Do I Have to Stay On After Selling My Practice?
The answer depends on your buyer. If you're selling to another individual provider, you can typically walk away at closing. However, if you're selling to a private equity group, DSO, or MSO, expect to stay involved - in our experience handling over 100 practice sales, walk-away deals with groups are extremely rare.
Understanding Your Options
First, let's clarify some terminology:
- DSO (Dental Service Organization), MSO (Management Service Organization), and PE (Private Equity) are often used interchangeably to describe group buyers
- A "walk-away deal" means you receive payment and have no further obligations to the practice
- The standard PE partnership expects you to stay for about 5 years post-sale
Why Do Groups Want You to Stay?
Groups see you as the key to your practice's success. Your presence maintains continuity for your patient base, staff relationships, and practice culture. They're investing in you as much as your practice - and want you to stay long enough for them to establish new leadership and operations.
Your Options Based on Practice Size
Your practice revenue largely determines your potential buyer pool:
- Practices earning $750K-$1.5M annually can typically sell to another provider with a clean exit
- Practices over $1.5M usually attract group buyers who will expect you to stay involved
The Trade-offs of Pursuing a Walk-Away Deal
Potential Downsides:
- Fewer potential buyers if you require an immediate exit
- Possibly lower valuation to account for transition risk
- May miss opportunities with groups that could be great long-term partners
Key Benefits:
- Clean break to pursue other opportunities or retirement
- Immediate liquidity
- Freedom to explore other ventures
- Option for a doctor-to-doctor transition if preferred
Making a Walk-Away Deal Work
If you're committed to a shorter transition period, consider these strategies:
- Build a strong associate team that drives significant production
- Be flexible on a shorter transition period (6-12 months) versus an immediate exit
- Ensure your technology and systems are up-to-date to smooth the transition
- Consider staying available for consultation even after your clinical duties end
A Recent Success Story
We recently helped a husband-and-wife team negotiate a modified walk-away deal with a DSO, despite their practice's size typically requiring a longer commitment. By being flexible on a brief transition period and helping with integration, they secured their desired exit while still accessing the higher valuations that group buyers can offer.
Making Your Decision
Whether you can walk away immediately depends on your practice size, buyer type, and willingness to be flexible on transition terms. The key is finding the right balance between maximizing value and achieving your personal goals.
Ready to explore your options? Contact Thomas Allen at ta@practicetransitionsgroup.com to discuss your specific situation.
