In the past 10 months, our firm encountered three dentists who experienced the same event — death. For two of them, the post-death sale went well, sparing their widows the further pain of a long, drawnout sales process or, worse yet, no sale. The third widow was not as lucky. In telling the stories of these three dentists, my hope is that it will make you think about your own situation and if you have planned for this possibility.
Dr. A called our office, telling us that he was going into the hospital for tests. He needed a dentist to cover his practice, which we provided. I visited him at the hospital and his condition was so serious that he and his wife decided to sell his practice. I was given a key to the office, and with the help of a dentist who was familiar with the practice’s software, I was able to quickly gather all of the information needed to perform an appraisal and prepare a marketing package.
The next day, I contacted a prospect from our database and showed the practice to him. I went over the practice figures and other information that he requested. After several hours of inspection and study, the prospect made a full-price offer. The following day, Dr. A died. During the next week, sales contracts were distributed and reviewed, and a lease for the office and financing were obtained. The sale closed 10 days later, with the widow receiving the full sale price in cash.
Dr. B was exercising when he suddenly died. Our firm had coincidentally performed an appraisal of his practice six months earlier. Upon his death, his accountant and widow contacted our firm to sell the practice. Our first step was to find a dentist to provide continuing care for patients of the practice. With a current appraisal and marketing material in hand, we contacted a prospect from our database who quickly made an offer of 94 percent of the appraised price. Dr. B’s widow was paid in full at the closing, three weeks later.
Dr. C died from a heart attack. The family attorney commissioned us to perform an appraisal of the practice, but then elected to try to sell the practice himself. After four months of no activity, the attorney contacted us to sell the practice.
The attorney had failed to place a dentist in the practice during this time to provide continuing patient care. The doors of the practice were essentially shut for four months, during which time the practice value — as well as interest in the practice —dropped precipitously.
We immediately placed a locum tenens dentist in the practice to revive patient activity, which was minimal. Finally, five months after the owner’s death, a purchaser was found. The practice sold for one-third of its originally appraised value!
Dr. A’s and Dr. B’s practice sales were as successful as if the two dentists had not died suddenly. Dr. C’s outcome was much less successful.
There are several factors that affect the success of post-death practice sales. The first — and possibly the most important — is the use of a locum tenens dentist to continue the practice operation. Keeping the practice active is vital in preserving its value and marketability. Many patients are lost when a practice is closed or when well-meaning neighboring dentists cover the practice.
Another success factor is enlisting a professional practice broker, even though the family may think it has interested prospects. Expertise and experience in marketing, prospecting, qualifying, financing, and selling a practice — as well as having prospects to immediately contact for an immediate sale —are critical.
However, without complete and current practice data, even the best practice broker will be ineffective. Dentists rarely assemble this information during their lifetime. The task invariably falls on a grieving spouse who does not know what to look for, where to look, or who to call for professional help. The lack of complete practice information and a professional approach to marketing it may easily result in losses of hundreds of thousands of dollars.
The process of gathering practice information and preplanning the practice sale process is practically impossible for a spouse, especially when the spouse is not directly involved in the practice. However, the process is relatively quick and easy for the dentist. Wise dentists will make this small investment in time and effort to ensure the best practice value and sale success for their families, patients, and staff.
Earl M. Douglas, DDS, MBA, is the founding president of American Dental Sales. He is president of Professional Practice Consultants Ltd. Dr. Douglas personally services the Southwest area of the United States, and has affiliates nationwide. He can be reached at (770) 664-1982 or write to him at 11285 Elkins Rd, A-2, Roswell, GA 30076. Visit his Web site at www.ppcsouth.com.