Your editorial in March JADA relating to future value of dental practices ("Ready or Not") was very misleading and could cause a great deal of unnecessary consternation among your colleagues.
As founder of the oldest and largest dental practice brokerage in the United States, it is our experience that dental practices usually sell for 70 percent to 80 percent of annual gross revenues, not the 60 percent you quoted from an unnamed practice broker.
A dental practice with an annual gross of $500,000 would sell for an average price of $375,000, not the $300,000 stated in your editorial. If this dentist was given appropriate advice on when and how to sell this practice, then 100 percent of these sales proceeds could be invested in the doctor’s pension plan and there would be no taxes needed to be paid on this sale.
That means there would be $337,500 available for investment in a retirement plan, which is quite a difference from the $190,000 quoted in your editorial. I feel sorry for all the dentists who have followed the advice of this broker if this is typical of the advice they have received from him or her.
If the doctor sold this practice early enough in his or her career (say 15 years before retiring), then this money would grow to four times its present value, or $1.35 million at the time of retirement. Add this to their present savings and it should prove to be more than adequate to allow all your colleagues to enjoy their retirement years instead of having to work until they die.
Your editorial implies that practice value plays little or no role in a doctor’s retirement plans, but it should. All dentists could retire at age 59
if they would capitalize on their practice value early enough and then use those proceeds to fund their retirement plans.
I feel that your editorial will cause many of them to give up hope and that is a shame. I hope you will allow this letter to be printed in your next issue to set the record straight. Your colleagues deserve it.
