Proper transition planning is a complex endeavor that encompasses financial, legal, operational and emotional aspects. It takes a well-organized approach to achieve maximum success in each of these areas for all of the doctors involved. Most failures in this area are not the result of personality conflicts or unforeseeable events; the overwhelming majority of failures can ultimately be traced to a planning failure in one or more of these important areas. Not only will our transition planning services provide a pathway to success, they will help you by distinguishing your transition opportunity from all others in the marketplace.

At The McGill & Hill Group, our focus is on thorough, detailed planning. Our depth of experience and expertise is unmatched anywhere else in the dental profession. By bringing a team of professionals dedicated exclusively to the dental profession, we can address your requirements exclusively. Our no-commission, flat fee approach offers you savings that are often measured in tens of thousands of dollars. Beyond the fees, you are relieved of trying to be the “hub of the wheel” by piecing together information from various professionals. Instead, our fully integrated services make you Chairman of the Board. Partnering with our firm for your transition needs will provide you the following benefits:

• You will obtain the optimum outcome for each doctor involved.
  
• You will save significant expenses with our global, flat fee.
  
• Each doctor involved will be treated in a fair, even-handed and equitable manner.
  
• You will maximize your tax efficiency and benefits.
  
• You will be provided with a plan that is specific to your exact needs and requirements.
  
• You will have unlimited access without additional fees, to all of the advisors on your team, including legal services provided through McGill and Hassan, PA during the transition.
  
• Our team will work with you throughout the entire process, whether this is several months or several years.
  
• Excellence is a daily pursuit in our Group. We look forward to serving you.

About Your Advisor

Roger K. Hill, A.S.A. is an accredited senior appraiser (ASA) of the American Society of Appraisers, a member of the Institute of Business Appraisers, and a founder/charter member of the Practice Valuation Study Group. With over 24 years of experience in working with general dentists and specialists, Mr. Hill serves clients across the United States providing transition planning for practice sales, partnerships (buy-in/buy-out), practice mergers, associateships/compensation analysis, and financial forecasting (proforma). His work places particular emphasis on achieving comfortable, successful outcomes by using tax efficient structures that provide a financial structure that is both affordable for purchasers yet fair and equitable to sellers. His work also thoroughly examines income distribution formulae (allocation of profit) so that each doctor involved can comfortably achieve his or her goals.

What Is The Transition Process?

Our approach to addressing your individual transition plan is detailed and methodical, in order to ensure that your needs are met. Following is a brief overview:

Preliminary Practice Financial Analysis

After receiving the requested financial and operational information about your practice (an easy-to-follow list is provided for your use), a financial analyst is assigned to develop the information in a format that is supportive of the process. During this period, your analyst will periodically be in touch with you to ensure that a thorough understanding of your practice’s individual characteristics has been established as the foundation. This part of the process will also enable us to establish your practice’s true profitability, point out areas with potential for improvement, provide an overview of the procedure mix, and see the overall trends in the practice.

Due Diligence Visit

During the preliminary financial analysis, a date will be established for a due diligence visit. A due diligence visit is essentially diagnostic in nature but also provides an opportunity to have a face to face meeting about how the transition process will be employed in your practice. The essential steps in a due diligence visit are as follows:

Review of goals and objectives – As a foundation, the due diligence visit always begins with an opportunity to fully explore and understand your specific needs. The purpose of this is to make certain that the transition plan, when finished, will support your goals and objectives exactly.

Operational Information – It is important to develop a fund of information about the operational aspects of your practice both for valuation purposes and for looking at the practice through the perspective of a transition plan yet to be implemented.

Financial Module – This area involves two important steps. In the first step, we will review the preliminary financial analysis, procedure mix, normalized overhead, and historical growth rates. In the second step, we will discuss forecasted income, usually at two different levels. The first is for establishing the Fair Market Value, while the second is for cash flow projection purposes. Finally, before leaving the financial module, we will discuss anticipated capital and/or operational expenses.

Employment Contract Issues – In the event that your transition plan includes an associate leading to either the purchase of the entire practice or a fractional interest, it will be necessary to discuss and establish the contract specifications that will form the basis for an Employment Agreement. Sometimes, in the interest of expediency, the Employment Agreement is begun through a conference call prior to the due diligence visit. This discussion provides the information for McGill and Hassan, P.A. to prepare the Employment Agreement.

Process Description/Questions and Answers - This section is also a two-step procedure. In the first portion, we will explore the transition process, its critical issues, how tax efficiencies will be achieved, and provide an overview of the entire planning effort in order for you to gain a thorough understanding of the next steps. The second step of this section will provide you ample opportunity to ask any questions that might remain and make certain that all agendas have been explored.

Using the information from both the preliminary financial analysis as well as the due diligence visit, the Fair Market Value of the practice is established. Our valuation studies include a group of capitalized earnings approaches as well as guideline sales (market comparables) approaches. This ensures that the study employs a minimum of five to six separate approaches to value, thus ensuring greater accuracy. This opinion is then published in a report generally in the range of 50 to 60 pages.

Without question, the next step is generally the most critical in any transition planning. Without knowing the likely financial outcome, proceeding to the next step(s) is ill-advised. Our cash flow projection (proforma) provides a forecast for the next 10 years. There is a separate set of projections for each doctor involved, together with all of the necessary explanatory notes in order for you to under these projections. There are four objectives, critical to your success, which are addressed through the proforma.

After-Tax Cash Flow – This gives each doctor an estimate of the likely financial outcome for each of the next ten years after overhead, anticipated capital expenses, the cost of purchasing either the entire practice or a fractional interest, and estimated (personal) income taxes. Anything short of estimating your after-tax cash flow is incomplete.

Trigger Point – In the event that your transition plan involves the sale of a fractional interest, it is necessary to determine at what level of collections your associate can afford to start the buy-in. Beginning this too early or too late is disadvantageous.

Financial Structure – If there is a critical juncture to the planning process, this is it. This step involves determining a financial structure that is affordable for the purchaser while still being fair and equitable to the seller. This also includes making certain that the financial structure is as tax efficient and even-handed for both doctors as possible. Our proprietary software enables us to look simultaneously at several structures in order to select the best one possible for you.

Income Distribution Formulae – Once the financial structure has been established, it is necessary that any financial projections devise and illustrate the effect of a distribution formula if there will be more than one owner. A distribution formula is the protocol which allocates profits to the owner doctors. It is often helpful to provide you with the outcome under several different distribution formulae in order for you to make an informed decision. This gives you a perspective for decision making that is otherwise not available.

Client Review of Study and Proforma

Once the valuation study and cash flow projections (proforma) have been completed, they will be provided to you in sufficient copies for a review. There are two ways to review these before proceeding with legal documents. First, a conference call is established in which all of your questions and issues will be answered and addressed. This would include ultimately doing the same with any purchaser or associate candidates whom you may be contemplating including in your practice.

However, a number of our clients find it attractive and useful to conduct a review in our offices in Charlotte, North Carolina. (There is plenty of golf, shopping, and dining nearby!) We will be happy to conduct the review with you in a personal meeting. You may also wish to include your spouse and transition candidate. One of the distinct advantages of doing an in-office review is the ability to test alternative assumptions that might come up in our discussion as well as accessibility to the law firm of McGill & Hassan, P.A., should questions arise regarding legal documents.

Preliminary Legal Documents

After the financial review has been completed, the next appropriate step is for Blake Hassan, CPA, JD of the law firm of McGill & Hassan, P.A. to draft an Associate Employment Agreement and Letter of Intent, for either the purchase of a fractional interest or the entire practice where a transaction is anticipate at a future date, usually one or more years later. In some instances, the actual transaction is imminent, in which case the final documents will be drafted as described below.

Blake Hassan, CPA, JD will be glad to review these with you and answer any questions that you, your candidate, or any attorney working with him or her might have. Since our attorneys serve only the dental profession, you can rest assured that their advice and counsel is not only up to date but also specific to your needs as a dental professional.

Update FMV/Proforma

In those instances where the purchase of either a fractional interest or all of your practice will be delayed by one or more years, it is appropriate to update the value and the cash flow projections done earlier, but prior to the actual event. It is important to note that in updating the value, the purchaser will not be penalized for adding to the intangibles (goodwill) value of the practice in the interim. On the other hand, any changes in equipment, computers, leasehold improvements, receivables and debt reduction, will need to be taken into account in order to properly update the value. Once the updated value has been established, the cash flow projections (proforma) are also updated in order that they are consistent with current trends in your practice. Again, you will be provided multiple copies documenting the update.

Final Documentation

Just as you were provided copies of the update described above, Blake Hassan, CPA, JD will use the Letter of Intent that was drafted earlier together with the updated value/proforma to draft the final documents. The document set will include all legal documentation necessary to effect either the sale of a fractional interest or the entire practice, depending upon your specific circumstances. Once you have been provided the documentation, Blake Hassan, CPA, JD will be available to answer any questions you might have or include any necessary revisions. Additionally, Blake Hassan, CPA, JD will also be available to speak with an attorney employed by your candidate/purchaser.

Why the McGill & Hill Group?

Just as you have other doctors in your area, there are other firms providing similar services. However, we do not compete with them. Instead, we strive for excellence by, in effect, competing against ourselves each time we serve a client.

Below are some important reasons why choosing our firm to serve your needs is a good decision.

• The McGill & Hill Group has a depth of experience and expertise that is simply unmatched anywhere else in the industry. As noted before, Mr. Hill has more than 24 years of experience in transition planning. He works with Blake Hassan, CPA, JD who serves only the dental profession. Mr. Hassan provides cutting edge legal and tax advice while being easy to understand.
  
• You are not the “hub of a wheel.” For most doctors, pulling together and integrating pieces of a transition plan from various professionals is, at best, uncomfortable and oftentimes leads to failure. Since all of the professionals necessary to design and implement your transition plan are within our Group, the plan comes to you fully integrated. As a result, instead of being the hub of a wheel, you are Chairman of the Board.
  
• In almost all cases, our work for you is charged on a flat fee basis. This fee includes all transition planning and the legal services provided by Blake Hassan, CPA, JD of McGill & Hassan, P.A described above. This flat fee agreement also provides unlimited access to all of the transition team, without additional hourly charges. Usually, our fees will save tens of thousands of dollars compared to commission or hourly fee arrangements.

Whether your transition plan will take a few months or up to 3 or 4 years to implement, we will be there for you. Knowing this brings a sense of comfort and relief to all of our clients. We will walk through this with you as your partner.

Often times, our relationship with new clients begins with a phone call. We look forward to your call and serving you in the pursuit of excellence. To begin your transition plan please contact us at erica.flory@bmhgroup.com.