I’ve spent a lot of time telling you how to prepare for joining a DSO: optimizing your practice, increasing EBITDA, finding the right broker, asking the right questions, and bringing the right demands to the table. But what happens after you join?
If you’ve done your homework and entered negotiations with a surefire winner, it’s likely that you’re going to leave negotiations with something else entirely—a whole lotta money. While that is a great problem to have, getting a large payout like that can turn into a problem, quickly.
Find a fantastic CPA before the sale
The right accountant will be a huge help as you prepare to sell your practice to a DSO. I like to say there are three types of accountants:
- Bean counter: This one is a competent accountant and that’s it. They operate solely as a person you can send your P&L statements to, and they’ll let you know what you owe—nothing more, nothing less.
- Reactive: This accountant is helpful when it’s too late. They inform you about issues they discover during tax filing and provide you with vague information about how to manage your finances next year.
- Proactive: This CPA is an ally who helps you all year long. They actively look for ways to support you by reviewing new and existing tax laws to find safe, legal deductions and credits that save you money.
You can probably guess which accountant is going to be most helpful as you prepare for a sale. Not only will a proactive CPA look at ways to mitigate your tax burden after the payout, they’ll also be an invaluable asset as you work on your practice valuation and increasing EBITDA.
You’ve worked hard to earn the generational wealth that a DSO sale will provide. Don’t let Uncle Sam get more than his fair share! The right CPA will have your back, helping you legally and ethically keep more of your own money.
Work with a top-notch wealth advisor
Steve Jobs once said, “Great things in business are never done by one person. They are done by a team of people.” And he’s right! Depending on your sale arrangement and life plans, there’s a good chance you won’t have the time you need to manage your wealth (or the expertise). Just like you wouldn’t recommend a patient perform their own root canal, you likely don’t have the training or experience to manage your money. That’s OK; it just means you need to build a team of pros to do it for you.
A wealth advisor can help you plan for diversification, tax mitigation, investment management, estate planning, insurance, and more. This is their zone of genius, and they can help you explore possibilities you may never have thought of. I suggest working with a fiduciary—a professional who has pledged, similar to the Hippocratic Oath, to work in the best interests of their clients.
Another option is to work with a wealth advisor who can create a “family office” for you. While typically used by the ultrarich (think $100-plus million), a wealth advisor can create a similar situation for you, managing a team of accountants, attorneys, investment managers, and insurance agents to take short- and long-term money management off your plate.
Stay engaged and aware
Think of your financial support team as a bicycle wheel. You're in the middle, and all around you are the professionals you hire to take care of your taxes, legal needs, insurance, and investments. The only problem is, sometimes your wealth wheel can become a financial flat tire. That’s why—no matter who you choose to work with—it’s vital to regularly take stock of the people on your wealth wheel and how they contribute to your overall financial well-being.
You’ve spent years of your life preparing for this moment. I can’t wait for you to start enjoying the fruits of your labors. With this final push of preparation to keep your hard-earned wealth safe and growing, you can make the most of your life, focusing on the people, activities, and pursuits that you love most. Here’s to your success!
Editor's note: This article appeared in the May 2024 print edition of Dental Economics magazine. Dentists in North America are eligible for a complimentary print subscription. Sign up here.
Gary Kadi, founder of NextLevel Practice, is on a mission to help dentists beat the odds. While most dentists now don’t retire until age 69, and 96% of them aren’t financially free, Gary has developed the strategies and methods to empower dentists to retire on their terms. The more than 6,000 practices he’s worked with generate over $1 billion in combined collections. Gary has helped them discover true freedom—becoming time-free, debt-free, and frustration-free.
