The first time David Phelps sold his dental practice, he ended up in a legal battle that cost him more than $100,000.
Phelps eventually got his practice back and was determined to sell it the right the second time.
David Phelps started his dental practice in 1986 and built it for 20 years before his daughter was diagnosed with leukemia. Fighting for his child’s life, Phelps decided to sell his practice in a hurry.
He agreed to provide financing to the new owner to buy the practice, which ended up being a decision he would come to regret.
About David Phelps
David Phelps began investing in real estate in 1980 while attending Baylor College of Dentistry in Dallas. His first joint venture partner was his father, who invested with David in the first rental property David managed. After graduating in 1983, David – who also had a dental practice – began a steady and continuous progression of real estate education and investment. His goal was to create multiple streams of income that would provide for his family, for an emergency, for college tuition and for retirement.
In 2004, David’s daughter, Jenna, then 12, was diagnosed with end-stage liver failure, the result of years of chemotherapy and drug therapy to treat leukemia and epileptic seizures. Jenna was fortunate to receive a liver transplant in time to save her life, but the recovery period was long and arduous. During this time David made the decision to become a true business entrepreneur, transforming his dental practice to enable him to spend more time with Jenna, whether she was sick or well.
As a result of his new-found freedom, David began practicing dentistry part time and subsequently stopped being the “provider” of dental treatment. He ran his practice remotely for another six years before selling to one of the associate dentists.
David’s new book Breaking the Chains, soon to be published, provides owners of professional practices and other small businesses a well-defined blueprint with which to create freedom and options within the scope of their businesses and personal lifestyles.
Some Highlights of the Show
3:15 – David discusses giving other practitioners a pathway to ownership
4:40 – David talks about how much equity he’d be willing to give up for the right partners
5:55 – The life events that led David to want to sell
9:30 – Finding an associate
10:30 – How do you value a practice?
11:52 – David discusses how the sale was structured
13:30 – Determining the interest rate
15:07 – What happens in the case of a default?
16:35 – David discusses the litigation process … never a pretty situation
18:39 – The bad news: revenues 50% down, goodwill gone, reputation tarnished…
19:20 – David’s decision to rebuild the practice with new associates as potential buyers
21:00 – Selling the second time around – a bad story gone good
23:07 – David talks about freedom and the surprises
24:45 – John asks David if he allowed himself a prize after the sale…
26:10 – John asks David if he’s up to something new…
27:00 – David discusses his coaching practice and the “freedom blueprint” for professional practice owners.
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