A growing number of dentists are continuing to practice as long as they can physically handle the stresses of the job. The decision not to move into retirement has been very positive for their patients and staff since they continue to receive high quality care from a person they trust. Additionally the dentist has the benefit of continuing to do what they love and remain engaged in the community.
The downside to this trend has been the growing number of dentists who are passing away while still in practice. If the appropriate precautions have not been taken, this can cause tremendous turmoil for your family after you pass, as well as devastate the value of your life’s work.
I will illustrate this point with an actual story from a recent client. The Dr. had not fully planned ahead for the contingency of an unexpected death. What I mean by that is, he did have life insurance and practice overhead insurance, but had never established a justifiable fair market value for the practice, had not established a business continuity plan, and had not designated in his will who would handle the sale of the practice in the event of his death. When this dentist died unexpectedly, his wife was left with trying to figure out how to keep the practice running and package it for sale, while she was in the midst of grieving.
Her brother-in-law told her that he knew a CPA that could handle the sale for her. Since there was not a plan in place and she had no idea how to deal with the practice she jumped at the chance for help. As you know, word travels fast in our small dental community and several potential buyers for the practice emerged almost immediately. Several were bottom feeders looking to take advantage of a bad situation but a couple were strong buyers with integrity that made fair market value offers. Due to the CPA’s lack of experience, he misunderstood the abundance of initial interest and thought that they could get better offers if they waited. The serious buyers moved on when their offers were rejected. The wife struggled to learn as fast as she could how to keep the practice going while this CPA tried to sell it. The practice started to decline rapidly because there was no continuity. Ultimately the CPA was able to sell the practice almost a year later and for significantly less than the initial fair market offers they received.
The punchline of the story is this: the wife spent a very frustrating year trying to keep the practice afloat and for her efforts received NOTHING after the sale. Because of the practice decline, there were not even sufficient proceeds to pay off the creditors once the sale closed. This dentist left a legacy of frustration, pain and debt to his family. The really tragic part of this story is that it could have easily been prevented.
Southeast Transitions can assist you in establishing the fair market value and naming the agent responsible to sell your practice in the event of your death. We will be here for you and your family whatever the circumstance.
Contact us to get started.
For more information, read our blog post Selling a Dental Practice After Death.