results will lead to a smoother and more organized transition.
  • Financial obligations – a new owner may have financial obligations that drive them to make changes that affect your ability to practice in a similar capacity after the sale. To minimize impact, it is critical to have a large enough patient base to accommodate your desired income, along with that of a new owner.
  • Financing conditions – consider the potential risk for the deal if the buyer is not able to secure capital.
A larger organization:
  • Flexibility – factor in how much autonomy you would like to retain, and how much you would like to continue working. Look for a buyer who is aligned with the role you want to continue to play.
  • Support – think about what type of support and resources would be most beneficial to your practice, your team, and your patients for the long term. Consider whether your buyer is prepared to share the burden of managing the practice and dig into the size and scale of the buyer’s support.

Is your practice valuable to the next generation?
Set realistic expectations around what your practice is worth

  • Stable patient flow and dedicated team – having a stable and growing patient base serviced by an established team creates more value for purchasers.
  • Physical location – the details of your lease, including location, future plans for the area, and when the lease ends will be important to the valuation of your practice.
  • Upgrades – the need for a buyer to make immediate investments in areas such as technology or aesthetics may have greater implications for a buyer with less access to capital.

What kind of financial deal will benefit your needs?
With various financial models available, evaluate opportunities that work best for you.
  • Total liquidity – an ideal sale will allow you to realize the full value of your practice, giving you the freedom to invest your money as you see fit.
  • Retained interest – are you looking to keep retained interest as a part of the sale? Would your minority position be considered equal or subordinate to that of the purchaser?
  • Shares – if shares are part of the deal, it is important to understand past liquidity events, what the share options represent in actual value, and future opportunities to sell the shares.
  • Tax structure – will the buyer work with your advisors to structure the purchase in a tax-efficient manner?

How will a transition impact your team?
Look for a partner who will honour the brand and culture you have built for your practice.
  • Values – the best partnerships ensure both parties are fully aligned on core values, and how these values are reflected in the ongoing culture.
  • Team support – your team should continue to feel safe and valued. Look for a buyer who can offer financial support, as well as additional opportunities such as professional development and mental health assistance.

Michelle McAra joined dentalcorp in 2016 and is an experienced healthcare transaction professional. She is the head of the national Partnership Development team, leading acquisitive growth through regional teams that identify Partner opportunities, understand, and evaluate market dynamics and build relationships with key stakeholders. Michelle has extensive experience in the healthcare industry in business development and pharmacy acquisitions. She holds a Bachelor of Commerce degree specializing in Marketing from the University of Alberta and completed her MBA at Queen's University. 

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