Are Selling Dentists Getting Younger?

ARE SELLERS GETTING YOUNGER?


Definitely YES! The average age of our sellers has dropped from 62.4 years old to 50.7 years young just over the past 10 years. And this propensity is continuing. We are listing more and more sellers in their mid 40’s all the time. In fact, we predict the average age of our sellers will be in the mid 40’s within the next 3 to 5 years.

Why so young? There are some extremely sound reasons for this trend. Burn-out, stress, boredom, disgust, OSHA are just a few reasons… but, quite frankly, the most recurrent reason for selling at a younger age is purely FINANCIAL!

Many doctors are discovering the PARAGON Pre-Sale Program as a life-changing alternative. The PARAGON Pre-Sale makes it possible to maintain your current take home income level and your present life style for as many years as you desire… while converting your current practice equity into a useable cash investment TODAY! This is a major financial advantage that is very hard to ignore.

For example, let’s say a 45-year-old doctor owns a practice worth $400,000. This doctor is busy enough and entrenched in the proverbial “comfort zone”. By his own admission, it is unlikely that he will put forth the effort to take the practice to a significantly higher level. He has been at or around this $400K value for several years now. If our 45-year-old converted his practice equity into cash today and invested the after-tax portion ($250,000) for the next 20 years at only 10% interest, he would accumulate $1,681,850 by age 65. Consequently, to net the exact same amount by selling the practice at retirement, he would have to sell the practice for $2,541,308 (paying taxes of $859,458 to net $1,681,850) at age 65. That means his practice would have to be grossing around 3.3 million a year at age 65. Are you kidding me? That is not even feasible enough to be classified as a fairy tale!

So what are his realistic options? He could obviously wait to sell because he feels he will eventually put the drive into building the practice gross income up. But even if he could muster the energy, he may still be fighting a losing battle, as far as practice equity is concerned; because the supply and demand trends in dentistry today favor a significant drop in overall dental practice equity values over the next decade. We are fast approaching a “buyer’s market” in which we will see far more sellers than buyers and market values falling (please read “The Diminishing Practice Value” article).

And without acquiring a practice for merger, could our 45-year-old really build his current practice up enough to make a difference anyway? Let’s see. If our 45-year-old dentist waits one more year to sell it would cost him $152,875 at age 65 ($250,000 invested at 10% for 19 years equals $1,528,975). This is about 30% of his current practice value just for procrastinating one year. That means he would have to increase his practice’s gross income by 30% next year just to break even. Can you realistically increase the gross income of your dental practice by 30% in just 12 short months? I once vowed to “never say never”… but I seriously doubt it!

Once a practice reaches its peak value it makes no financial sense not to sell… regardless of age. You can maintain a substantial current income for as long as you desire. You can work when you want to work and only see the patients you want to see. You can pick and choose the procedures you enjoy doing. You can accumulate significantly greater sums of money by retirement age by selling early. You can be in a position to retire at a much earlier age than those dentists who don’t sell early. There appears to be every reason to sell younger and, as far as we can see, no logical reason to put selling off!

And we did not even mention the inherent costs associated with the unknown… death, disability or extended illness. Either could destroy your practice value in a very short time! You owe it to yourself to explore your options. Call PARAGON today for a complimentary consultation. You will be very glad you did

 Paragon, Inc. All rights reserved. For more information on this or other PARAGON articles contact PARAGON at 1.866.898.1867 or via email info@paragon.us.com. Other articles are available for review on PARAGON’s website: www.paragon.us.com.