Phasing Out - Basic Seminar Outline
PART I. WHY PHASE OUT
Exit options and comparisons
1. Associateship
2. Sell and walk
3. Solo back off
4. Pre-sale
5. Post (deferred) sale
6. Merger
7. Phase-out
PART II. WHEN TO START A TRANSITION
A. Financial timing
1. When financially able to make the move?
2. Optimum timing
B. Financial projections
1. Personal computerized projections
2. Practice projections - difficulties
C. When, the added dentist?
1. Practice size - gross
2. Growth potential
3. Do-ability
D. Emotional concerns
1. Letting go
2. Loss of control
3. Junior failure
4. Burnout
E. Positioning/maximizing the practice for the move
1. Beyond present practice nos.
2. Physical office condition
3. In-house evaluation
4. Quality image
5. Staff
6. Fees
7. Referrals
F. Lead time and steps in the process
1. Information gathering
2. Provisional decision
3. Office enhancement
4. Candidate search
5. Interviewing
6. Reevaluation
7. Candidate selection
8. Signing
PART III. FINDING AND SELECTING A JUNIOR DENTIST
A. Precautions
1. Taking a new graduate
2. Interviewing before clear criteria
B. Sources
1. Brokers - advantages and disadvantages
2. Dental schools
3. General practice residencies
4. Military bases
5. Dental societies
6. Internet
7. Networking
8. Grooming
9. Ads
C. Interviewing
1. Objective
2. Multiple interviews
(1) Staff interview
(2) Social interview
D. References
E. Qualifications
1. Education
2. General experience
3. Military type experience
4. Bank-ability
F. Qualities
1. Personality
2. Values
3. Commitment
4. Work aggressiveness
5. Professionalism
6. Management ability
7. Control
G. Negotiations
1. Too hard-nosed
2. Outside advice
3. Too easy
4. Time out
5. Making it fly
PART IV. SIGNING THE CONTRACT
A. Before or after starting
1. Bargaining position
2. If just trying it
B. The typical ill-fated scenarios
1. Friend or relative
2. Associate staying
3. Temporary contract, with covenant
4. Time limit on signing
5. Straight sale
6. Senior uncertainty
7. Converting an existing associateship to a sale
PART V. FINANCES OF A PHASED TRANSITION
A. Profits
1. Associateship period
2. Partnership period
B. Senior's income
C. Junior's income
D. Buy-in sale price
1. Growth credit
2. Appraisals
E. Sell-out sale price
1. Growth credit
2. Appraisals
F. Financing
G. Comparison to a straight sale
1. Senior's gains
2. Junior's gains
PART VI. ASSOCIATESHIP PERIOD - Blueprint explanation
A. Trial period
1. Signing point - before junior starts
2. Length of period - 6 months
3. Too easy
4. Too tough
5. Corrections
6. Adjustment of key staff hours
B. Patient announcement
1. Promotional tool
2. Referrals
3. Senior's non-retirement issue
C. Associate compensation
1. Commission
2. Start-up advances
D. Associate vs. owner expenses
1. Personnel - paid by owner - vs. separated
2. Supplies
3. Lab fees - junior shares
4. Individual expenses, write-offs - deductibility
5. Retirement plan
E. Work schedule
1. Senior's option
2. Expanded hours
3. Scheduling and space sharing
F. Distribution of patients
1. When affordable to cut back and shift patient load?
2. Defining the distribution
3. Factors affecting the distribution
(1) Junior's schedule
(2) Recalls
(3) New patients
(4) Patient quality
(5) Term
(6) Team concept
(7) If ineffective patient shift
G. Senior's cutbacks
1. Amount and rate of work reduction
2. Defining the cutbacks
3. 90-day-per-year work example
PART VII. TRANSITIONAL PARTNERSHIP PERIOD
A. Buy-in - definition
1. Buy-in date
2. Percentage of ownership sold
3. Multiple buyers
4. Advantages of the partnership period: time, control, income
B. Division of expenses and income
1. Office expenses
2. Hygiene or ownership income
3. The remainder, production income
C. Division of management
1. Defining the division
2. Sharing vs. shifting of management
3. Junior preparation
4. Conflicts
D. Senior's real estate sale possibilities
1. Tying office sale to the deal
2. Remodeling or moving
E. Tax consequences
1. To the junior
2. To the senior
F. Junior outcome at buy-in
1. Shared profits
2. Note payments
3. Equity gain
4. Promissory note term
5. Associate commission level
6. Down payment or withheld money
7. Required buy-in production
8. Junior's work aggressiveness
9. Senior leadership
PART VIII. FINAL SALE AND TERMINATION
A. Buy-sell options, requirements and timing
1. Senior and junior options
2. Senior counter-option
3. Setting of the sell-out date?
4. Selling at the point of retirement?
5. Selling when ending management?
6. Selling when ending control?
7. Selling relative to profits and practice value
8. Possible force-out
9. Death or disability
B. Restrictions
1. Junior's restrictive covenant
2. Senior's restrictive covenant
3. Patient records payment
4. Non-solicitation
C. Senior's post-sale working arrangements
PART IX. WORKING TOGETHER
A. The typical problems
B. Solving problems
1. Joint definitions
2. Staff notification of the transition plan - before or after?
3. Benefits to staff and patients
4. Possible staff dismissals
5. Staff meetings
6. Junior-senior meetings
7. Office manual
8. Stress diminishment
PART X. ROUTE TO FORMATION OF A TRANSITION
Recommended route
1. Professional and peer consultation
(1) Attorneys, accountants
(2) Peers
(3) Brokers - why so expensive - complications
(4) True consultants - needed
2. Written guides
(1) Other contracts
(2) Blueprint - for planning what to do and how to do it
(3) Fill-in-the-blanks contracts
(4) Package plans
3. Candidate selection
4. Negotiations
5. Legal completion
(1) Attorney selection
(2) Personal involvement
(3) Limiting use of attorney
(4) Professional fees
6. Exception
SUMMARY of Phase-out Benefits
1. Reduced work - without reduced income
2. Working in the practice - while selling it
3. No decline in practice value
4. Automatic buyer - especially if death or disability
5. Ending management
6. More enjoyable, with peer
7. Healthier, vs. the sudden ending
8. More lucrative
For more information, call 1.877.428.5837.
"I will be forever grateful for your advice about bringing in an associate and how to go about a transition. Your contract guide with the buy-in spelled out worked greatly. I was immediately able to drop down to three days a week and take month-long vacations without any loss of income. I 'enjoyed' dentistry for the first time."
- Jay Emery, DDS, Sultan, WA