The transition from Buyer to Owner is as important as the documents leading up to the practice purchase. The Buyer and the Seller have vastly different long-term plans, but they need each other to reach their goals.
If a Buyer is lucky enough to have had a successful associateship, then the Buyer already knows the office team, the patients, and the referral sources. But, if like most scenarios, the Buyer and Seller did not know each other until the practice purchase was first discussed, the Buyer’s knowledge of the practice is limited to what the Seller disclosed on paper.
From name-on-the-door to foot-out-the-door, the Seller has personal knowledge about the practice that the Buyer needs. But the Seller generally thinks the practice should operate as the Seller has always operated it, and is slow to change as the Seller deals with the emotional side of letting go of their practice.
Working together, though, the Buyer and Seller can obtain the personal return on investment that each desires. In the practice purchases I have helped with, I have seen the following successfully work:
1. Patient Transition.
· Co-author an introductory letter to active patients and referral sources;
· Agree to a six month employment agreement so that the Seller can introduce patients in-person and teach the Buyer about individual patient preferences; and
· Make all appointments, except for special cases, with the Buyer. Even for patients scheduled with the Seller, the Buyer should meet each patient in person in the office.
2. Practice Transition.
· To the extent possible, keep all team members for at least six months after the purchase;
· Maintain the physical appearance of the office the exact same, no matter how ugly that wallpaper may be, for at least six months after the purchase; and
· If the Seller’s practice name is the Seller’s name, create a “Doing Business As” (d/b/a) name that blends the Seller’s name with the Buyer’s name. If the Seller uses a generic name, the Buyer should continue that name as Buyer’s d/b/a for at least six months after the purchase.
3. Back Office Transition.
· Direct all payment deposits into the Buyer’s new entity. If Seller is owed any of the money that the Buyer collects, Buyer can always pay Seller the money and deliver a 1099;
· Change all email addresses, Google directories, caller ID tags, and any other third-party identifiers to the d/b/a discussed above; and
· Redirect all of Sellers’ vendors’ autopayments to Buyer to prevent a gap in services.
To perform dentistry, you also have to run a business. Whether you’re a practice owner, employee, or an independent contractor, you’re running a business. My next post will discuss some points to consider to better operate your business.
Please feel free to contact me by email (firstname.lastname@example.org) or by phone (972.393.1500) if you have any questions!