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A Termination Clause
– When you request consent to transfer
your lease to a purchaser, the landlord has the option to reject your
request and terminate the lease instead, which seriously restricts your
ability to sell the practice.
A Renewal Clause
– At the time of renewal, this option simply states
that the rent amount will be “as mutually agreed by landlord and
tenant,” without a mechanism to resolve the rental amount if the
parties cannot agree.
Mr. Rosenthal said your goal is to have these clauses deleted from the
lease when you renew. “Remember you have some leverage with your
landlord,” he explained. “Dentists are AAA tenants, so they won’t want
to lose you. If your landlord rejects your initial requests, it may be worth
offering to pay a higher monthly rent in exchange for an agreement to
delete these various problem clauses.”
Investing Your Proceeds
After you sell your practice, how do you invest the cash so that you
can enjoy the fruits of your labour? According to Ron Haik (
➌
), Vice-
President, Investment Advisory Services at CDSPI, you need a sound
plan that doesn’t take unnecessary risks.
He cited an example of a dentist who, in 2008, was quite well off at the
age of 69. He decided to stay almost completely invested in equities
and lost a substantial amount that he didn’t really need to put at
risk given his net worth. He told of another prosperous dentist who
invested in an ill-advised scheme that cost him everything he had
worked for his entire life.
“At this stage of your life, capital preservation should be the primary
goal, and modest growth a secondary goal,” said Mr. Haik. Another
challenge is multiple competing priorities. “You can’t have it all now
and
in the future,” he said. “You have to make choices and for a lot of people
that’s pretty tough.”
Speakers at the forum were clear that if you are planning to sell your
business, you need to think well ahead to prepare properly. Mr.
Rosenthal provided this sound advice for dentists in transition: “The
main thing I want you to come away with is that you need to surround
yourself with experts. Selling your practice is a critical life event and
professionals will serve you well.”
a
Article by Sandy Kovack
Mr. Kovack is a staff writer with CDSPI.
If you would like to be contacted to arrange for a
no-cost review of your insurance and/or investment
portfolio by a licensed, non-commissioned professional
from CDSPI Advisory Services Inc., send an email to
review@cdspi.com .Please indicate which type of
review (or both) you would like to receive.
Restrictions may apply to advisory services in certain
jurisdictions.
CDSPIprovidestheCanadianDentists’InsuranceProgramand
theCanadianDentists’InvestmentProgramasmemberbenefitsofCDA
andotherparticipatingprovincialandterritorialdentalassociations
.
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Volume 1 Issue 7
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