Avoid These Top 5 Practice Transition Mistakes

By Jonathan Martin, CPA*

1. Waiting too long to prepare

There are several types of practice transition—selling to a DSO, selling to another dentist or group, or bringing in a partner(s) and selling ownership in stages over time. Each option comes with different advantages, disadvantages, and timelines. However, the later you start planning, the more limited your choices will be.

For example, if you wait until you’re close to retirement, it often eliminates the option of a staged partnership, where an associate is brought in and ownership is sold in pieces over several years. Selling to a DSO typically requires a post-sale commitment of five years, which may not be realistic if you want to exit quickly. Selling larger practices ($3MM+ in revenue) face an additional challenge—fewer individual buyers can shoulder the production and debt necessary to acquire such a large practice. Without early planning, you may be forced to accept a lower price or less favorable terms for your practice.

Recommendation: Begin planning at least 10 years in advance of when you plan to leave practice. This gives you the flexibility to choose the type of transition that best fits your financial and lifestyle goals, rather than being boxed into whatever transition options remain available at the time.

2. Overprioritizing sale price over other terms

While your practice’s sale price feels like the headline number—and for many dentists, a validation of their life’s work—it’s not the only, or even the most important, factor. The structure and details of the deal often determine what you actually walk away with.

• Allocating the purchase price between goodwill, equipment, and other assets can reduce your tax burden dramatically, increasing your net proceeds by tens or even hundreds of thousands of dollars.

• Sale structure matters just as much. With DSOs, a flashy “headline multiple” may include stock, holdbacks, and earnouts that look attractive but may never fully materialize. What matters is the “realized price”—what ends up in your pocket after stock is cashed out, all conditions are met, and taxes are paid.

• Timing of the sale can also be leveraged. If a buyer’s offer is slightly below your expectations, negotiating a later sale date may allow you to collect a few more months of cash flow to bridge the gap.

• Income division in partnerships is another overlooked area. A slightly lower buy-in price is far less impactful if your practice profit allocation is increased over a 10+ year partnership.

Bottom line: Price is just one piece of the puzzle. Dentists who focus exclusively on it risk missing out on terms that could have a greater long-term financial and quality-of-life impact.

3. Failing to maintain practice performance and records

When you sell your home, you don’t just immediately put up a “For Sale” sign. Rather, you clean, repair, and enhance its curb appeal first. The same concept applies when transitioning your practice.

Buyers look for consistent performance and accurate, reliable records. Production, collection, and new patient flow should ideally be stable or trending upward. Clean, consistent financial statements inspire confidence, while sloppy bookkeeping creates questions and room for negotiation. Overhead should be under control, the office should look up to date and maintained, and any associate dentists should have signed employment agreements with non-competes in place.

When these areas are neglected, buyers see risk— and that risk translates into a lower price they’re willing to pay. By contrast, strong performance and accurate professional records create leverage for the seller, often resulting in a better price, smoother negotiations, and stronger deal terms.

4. Choosing the wrong advisor

Unfortunately, the practice transitions industry has a low barrier to entry. Many “consultants” or “brokers” present themselves as experts, even though their experience is limited to general healthcare consulting, supply sales, or banking. These backgrounds don’t necessarily provide all the skills needed to guide your complex dental transition to success.

A qualified advisor should bring both technical expertise (such as a CPA or attorney), that understands deal structures, tax implications, and entity considerations and years of practical experience (navigating real-world negotiations and aligning deals with your personal goals). They should be able to present multiple transition options and help you quantify what’s best for you— not push you toward the only option they offer.

Choosing the wrong advisor can result in a poorly structured deal, money left on the table, or being locked into an arrangement that doesn’t align with your personal and professional objectives. Even worse, it can cause the deal to “blow up!” Conversely, the right advisor pays for himself many times over.

5. Neglecting personal financial and lifestyle planning

You may pour your energy into the practice transition itself, but neglect the even bigger question: what will you do after the sale?

Without personal tax and financial planning, it’s easy to misjudge whether the proceeds will support your desired lifestyle. Some dentists sell too early, only to realize they’re not financially prepared. Others keep working longer than they need, chasing a higher price because they never defined their income needs. And without proper tax planning, a poorly structured sale can lead to excessive tax bills that erode the net benefit.

Beyond money, many dentists also underestimate the lifestyle change that occurs when you’re no longer running a practice. Thinking through how you’ll spend your time, what goals you’ll pursue, and how the transition supports your broader life vision is just as important as the financial aspects.

The takeaway: A practice sale should be part of a larger personal financial and life plan, not just a business transaction. Aligning the two ensures peace of mind and a smoother transition into a successful next chapter of your life.

*Jonathan Martin, CPA is a practice transition specialist with McGill and Lyon Dental Transitions. For more information on dental practice transition services, call 704.424.5626 or email transitions@mcgillhillgroup.com.