Debunking Common Myths About Dental Practice Transitions

Transitioning out of your dental practice is no small task, and you will inevitably encounter plenty of advice along the way. However, not all of that advice is rooted in fact. Over the years, we've helped hundreds of dentists successfully sell their practices, and we've repeatedly heard the same misconceptions that can cause unnecessary stress—or worse, financial loss. 

To help you make informed decisions about your transition, we’re here to set the record straight about these myths.

Myth: The practice will lose 30% of patients after the sale. 

Fact: Some patient attrition is expected, but it’s far lower than 30%. Typically, practices lose just 5%-10% of their patients post-transition. This number can increase if the seller and buyer have mismatched treatment philosophies or if the buyer struggles with business operations. However, with careful planning and alignment between seller and buyer, patient retention can remain strong.

Myth: Sellers must stay and work in the practice for at least one year. 

Fact: Every transition is unique. While it's true that sellers staying on temporarily can help with patient and staff retention, this isn’t a one-size-fits-all rule. We’ve worked on transitions where sellers left immediately after closing, and others where sellers stayed for a year (or more). The most common arrangement is for the seller to remain for 1-3 months to help ease the handover process.

Myth: My associate can buy my practice. 

Fact: While this seems like a logical solution, statistics suggest otherwise. The American Dental Association (ADA) estimates that 75% of associate buy-ins fail before closing. Challenges often arise due to personality clashes, differences in practice philosophy, or disagreements over assigned procedures. Setting clear expectations and seeking experienced guidance early can help mitigate these risks, but many alternatives typically provide a smoother transition.

Myth: My landlord will release me from all liability in the lease. 

Fact: Most of the time, landlords will not fully release sellers from lease liability. Instead, they might require the seller to remain a guarantor for the total lease term or a negotiated period, such as 2-3 years. While some landlords may agree to a total release, this is the exception, not the rule. Before finalizing a lease agreement, consult a professional to explore your options.

Myth: Sellers will need to finance the purchase price. 

Fact: This is uncommon. Buyers typically secure financing through banks, often with little to no down payment required. Seller financing normally only comes into play in specific situations, such as when a buyer has limited credit or when a business has insufficient cash flow. Even in these cases, sellers usually finance only a small portion, typically around 10%-20% of the purchase price.

Myth: It’s better to keep and collect my accounts receivable (A/R) rather than sell them. 

Fact: While holding onto accounts receivable may work in some cases, we often recommend selling them to the buyer. This approach ensures a cleaner transition, avoids potential disputes over payments, and simplifies the overall process. Most buyers value A/R at around 85% of "collectible" value—accounts under 90 days old, after insurance adjustments. Selling A/R provides convenience for both parties and minimizes legal and financial conflicts.

Myth: Slowing down your practice before selling is a smart transition strategy. 

Fact: Slowing down your practice before selling can significantly devalue it. Many dentists fall into this trap, reducing collections from above $1 million to $600,000 or less, ultimately costing themselves hundreds of thousands of dollars in equity. Instead, consider hiring an associate to take on some of your workload or selling your practice while continuing to work part-time under the new owner.

Myth: Practices are always valued and sold for 100% of their collections. 

Fact: While some practices sell for 100% of collections, they are often the exception. Valuations typically range between 50% and 100%, depending on factors like net income, location, overhead, updated technology, and local market demand. A proper valuation should go beyond collections and encompass all aspects of the practice, including goodwill and the book value of assets. Sellers’ market conditions may push valuations higher, but not all practices qualify for top-dollar sales.

The Importance of Dispelling Myths 

Making decisions based on myths or bad advice can cost you valuable time, money, and peace of mind. By relying on facts and seeking guidance from experienced professionals, you can ensure the transition of your dental practice is as smooth and successful as possible. 

We’re here to guide and support you through every stage of your transition. Whether you’re planning the next steps or just starting to explore your options, having accurate information can make all the difference. Remember, selling your dental practice isn’t just a transaction—it’s the culmination of years of hard work and dedication.

Connect with our team of experts today, and ensure your transition is grounded in knowledge, not misperceptions.