In this 3-part series, Xite VP, Philip Ranger discusses why the right team is important for a successful exit including transition strategy, due diligence, marketing, timeframes and much more. Let’s begin.
Selling a dental practice is not like selling a home, a used car, or any other type of business outside of the medical professions. It requires forethought, a strategy, perhaps years of planning, and a specialized type of support system. Walking away from and handing a dental practice over to a new owner is a complicated process with many components that impact a lot of people.
This is partly because the majority of what’s for sale is “goodwill,” according to Philip Ranger, a Transition Broker in the Xite Realty Houston office. “It can be very delicate and even emotional, not only for the seller, but for the buyer as well,” he says.
That goodwill part of the equation is an important piece of the equity that must be taken into consideration when selling a healthcare practice. This encompasses the patients who will continue to stay within that practice as well as those who become active patients as a result of the sale. Each one is generating revenue. “The selling dentist created that good will or that trust with each patient and that is part of what he or she is selling,” Ranger says.
“It is an asset of the practice and, in fact, is a valuable part of a practice that can’t be replaced,” Ranger explains. “The selling process should support the goodwill between the doctor and the patients.”
Ranger has a unique handle on this understanding, which he brings to his position as a dental practice transition broker. He worked for a large dental products/technology/service company for 25 years as a territory sales representative. “Over those years, I had the opportunity to learn a lot about the business of dentistry, from my doctors and through the company,” he recalls. This experience provided him a great knowledge base about the profession. “I came to realize over quite a few years in the dental industry that many dentists struggle at operating a small business because they were not trained on how to run a dental practice. I became knowledgeable about that and really understood all the intricacies of how dentists can effectively run a dental practice. I was able to trade a lot of information with my clientele to help them progress, grow their business, and make good decisions.”
Transition Strategy is Important
For Ranger, identifying and building the right transition strategy for each individual dentist and helping them understand how to transfer the goodwill asset is an important part of his role in the process. “Building a successful strategy does not just focus on the seller either,” he adds. “Most of the time, It also takes into consideration their patients, their staff, and their family.”
Because there are so many “moving parts” involved when selling a dental practice, Ranger says it’s in the owner’s best interest to put a team together that can identify all the criteria and components involved and protect their best interests, too.
In addition, he says that finding the right buyer to inherit and continue to manage that asset is just as important.
The Team Players
The seller’s ideal transition team members include a broker, an attorney, a certified public accountant (CPA) and sometimes a wealth management specialist.
The broker facilitates the process and the transition of the practice. It is his or her job to coordinate with the other team members, the bank, and the buyer.
The attorney’s job is to monitor the legal side of things and ensure that the seller is not only protecting what he’s built up over the years but is also moving forward and putting everything into place that will not only protect his family, but his staff and patients’ stakes in the sale as well.
The second critical team member is the CPA who will monitor the financials. That person will address the tax implications involved with the sale, but just as importantly, help determine whether a doctor may be thinking about selling his or her practice today only because they feel a lot of money can be made. Lastly, the doctor/seller needs to know if 10 years down the road there will be enough money to support their retirement and this is where a wealth management advisor will be needed.
“It’s important for me to know, as the facilitator of this strategy and process, if they are going to be okay after 10 years,” Ranger says. “I want them to visualize what it’s going to look like on a day-to-day basis once they are no longer practicing. Do they have hobbies? Are they going to be fulfilled for the rest of their life, being able to do the things that they want to do? It may sound silly to ask these kinds of questions, but it’s important. It’s my job to bring all the right players into the circle and to make sure that all the boxes are checked and the dentist is good to go.”
Stay tuned for part 2 of our 3-part series where we discuss due diligence and location.
About Xite Realty
Xite Realty helps healthcare professionals in through every stage of their career including opening their dream offices to practice sale for retirement. Founded in 2013, Xite Realty has six offices in three states, staffed with professionals to assist our clients open, sell, or purchase a medical practice in the United States. We equip our clients with tangible evidence for their startups by using tailored demographic data and tested healthcare real estate expertise. For more information, visit https://xiteco.com