02 Jun My pension took a hit from the stock market. How can I afford to sell my practice?
“My pension fund was devastated in the recent stock market decline so I will need to continue practicing a while longer before I can sell my practice!”
We wish we had just ten bucks for every time we have heard this excuse in the past few years! We literally hear this from somewhere in the country almost everyday. But, the real question is… are these dentists being wise or are they missing out on what may be the greatest opportunity of a lifetime?
The wise investor finds financial opportunity in both the good times and the bad times! It really boils down to having a positive attitude, a realistic perspective and, most of all, a true and accurate understanding of their options.
The first thing you need to understand is that selling and retiring are two separate events in your life and do not have to go hand in hand. In fact, it is frequent that the seller of a dental practice does not retire as soon as you sell. That is the basis of the PARAGON Presale Program. But, unfortunately, selling and continuing to practice for as long as the seller desires is an option that so many doctors simply do not know exists. Your PARAGON consultant will be glad to share the details of the PARAGON Presale Program with you, but for now let’s just accept the fact that selling now and retiring later can easily be done.
So, knowing that you can continue to practice dentistry in your practice after it is sold, is a decision to wait to sell your practice because the stock market is down based on profitable logic or costly emotion? Once you know the facts, I think you will agree it is based solely on emotion!
- There are more seller-aged dentists in the profession today than at any other time in the history. This is due to two primary factors: a tremendous increase in dental school enrollment in the early 70’s and 80’s due to the “baby boomer” phenomena.
- Even though there are far more seller-aged dentists today, there are far less dentists selling today than just two years ago. This is due almost solely from the uncertainty of our economy and the stock market declines.
- The fair market value of a dental practice is based on supply and demand. Although it was anticipated that market values would be falling at this time due to a large influx of new dentists in the 70’s and 80’s and these “baby boomers” now reaching seller age, the reduction of selling dentists caused by the stock market decline has actually resulted in practice values reaching an all time high. It is simple economics! If you have the only practice for sale in an area where 5 buyers wish to own, your practice is worth a tremendous premium!
- Certain prime metropolitan areas and select rural markets have a current market mix whereby buyers out number sellers by as much as 10 to 1.
- The current market mix of sellers to buyers is artificial, based solely on emotional thoughts and impossible to predict economic factors. This tend will rapidly turn around when our economy begins to recover. The demographics of the dental profession reveal a ratio of 4.7 traditional seller-aged dentists to 1 traditional buyer-aged dentist. Compare this to PARAGON’s current national ratio of 5.9 buyers to 1 seller, and it is clear that this backwards situation is obviously temporary, not logical and will not last for long. Practice market values will begin to fall. It is inevitable!
Aside from your practice being at peak market value TODAY, there is also another powerful economic factor working in your favor. The old adage of “buy low and sell high” has never been more applicable! TODAY you have the ability to receive a premium price for your practice and invest those proceeds when the market is at its lowest point in recent years. Aren’t you supposed to buy when stock prices are low?
However, if you wait until the market rebounds to sell your practice, you are virtually guaranteed to have many more sellers competing for fewer buyers. This will force practice values down. This will result in the ability to invest far less practice sale proceeds in a much higher stock market. Please explain to us what is logical about that financial plan?
Call PARAGON today for a complimentary consultation. No obligation… just a very worthwhile education!