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As the year draws to a close, many Los Angeles dentists reflect not only on patient care and business performance, but also on their long-term future. If you are nearing retirement or considering selling your practice, now is the perfect time to begin planning your dental practice exit strategy.
At Polished Legal, we help dentists across Los Angeles design comprehensive exit plans that safeguard their financial goals, ensure continuity of care, and avoid costly legal missteps.
Why Exit Planning Matters
Your dental practice is more than a business; it’s the result of years of hard work and patient relationships. Exiting without a solid plan can lead to undervaluation, disputes, or unnecessary delays. A structured exit strategy allows you to:
- Maximize the practice’s market value.
- Protect staff and patient relationships.
- Minimize tax and liability risks.
- Control the timing of your departure.
Step 1: Create a Timeline
The best time to start planning is three to five years before your desired exit date. A longer runway provides time to:
- Boost profitability and strengthen valuation.
- Resolve outstanding debts or compliance issues.
- Improve patient retention systems.
- Prepare your staff for the transition.
In Los Angeles’s competitive market, early preparation can make your practice more attractive to buyers.
Step 2: Organize Essential Legal Documents
Exiting your practice involves multiple contracts and legal safeguards. Critical documents include:
- Letter of Intent (LOI): Initial framework for a potential deal.
- Asset or Stock Purchase Agreement: Determines the structure of the sale.
- Lease Assignments or Renewals: Ensures your space transitions without disruption.
- Employment Agreements: Outlines staff continuity post-sale.
Polished Legal drafts and reviews these agreements to ensure compliance with California law and your best interests.
Step 3: Prepare for Valuation
Understanding your practice’s value early helps you make improvements that maximize your return on investment. Valuation typically factors in:
- Revenue, profit margins, and growth trends.
- Patient demographics and loyalty.
- Lease terms and location desirability.
- Equipment, technology, and goodwill.
With advanced planning, dentists can take actionable steps to increase their practice’s worth before going to market.
Step 4: Avoid Common Mistakes
Without professional guidance, dentists often encounter preventable challenges. Common mistakes include:
- Waiting too long to plan, reducing options, and practice value.
- Overlooking tax planning and net proceeds.
- Failing to communicate with staff and patients.
- Not working with experienced legal counsel.
By addressing these issues early, you set yourself up for a smoother and more profitable transition.
FAQ: Dental Practice Exit Planning in Los Angeles
When should I start planning my exit strategy?
Ideally, at least three to five years before your retirement or sale to maximize value and prepare staff and patients.
What’s the difference between an asset sale and a stock sale?
In an asset sale, only selected assets are transferred. In a stock sale, the entire entity, including liabilities, is sold. Polished Legal helps determine the right structure for your situation.
Do I need landlord approval when selling my practice?
Yes. If you lease your office space, most landlords must consent to a lease assignment or renewal as part of the sale.
How do I determine the value of my practice?
Valuation considers revenue, patient base, goodwill, lease terms, and equipment. We work with financial experts to ensure accurate results.
Can I still work part-time after selling my practice?
Yes, but only if your agreement allows it. Restrictive covenants may limit your ability to practice in certain areas.
Why Work With Polished Legal
At Polished Legal, we understand that transitioning out of your practice is both a professional and personal milestone. Our team combines dental industry insight with transactional law experience to ensure your exit strategy maximizes value, minimizes risk, and preserves your legacy.
Start Planning With Polished Legal
As the year ends, now is the time to look forward. At Polished Legal, we guide Los Angeles dentists through every step of exit planning, creating timelines, preparing legal documents, and avoiding costly mistakes.
Schedule your consultation today and take the first step toward a smooth and rewarding practice transition.
