Practice Transition vs. Practice Sale: What’s the Difference?

By Bob Septak, MBA
UPBA President & Broker

While both terms involve a change in ownership, the key difference often lies in the timeline and the seller’s continued involvement.

With a traditional Practice Sale, there’s still a “transition period,” but it’s typically shorter—anywhere from three months to a year-and-a-half. Some periodontists lean towards a longer “transition” because they’re not quite ready to retire, want help growing the practice, or believe it’s the best way to smoothly integrate a new owner.

The Crucial Practice Size Factor

However, a crucial factor for a successful transition is that the practice must be large enough to support two practitioners. For example, a practice collecting $500,000 – $700,000 per year is unlikely to generate enough income for two periodontists without significant growth. Finding an associate willing to take a pay cut for a less immediate payout is often challenging when they have other, more lucrative options.

Key Characteristics: Practice Transition

A Practice Transition typically involves a longer, multi-year process where the associate eventually buys the practice from the owner.

• Practice Size: Must be large enough to comfortably support two practitioners.

• Associate’s Comfort: The incoming associate needs to be comfortable with a longer-term transition rather than an immediate, direct purchase.

• Ownership: The seller typically maintains ownership, likely controlling ownership, at least initially.

• Payment: The owner may receive payments over an extended period and may even finance a portion of the sale.

• Seller’s Role: The owner stays on and continues to work for a period of years, gradually transitioning the practice to the new associate.

• Referral Confidence: This extended period allows more time to ensure referring dentists are comfortable with the new associate’s work and continue to refer patients.

Key Characteristics: Practice Sale

A Practice Sale is a more traditional transaction where ownership is transferred immediately or very quickly.

• Control & Ownership: The seller typically relinquishes immediate control and ownership of the practice.

• Payment: The owner usually receives 100% of the payment for their practice upfront.

• Seller’s Role: The owner generally needs to stay on for a shorter period, usually 6 months to a year-and-a-half, to ensure a smooth handover.

• Referral Confidence: It’s still crucial to ensure referrers are comfortable with the new associate’s work and continue their referrals.

• Extended Stay: If the buyer agrees, the owner may be able to stay and work longer than the typical transition period.