– I get asked the question, Colin, should I sell my practice?
– I have these DSOs that are approaching me, I have this private equity money, they’re building conglomerates, I’ve got an opportunity to sell. Should I sell?
– And really what they’re asking me is, what’s the price of lamb today versus the price of wool tomorrow?
– So if you’ve got a sheep, you’ve got two choices. You can nurture that sheep and keep selling the wool, shearing it every year, twice a year, and selling the wool, or you can slaughter it. But you only get to slaughter it once.
– So what is the value of the practice over the long term?
– And in most dental practices, if you look at the price of lamb today versus the price of lamb over the next two to three years, you’ve got a very close break even point.
– By the time you recapture depreciation, you pay uncle Sam, you pay your closing agent for brokering the practice sale, you’ve got a year or two of profits in the bank.
– And then the question is, how do you take that money that you made and go re-invest it to earn a significant return, like what you were doing in your practice?
– It’s always sexy to think about, I could sell my business, I could sell the practice and just retire, but then you’ve got a chunk of cash and what do you do with it?
– Do you just do nothing with it and spend the principal?
– You’re going to go through that in a few years and then you’re going to have nothing.
– So you’ve got to fundamentally look at the numbers of, again, the price of lamb today versus the price of wool tomorrow.
– Generally speaking, for most dentists, it doesn’t make a lot of sense.