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Articles

The Professional Advisory

  1. Is it Time to Move?
  2. Staging A Dental Practice
  3. The High Cost of Dying
  4. Deal-Busters
  5. Patients - Attract and Retain
  6. Should I Stay or Should I Go?
  7. Is There a Buyer for Every Practice?
  8. Good, Better, Best - The Market has Spoken
  9. Smooth-Sale-ing
  10. Buying Time
  11. Patients, Patience, Patients
  12. A Real Patient
  13. Why Do a Practice Valuation? I'm not Selling
  14. Irrational Exuberance or The New Normal?
  15. Do dental equipment and dental technology affect a practice value?
  16. Finding and Being a Mentor
  17. Bigger is Better
  18. Daves Top Ten List for Buyers (Vendors should read this too!)
  19. How Well Do You Know Your Practice?
  20. Dave
  21. What will happen to dental practice Values in the next 10 years?
  22. Your Premises Lease is an Important Asset
  23. What are Associates Thinking?
  24. There is Life Outside the GTA
  25. When Is the Right Time to Sell My Dental Practice?
  26. Mergers are a Viable Option
  27. Is Your Associate an Asset or a Liability?
  28. Has your Practice Facility Kept Up With Your Billings?
  29. The 100 per cent of Gross Myth
  30. The Past, The Present and The Future
  31. Caveat Emptor
  32. Overpaid Long Term Staff
  33. Selling your Practice in Stages
  34. A Potential Pitfall of Selling Shares
  35. Value in Your Practice Through Balance
  36. Only Trusted Staff Can Defraud You
  37. To Own or Not to Own Practice Real Estate? That is the Question.
  38. Coping With A Large Patient Base
  39. Successful Dental Practice Transitions
  40. Taking Care of Business
  41. The Investing Dentist Phenomenon
  42. Two areas to focus upon that could negatively impact the value of your practice
  43. Organize your Debt in Order to Sell your Practice
  44. Having a Better Team
  45. How Do I Prepare My Practice For Sale
  46. How Do I Prepare My Practice For Sale? Part 3
  47. How Do I Prepare My Practice For Sale? Part 2
  48. How Do I Prepare My Practice For Sale? Part 1
  49. Advice to My Son or Daughter Graduating from Dental School
  50. Transition - What to Expect
  51. Discussion on Digital X-Rays
  52. Partnerships and Shotguns
  53. Strategic Planning - How to Get Started
  54. Calling All Vendors - Practices have Gone Up in Value
  55. Purchasers: Expect to Pay More for a Practice because of Lower Professional Corporation Tax Rates
  56. Matrimonial Practice Valuations
  57. Purchaser's Guide to Affording a Practice
  58. Location Improvements Throughout Your Career
  59. Small Practice Valuations
  60. Partnerships – The Best and The Worst
  61. Changing Location When the Opportunity Comes Along
  62. Visual Presentation of Your Practice
  63. Presentation of Charts
  64. Your Premises Lease Can Be Your Worst Enemy
  65. How to Select an Appraiser for Your Practice
  66. How Are Your Billing Ratios?
  67. It Pays to Invest in Your Tangible Assets
  68. The Importance of Separate Financial Statements
  69. Five Time Frame Levels to Sell a Practice
  70. 12 Suggestions to Safeguard Computer Data
  71. How to Buy a Visible Practice
  72. Why is there a shortage of good practices today?
  73. The Importance of Equipment in the Purchase of a Practice
  74. The Balanced Practice
  75. Will My Practice Be Saleable in The Future?
  76. Buyer Be Aware
  77. Excess Profit - The Second Key
  78. Patients and Profits are the Keys
  79. Plan Ahead

Volume 77: The High Cost of Dying

Download the PDF version now!

I know it is a morbid subject and I have avoided writing about it for many years, however some of this stuff needs to be talked about. As is the case with most of our articles, the subject matter usually arises due to recent transactions or situations that we have been involved with and this issue is no exception.

It is inevitable that we are all going to pass away someday, however it is remarkable how poorly most of us plan for it. When you consider the effort and expense we go to in order to plan for things that may happen, such as “we don’t want to downsize our home, because one of our kids may move back, or we may need the winding staircase for wedding pictures someday”. Or the effort dentist’s go to put their employee’s on contract because they may need to be terminated someday. There are countless examples of this kind of thing throughout our everyday lives, yet we don’t do a good job of planning for something we know will happen; our own death. Fear is a great motivator so I hope to instill a little fear in you in the hope that it will cause you to take steps to plan for this eventuality.

You, as a dental practice owner have a unique set of circumstances related to your own death that many people in society don’t have to worry about.

  • You are self-employed
  • You don’t have a pension
  • You are usually the primary bread-winner of the family
  • There is a miniscule percentage of the population to replace you
  • You book your life in 10-15 minute blocks up to six months into the future 

So what happens when someone with those characteristics dies suddenly (or becomes critically ill or disabled) without any forward planning? At the risk of being insensitive, I am going to limit the content of this article to factors related to dentistry, though I am acutely aware that there are other, often more important things people must deal with during these times.

First, the team at your practice have no idea where to start. There is not a go-to person who has all the answers, they feel empty and alone and don’t know what to tell the patients. The goodwill value of your practice, which regular readers will know, accounts for about 80 per cent of your practice’s value, starts to erode with that first cancelled appointment. Who will take control of things? Your spouse? Your family and friends? Not likely. In the early days they are too distraught to even worry about the practice. In one of the situations that caused me to write this article, a dentist’s wife contacted a cottage neighbour for help. He was a retired accountant whom she knew had other dentists as clients. He was someone she trusted who would guide her properly. The trouble is that initial contact was made three months after her husband had passed away. She knew very little about her husband’s practice and just assumed someone was taking care of things in the interim. The accountant put her in touch with us but the damage was done. We were able to move the balance of the practice to a neighbouring dentist but a large percentage of the patients had already moved on - therefore the value was severely impacted.

Time is the enemy in these situations. Your patients are loyal to you and they like going to your practice, but when you’re gone there has to be a plan. The first thing to do is to write down clear instructions for people to follow in the event of your demise. It should be specific and contain contact names for people you trust to put an action plan into place immediately. Discuss your instructions with your spouse and possibly, your lawyer, accountant and practice broker. They all bring unique skills in dealing with these unfortunate situations, and importantly are one level removed from the emotion of the situation so can act appropriately for the benefit of your heirs, staff and patients. A locum dentist will need to be retained immediately to maintain as much normalcy in the practice as possible. Your practice Valuation will need to be updated (not started) immediately and a plan put in place to transfer the ownership to another dentist. Have a team prepared and knowledgeable and let your family and friends know that you have done so and where to find your instructions. If you don’t have the support you think you’ll need, start setting yourself up. There are many professionals that dedicate their lives to working with dentists. They are most competent to take care of things for you when you can’t.

Plan. Provide information. Sleep comfortably.

David Lind is a Principal and Broker of Record in Professional Practice Sales Ltd. (www.ppsales.com), which specializes in the valuation and sale of dental practices.  He can be reached at (905) 472-6000 or 1-888-777-8825 or e-mail at: david.lind@ppsales.com

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