How to Optimize the Valuation of Your Practice With a Managed Joint Venture
When you want to maximize the value of your practice with your associates (a.k.a. employees) and create financial freedom, you need to make sure that the interests of all the people involved are in alignment.
A highly effective way to do this is by creating a Managed Joint Venture, or MJV for short.
A Joint Venture is a commercial enterprise undertaken jointly by two or more parties which otherwise retain their distinct identities.
For example, when the dentist who owns the practice and a dentist who’s working under them form a partnership to help the older dentist transition out of the practice while the younger one transitions in, they both become Members in the same Joint Venture.
With a Managed Joint Venture, the Members work together with a JV Manager for mutual benefit. Your Manager helps you to navigate the logistics and legalities of the MJV, and to peacefully settle any disputes that arise.
The Manager also helps you generate short-term income together while you collaborate and evaluate options for a long-term formal business relationship, which might include a partnership, corporation, or Limited Liability Company (LLC).
Why is it better to have partners than employees?
If you’re an older dentist who’s ready to start transitioning out, and the junior dentist in your office is an employee whose pay depends exclusively on their salary and who isn’t affected by the overall profitability of the practice, their interests might not be in alignment with yours.
If collections decline, the employee will still receive a salary at your expense. When your profits decline, the valuation and sales price of your practice will decline as well, and you may find yourself unable to exit your practice when you had planned to.
And if your employees don’t benefit from the success of the practice, they aren’t motivated to go the extra mile to increase collections and profits.
But when they’re an MJV partner whose interests are aligned with yours, you work together to design and execute your transition plan, increase the value of your practice, and create financial freedom for everyone involved, and you get better results in less time.
The Un-DSO creates mutually profitable JV partnerships between senior dentists and their associates.
A Partnership is a legal and formal form of business operation between two or more individuals who share management and profits.
In an MJV partnership created through the Un-DSO, the interests of the senior dentist who’s transitioning out need to be carefully aligned with the associate who’s transitioning into ownership.
When a senior dentist is exiting their practice with the help of the younger dentist who is transitioning in, both dentists are joint venture partners with one common goal: maximizing the valuation of the practice and the income of both partners, so they can each achieve financial freedom.
If collections increase as a result of their work with the Un-DSO, the senior partner gets to exit the practice with significantly more money than they would have gotten on their own, and the younger dentist transitions into ownership of a more successful practice.
Both Members are motivated to maximize the practice’s profits and valuation, and they both benefit as they work together to generate more income and grow the practice.
How you transition out is your choice.
Unlike a typical Dental Support Organization (DSO), the Un-DSO not only maximizes the profits of both the seller and the buyer, but it also helps you design a transition path that’s driven by your lifestyle and personal values first and practice profitability second.
You can hire more associates and work less; you can have multiple locations in areas that you prefer to vacation in; you can retire on the profits from selling your business and real estate, or you can increase those profits even further by investing in a dentist-centric Hedge Fund that is managed to provide you with a return of 15% annually and double your investment every five years*.
With the Un-DSO, your options are limitless!
If you’re ready to design and execute the transition plan that’s right for you, our Un-DSO transition and financial freedom experts will be happy to help you. Just click the button below to access our scheduler and book your free consultation.
Copyright © 2019 Liberty Group
*All numbers are provided for illustration purposes only. The Fund targets a 15% return, but there is no guarantee of any return. Before investing in the Fund or in any other investment vehicle, you are encouraged to collaborate with your financial planner, accountant and lawyer to determine whether the Fund would be a good investment for you.