How Should a Dentist Plan Practice Succession?

Practice succession is the planned transfer of the practice to a successor, whether an associate, a partner, a family member or an outside buyer. Unlike a sudden sale, succession is a process with a timeline, and it usually includes the doctor's continued involvement during a transition period.

The ADA Health Policy Institute has documented a long-term shift in practice ownership: about 72.5 percent of U.S. dentists were private practice owners in 2023, down from 84.7 percent in 2005, and ownership is being delayed among younger dentists. For practice owners, that means the pool of traditional buyers is changing, and planning for the transition has become more deliberate.

Five years is a practical planning horizon for most transitions, and longer for a family succession. That window allows time to develop the successor, document systems, reduce owner dependence and make the practice attractive to a buyer or affordable for the next owner.

Pagac's dental case study shows how long the timeline can run: a specialty dentist planned a transition of the practice to the dentist's son while relocating the practice and acquiring the real estate for the new location. The relocation, the real estate purchase and the family succession were coordinated in one financial plan, which is the level of coordination a long-horizon succession requires.

The financial work includes a realistic valuation, a structure the successor can actually afford, and tax planning for both generations. A family transfer may use gifting or installment structures; an associate buy-in may use a gradual ownership path funded from practice earnings. Real estate ownership adds another layer, since the building may be held separately and sold or leased to the successor.

Retirement planning runs alongside the succession plan. The doctor's retirement income, the timing of Social Security and pension decisions, and the practice sale proceeds all need to line up with the transition date. The pieces are interdependent, which is why succession is best planned as one coordinated picture rather than a series of separate decisions.

A DSO sale is one possible exit, but it is not the only one, and it changes the succession question. In a DSO deal the doctor often continues practicing under employment terms, so the transition is to an organization rather than to an individual successor.

The right path depends on the doctor's goals: continuity for patients and staff, a specific successor, the sale price, or a combination. Modeling the options, including the tax and real estate consequences of each, is what turns succession from a hope into a plan.