I truly hope this will never be your story.
About 3 months ago I came across a dentist who was diagnosed with a debilitating illness that would turn his life upside down.
This 40-something year old dentist had several successful practices, a lovely wife and children, had recently built a beautiful new home that was being finished; had lots of assets, toys, just an amazing life outside of dentistry that included many outdoor and sports activities with his children.
This man enjoyed life to the full, and all of a sudden everything came crashing down around him.
Now let’s forget the impact this had on his family and his lifestyle for a minute, and just have a look at what happened to his business.
Within a matter of months he was forced to sell off his practices as he was becoming unable to work a full day.
There was little chance of finding good locum doctors at short notice. These dental surgeries were not in major cities, so a couple of practices were sold off at a loss just to ensure a quick sale.
When I came along, this dentist had had his heart ripped from him and was in pretty bad shape. He had lost the will to carry on with dentistry and just wanted shot of what was left. And who could blame him?
Here was the major problem that we were faced with.
The holding Pty, Ltd. company books were a nightmare, and like most practice owners, everything was piled into one set of books making it nearly impossible to figure out in a hurry what came from where, etc.
Now that is fine for tax purposes, but there were cars, trucks, motorbikes, travel expenses which were huge, motor vehicle expenses including sponsorships, etc. Insurance was through the roof and included everything. Assets included all manner of toys, property, equipment, to name just a few.
On top of all that, we had a surgery that had been producing over $16,000 per week instantly fall to less than a $3,500 per week. The staff moved on, leaving just the owner and his wife to carry on and keep the business running as best they could.
- The problem was we didn’t have TIME:
- We didn’t have TIME to find a locum. (Actually I did find a locum, but once he realized how bad the situation was, his rate skyrocketed).
- We didn’t have TIME to redo the books.
- We didn’t have TIME to carve out what belonged to this practice and what didn’t.
- We didn’t have TIME to build a Practice Profile or an optimum Advertising Programme.
- We didn’t have TIME to create the best Exit Strategy possible.
- WE JUST DIDN’T HAVE TIME TO PREPARE.
What a dilemma this dentist and his family were faced with. I contacted all my buyers, and everyone I thought might be interested. Of course they only wanted to pay a minimum price for this practice, and why wouldn’t they?
For years I have preached the need for total business preparation including having a solid Practice Readiness/Exit Plan and Reverse Due Diligence completed. I couldn’t believe I found myself in the middle of this situation, trying to find a successful solution for the predicament this dentist and his family faced.
We managed to get an offer on the table within 4 days which was well below even the fitout costs. I suggested we continue looking, but with things going from bad to worse, this offer was accepted.
And then a new set of problems became apparent.
- We had very little paperwork for plant and equipment. A lot of plant that was under $20K was paid out of cash and had been written down immediately, reducing the overall P&E substantially and making it difficult to substantiate.
- The surgery was still using paper cards. Some records had been transferred to a digital dental program but still incomplete, so information was everywhere. This caused more problems because patient records were spread over 3 different systems making it difficult for the buyer to understand what they are buying.
- The lease was another nightmare which caused no end of trouble for all parties to unravel and then transfer, due to a difficult corporate landlord.
- The problems just kept piling up, one leading to another. I think everybody involved wondered if we would ever see the end to this.
Due to the fact we didn’t have TIME on our side to prepare this business for sale in a normal manner, this deal nearly went sideways on several occasions, and I must thank all who were involved for showing great patience and understanding all the way through this crazy ordeal.
I would like to also say, this dentist is one of the strongest individuals I have ever met, who against all odds took it all on the chin with no complaints.
Why am I writing this article?
- I don’t want to be in a situation like this again, where looking into a man’s eyes that see what’s on the table as his only option after he has lost so much, both financially and mentally, and knowing the future is not good.
- Having met so many people who consider themselves bulletproof, and don’t realise the importance of having TIME to prepare a solid Practice Readiness/Exit Plan for this very reason: the unknown and the unexpected CAN HAPPEN TO ANYONE, ANYTIME.
- 20 years ago at 43yrs old, I suffered a major heart attack and subsequently had a triple bypass. having suffered a similar fate to my friend here, I can tell you first hand: you don’t want to go there!
- Maximizing the value, selling price and net proceeds from the sale of your business requires planning and foresight. It also typically takes TIME to implement value enhancements, saleability, preparation and tax minimization strategies. This is why it is imperative to have an ongoing Practice Readiness / Exit Planning strategy in place at all times.
- You’ll reap maximum return on the sale of your business when PLANNING, PREPARATION and TIMING come together.
- It’s the cheapest insurance policy you will ever invest in!
To my new friend:
Thank you for allowing me to publish our story!