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Preparing for Your Practice Transition
August 4, 2021
Dental Practice
What to Look for in a Dental Practice
September 10, 2021

Should I Sell My Dental Practice to an Associate?

Associate dentist

Many dentists consider adding an associate to their practices. Associates can help expand your business by increasing your ability to provide quality patient care. They may also become future potential buyers when you decide to sell.

Dentists should be cautious about hiring associates with the sole purpose of selling their practices to them. While associate buy-ins are a viable transition strategy, you must carefully plan ahead to ensure a successful sale.

What is an associate buy-in?

In this type of transaction, a dentist gradually turns the practice over to the associate before exiting after an agreed upon amount of time. The retiring dentist then receives payment from the buyer. This option used to be the most common transition type but has been replaced in recent years.

What are the benefits?

Some dentists prefer this type of transaction because they are able to cut back on hours while maintaining control of the practice until retirement. Dentists who are particularly attached to their patients, staff and community may also prefer this option, as they are able to sell to someone they already know and trust.

What are the risks?

Dentists rarely sign formal agreements with their associates. This ambiguous arrangement can lead to major issues in the future, even with the best of intentions between the associate buyer and the seller. The transaction could fail if the associate decides to go a different direction. Approximately 80 percent of loose associate buy-in arrangements end up dissolving, sending the dentist back to square one.

How can I set myself up for a successful associate buy-in?

We recommend you define a purchase contract before the associate starts at your practice. In the contract, you should predetermine a time frame and phasing plan with specific milestones and a method of valuation and payment for the practice.

Many dentists fail to plan for their transition because they expect that their associates will buy them out of the practice. While this is possible, you should also prepare for other scenarios. Contact our practice broker team to discuss how to accurately price and market your practice to ensure you receive the outcomes you are looking for. 

If you are looking to hire an associate, please contact our sister company Menlo Dental Consulting to get started.

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