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this letter and plan with designated family members. Many dentists, especially if incorporated, will execute a power of attorney authorizing a specific individual to immediately begin transition proceedings if required due a dentist’s death. When and how to start If an appraisal has not been com- pleted or updated within the past two years, this is the first step. Developing an exit strategy plan, even if it is years away, should also begin as soon as the appraisal is completed. A stockbroker will advise that one should set a target sale price the day one acquires a stock. Simi- larly, the exit strategy is part of the dentist’s preferred timetable? Are there any preliminary steps required to enhance the value of the practice? Which method of transition has the greatest chance of successful completion? Make a plan outline The answers to these questions should result in a brief written out- line of the plan. The topics should include: (1) goals, (2) a timetable, (3) appraised value, (4) anticipated post-tax and sale’s expense net sale proceeds, (5) planned transition options and (6) a list of consultants to be involved. The plan should also contain an action plan for completion of any activities that will enhance the value of the practice or increase the chances the practice will be select- ed by prospective new dentists. Understanding that an inactive practice loses 5 percent of its value per week, an important part of the plan should also include a list of people to be called in the event of an unanticipated career-ending disability or death. A letter of instructions to family members should be included that lists those contacts and stresses the urgency to act expediently in transitioning the practice. A part of the plan needs to include sharing the potential financial reward of practicing. Good business sense dictates the plan should really have been started when the practice was first acquired. Part of a transition plan started early in one’s career will allow for inclusion of a well-funded pension plan and less reliance upon prac- tice sale proceeds for retirement needs. The timetable for the actual implementation of the plan will be dependent upon the personal wish- es, needs and financial resources of the dentist. Metro areas are seeing a com- mon market time of one to two years from listing to sale. Rural area practices face three to five years if they can be transitioned at all. The length of time required for location of a prospect and transi- tioning of the practice requires that the practice opportunity be listed at the earliest time that the dentist is willing to complete the transition. If the seller is fortunate enough to immediately locate a buyer after listing, the dentist needs to be ready to act. At the time of listing, the dentist must also realize that he/she may continue to own the practice for a long time. An alternative For dentists considering retire- ment, many have a difficult time starting the process because of the emotional attachment to their prac- tice. These dentists, unless or until they find something else they would rather do than practice dentistry, will be unable to activate their tran- sition plan. If the practice of dentistry is their only interest, their hobby and the center of their later life, there is no law stating that they must transi- tion their practice. For these dentists, their transi- tion plan is to practice until they can no longer do so. Their plan may be as simple as one day closing the doors and retiring. DT Financial Matters DENTAL TRIBUNE | March 201010A AD f DT page 8A About the author Dr. Eugene W. Heller is a 1976 graduate of the Marquette University School of Dentistry. He has been involved in transi- tion consulting since 1985 and left private practice in 1990 to pursue practice management and practice transition con- sulting on a full-time basis. He has lectured extensively to both state dental associations and numerous dental schools. Heller is the national direc- tor of transition services for Henry Schein Professional Prac- tice Transitions. For additional information, please call (800) 730-8883 or send an e-mail to ppt@henryschein.com.