Transitioning your dental practice requires balancing the amount of information released against maintaining the confidentiality of the transaction. On one hand, you want to market the practice and inform potential purchasers of the opportunity. On the other hand, you need to control how and when the patients, staff and public find out about the transition. There is no perfect way to balance these considerations, and the circumstances of the transition will often dictate how we approach this sometimes delicate matter. For example, speed is more important than secrecy for a deceased dentist’s heirs; whereas a healthy dentist with a 2-year timeline can proceed with more discretion.
The goal with any transition is to minimize the disturbance and inconvenience felt by the patients when their dentist sells the practice. To reassure the patients of practice continuity, it is essential they encounter familiar staff members when visiting the office after the sale. A practice can switch dentists, staff members or locations successfully, but usually not two at once. Consequently, employees are the most important piece of any transition. A well-trained staff already knows the patient is invaluable to a practice purchaser, hoping to effectively maintain the practice goodwill. Similarly, assuming control of a dental practice and servicing the debt on the acquisition is quite stressful, and the purchaser will need support from the office team. To put it another way, without the staff, you’re only selling used equipment.
Many dentists and transition consultants prefer to not inform the staff of a transition until the purchase agreements have been signed and the buyer is obligated to close the sale. This is to avoid unnecessarily stressing the employees. It can be a shock when employees find out the owner has sold the business, but it can be tempered with an immediate, enthusiastic introduction of the new owner, who then assures the staff of continued employment. If the employees find out the practice is being sold in the future without any additional details, there is a tendency to envision the worst-case scenario. Some employees may seek another job to choose their new boss rather than wait to find out who their new employer ends up being. If a new boss is introduced prematurely and the sale does not close, many staff members will seek new employment.
An additional reason to refrain from informing the employees, is the risk of the transition becoming public and rises exponentially as more people find out the practice is for sale. Employees cannot let information slip out if they do not know it. The dental community is small, and gossip runs rampant. Once dental assistants and equipment salespeople find out a practice is for sale, patients could follow soon after. If patients find out a practice is for sale, they start looking for a new dentist instead of waiting to be introduced to the practice successor.
Some practitioners feel that failing to inform the staff that they are considering a transition is being dishonest with their employees. If a dentist is approaching retirement age or dealing with long-term health complications, the office staff can often infer that a transition is on the way. In these cases, it may be best to meet with the staff and inform them of the transition. If you decide to take this approach, focus on the need for the staff’s discretion when engaging patients, vendors and referral sources. Emphasize the purchaser of the practice will want input on how the patients are informed and that it would be inappropriate to tell any patients or others outside the office until a buyer is found and the sale is finalized. One advantage to this method is prospective buyers can then meet and interact with the staff while considering the practice purchase opportunity and the staff can provide input on which purchaser they prefer if there are multiple offers on the practice.
After the employees, controlling the message to the practice’s patients is the next priority. Ideally, patients will be informed of the practice transition prior to arriving at the practice for treatment, but sometimes the execution of the purchase agreement and closing of the sale are simultaneous and leave little time for letters to propagate through the mail. The patient letter needs to be a sincere message from the seller thanking them for their patronage, but it should mostly be used to introduce the buyer. Be sure to include biographical and family information on the purchaser as well as any academic accomplishments, advanced training or new technology being introduced in the practice. The letter should also make any required disclosures concerning custody of the records and continued care. Many practices maintain email or text message lists for their patients. While these are useful for reminding patients of appointments or wishing them a happy birthday, informing the patients of a practice sale and chart transfer should be done with a physical letter via mail.
Finally, informing the public of a practice transition is the last step and should not be taken until funds change hands and the sale closes. Many states allow for the Seller’s name to be used in the practice for a limited time (usually 12 months) after they depart to maximize the transfer of the business goodwill. If the practice is changing names or rebranding, it is important to take advantage of this opportunity to associate the selling doctor’s name with the “new” practice.
An additional consideration is the purchaser’s need for confidentiality. The purchaser’s current employer may locate a replacement dentist and terminate their employment if they find out the purchaser is shopping for a practice. Because patients are booked months in advance, most employment agreements require the associate dentist to give ample notice (60-90 days) before they can quit their job and purchase a practice. This period needs to be accounted for in the transition plan when scheduling the closing date for the sale. Though no one likes waiting 90 days for a sale to close, these situations provide abundant time for the buyer and seller to effectively inform the employees, patients and public of the impending transition.
When it comes to telling patients and staff you’re selling your dental practice, some ways are better than others. With a little care and attention to detail, you should be able to control the message to your employees and patients and maximize the benefits reaped by your successor.
Preston Lovelace, JD, MS
President, ADS Lovelace and Associates, Inc.
PLovelace@gmail.com
President, ADS Lovelace and Associates, Inc.
PLovelace@gmail.com
