The DSO (Dental Service Organization) industry is experiencing rapid growth and success, but there are emerging undercurrents that pose potential threats to this boom. After selling their practices, dentists face the challenge of managing their proceeds and preserving their equity. This transition requires careful planning and decision-making to replace the income from the practice with investment income. Safeguarding capital from market volatility and potential crashes becomes crucial.
One concern is the possibility of entering a new “lost decade” era in the stock market, similar to the stagflation period of the 1970s. Economists and policymakers today are grappling with inflation, credit tightening, and a contracting economy, reminiscent of the challenges faced in the 1970s. During that decade, stock market investors experienced minimal gains, and when adjusted for inflation, suffered a significant loss. Dentists who have sold their practices need to consider the impact of such market conditions on their financial security.
Furthermore, the stock market is currently overvalued, reminiscent of the dot-com crash. The growth experienced in the past two decades has come at the cost of fundamental issues like massive stimulus, bailouts, and inflation. This artificial sense of prosperity and security may lead to a major correction in the future. Dentists must be prepared for severe market downturns like the one experienced in 2006-2009, which took years to recover from. Taking control of their financial destiny and reducing exposure to risk is essential.
After selling their practice, dentists become targets for financial advisors and asset managers offering various investment products. It is important for dentists to exercise caution and engage in self-education to make informed decisions. They must prioritize their own interests and develop a long-term investment plan that aligns with their financial goals.
Aside from financial considerations, selling a practice can also have a significant impact on dentists’ personal identity and sense of purpose. Many dentists have dedicated their lives to building their businesses and may struggle with finding their next passion or interest. It is essential to explore new opportunities for impact, meaning, and legacy in areas such as family, community, passion projects, philanthropy, and personal pursuits. Selling a practice is not just a transaction but a transformational event that opens doors to new horizons and possibilities.