Are you within five years of retirement?
In a perfect world, we start counseling oral surgeons five years before retirement to plan for the different options available to them. Alas, the world is not always perfect and many surgeons come to use a year or two before retirement asking for our assistance. Unfortunately, some surgeons have to retire quickly due to health or other personal concerns. In all cases, we work with the surgeon to develop a plan regarding their practice that takes into account their uniquely personal concerns, as well as the financial considerations in selling their practice given a long or short runway.
Retirement planning transitions come in different shapes and sizes. Some solo practice owners are willing to sell the practice now and work for the buyer for a period of time. Other solo practice owners want to sell and stop seeing patients immediately after the practice is sold. Oral surgery partnerships might have a partner retiring and a new partner who is presently an associate. Partnership transition planning is highly complex and requires a sensitive balancing of interests of the partnership, the partners and the departing and entering partners. We work on all types of practice transitions from the most basic to the most complex partnership restructuring.
One thing we tell all of our clients who might be retiring in the next few years is to keep “THE PETAL TO THE METAL.” Practice owners who gradually reduce hours or let their referral network go stale have practices with reduced revenues. Practices with reduced revenues, even those practices that still have seven figure collections, are unattractive to potential buyers because downward financial metrics are a sign of a tired practice. Such impressions might be totally unfair, but impressions matter and you do not want to give such an impression unless forced to do so for serious health or other personal reasons.
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How far in advance prior to retirement should I think about a transition plan?
There is no perfect answer to this question. If you are in good health and have a specific retirement date in mind, we recommend that you start planning 3 to 5 years before your anticipated retirement. Retirement planning influences intermediate business operations such as lease renewal decisions, equipment purchases, hiring decisions and work schedules. If you are only a year to two years from retirement, planning for a sale becomes critical as it can take 12 months or more to sell a practice. On the other hand, if your transition planning involves bringing in an associate to purchase your practice, you might need two to three years from the time you bring in the associate to the time you sell your practice to the associate. We urge surgeons who are thinking of retiring in the next five years to call us on a no obligation basis to discuss their options.
What is expected of me during a retirement transition?
If you sell your practice as part of a transition, you will be required to spend a few months helping the purchaser facilitate the smooth transfer of your referral base. Referral transitioning is a must even for practice sales due to health reasons if the purchaser asks and you agree (and are healthy enough), you might work for the purchaser as an associate for a short period of time (say 12 to 24 months) on a part time basis to provide an even more seamless transition. The same is true for a retirement from a partnership; transitioning referrals to the other surgeons (including an associate who might be promoted to partner) is crucial and working part time for a short period of time might be beneficial to all parties.
What if I have to retire quickly due to health reasons?
Unfortunately we deal with health retirements with some level of frequency. In those situations, the goal is not to maximize sale price because you don’t have the time for a full target nationwide marketing process. If you need to sell quickly, your paramount concern should be a smooth transition of your practice, staff and referrals. In a quick sale, you are not going to maximize your sale proceeds; human considerations take precedence. We understand what surgeons retiring for acute health reasons are going through. Our strategies in such situations put human matters first.