succession planning - independent dental solutions · 2020-03-05 · succession planning p what do...

WEALTH ADVISORY | OUTSOURCING | AUDIT, TAX, AND CONSULTING

Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor

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Succession PlanningWhat do you want to do when you grow up!!

Mike White, CPA

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Create Opportunities

What do you want to do when you grow up!

• Whether you are just

starting out or have been

practicing for 25 years

• Planning for the end goal

always needs to be part of

your annual process

• Ensuring your practice is

worth top value

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What is your Reason1. Are you looking to Build a Practice to Succeed to your child

2. Are you looking to Build a Practice and add more locations

along the way

3. Are you looking to Sell your Practice to an individual or

Associate

4. Are you looking to Sell your Practice to Private Equity

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New Graduate

Associateship

Independent Contractor

Employee

Joining as Partner

Ownership

Start-up Acquisition

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Keys to a Successful Transition 1. Start with understanding what your transition plan is..

2. Ensure your story (financials) are telling the story you want to tell

3. Get a valuation from someone that knows the industry to see if your

practice is ready for market

4. Evaluate the look and feel of your practice – is it desirable? Will

someone choose to acquire you or open their own

5. Seek guidance from professionals in the industry that can help

navigate your options

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Selling Practice “Request

List”Financial/Corporate Data

• Past 3 Years Tax Returns

• Depreciable Asset Schedule

• Lease Agreement

• Accounts Receivable Report

– With “Aging Buckets”

• Employment Agreements– And Benefits (if applicable)

Practice Management Data

• Past 3 Years… (by provider)– Production

– Adjustments

– Collections

• Patient Demographic Information

• Payer Matrix

• Summary of Revenue by Procedure

• Fee Schedule

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Level of Importance “Buyer’s Thoughts”

Location

Overhead

Past Performance

Staff/Culture

• Curb Appeal• Patient Demographic• Dentist to Population Ratio• Age/Quality of Infrastructure

• Largest Expenditures• Fixed vs. Variable Costs• Monthly Expenses• Vendors

• Experience• Personality• Chemistry• Efficiency

• Production/Collection figures• Month-to-month trends• Patient Retention Rate/Age• Accounts Receivables

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Don’t Forget

• Check your suspended credits within your AR

• Check your liability balances to ensure you take into consideration for your net value

• Discuss with your tax advisors a projected net cash flow after taxes

• Discuss with your other advisors to ensure they are prepared to help you consider other exposures

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Who wants to purchase my practice

• Associate Doctor

• Non-Related Doctor buyer

• DSO

• Affiliate with another group

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Overview of Dental Support Organizations (DSOs)

• An entity that provides non-clinical support services to dental practices.

• May also provide dental practices with non-clinical employees, equipment, trademarks, and office space.

• Paid monthly business support fees and other applicable fees by dental practices.

• Non-dentist ownership of a DSO is permitted.• DSOs cannot own dental practices (with very few exceptions).• Extensive litigation in the late 1990s to early 2000s focused on

DSO control over dental practices.• Growing number of dentists are affiliated with DSOs.

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What are Dental Service Organizations (DSO)

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TRADITIONAL PRACTICE OF DENTISTRY

DENTIST(Solo Practitioner)

PATIENTS

DentalServices

Fees

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DENTAL SUPPORT ORGANIZATION• Can be owned by dentists and non-dentists.• Owns trademarks, domain names, and other assets• Provides non-clinical business support services to Practices

DSO Business Agreements

and DSO Fees

DentalPractice No. 1• d/b/a ABC Dental• 100% Dentist Owned

Sub-DSO• Owned at least 51%

by DSO and up to 49% by Partner Dentist(s)





Dental Practice No. 4• d/b/a ABC Dental• 100% Dentist Owned






•Business Support Subcontracting Agreements and Fees•Trademark License Agreements and Fees (as applicable)

EMPLOYMENT PRACTICE (Optional)• 100% Dentist Owned• Employs and leases personnel to Practices



DSO Business Agreementsand DSO Fees

Staffing Agreements

DSO Business Agreements:•Business Support Agreement•Trademark License/Sublicense Agreement (as applicable)

•Equipment Use Agreement (as applicable)•Office Sublease (as applicable)•Equity Transfer Restriction Agreement•HIPAA Business Associate Agreement

DSO Fees:•Business Support Fee•Trademark License/Sublicense Fee (as applicable)•Equipment Use Fee (as applicable)•Office Sublease Payment (as applicable)

DSO-SUPPORTED PRACTICE OF DENTISTRY

Staffing Agreements

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DSO Red Flags

• Do the DSO and the owner dentist have a poor relationship?• Does a non-dentist own an interest in the dental practice?• Are dental fees being split with a non-dentist?• Is a non-dentist an officer or director of the dental practice?• Does the DSO try to impose quotas on dentists?• Are support fees based on a percentage of dental practice revenue?• Does the dental practice owe the DSO substantial unpaid support

fees?• Does the DSO employ clinical employees?• Is a non-dentist making clinical decisions?• Have the parties implemented and are they following the necessary

DSO business agreements?

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Build your Strategic Team

CPA + Advisors

Banker

InsuranceWealth

Advisors

Lawyers

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• Who is your team?

• How can we help?

Items for Action

We offer a free assessment to all new clients.

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CLAconnect.com

A special thank you for joining and giving CLA the opportunity to speak today.

Mike White, [email protected]

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succession planning - independent dental solutions · 2020-03-05 · succession planning p what do...

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