Navigating Non-Compete Agreements in Dental Practice Transitions
2/20/20241 min read
When you’re in the process of selling a dental practice, it’s crucial to understand the implications of non-compete agreements, especially if you plan to continue practicing dentistry. These agreements are designed to protect the buyer from direct competition with the seller within a certain geographical area for a specified period.
Geographical Scope
Rural Areas: Non-compete distances can extend up to 10 miles due to the lower density of dental practices.
Urban Areas: The competitive landscape in cities may necessitate shorter non-compete distances, sometimes as little as 3 miles. On average, a 5-mile radius is common.
Duration of the Agreement The length of time the non-compete agreement is in effect is also critical. We generally advise dentists to agree to non-compete terms lasting no more than 3 years. This duration is considered sufficient to establish the buyer’s practice without unduly restricting the seller’s future opportunities.
Mutual Understanding Both the seller and the buyer must acknowledge the importance of the non-compete agreement. No buyer wants to invest in a practice only to find the seller opening a new office just down the road. While contracts often include a non-solicitation clause to prevent the seller from actively pursuing former patients, this doesn’t stop patients from seeking out their previous dentist on their own.
Financial Considerations If you’re financing the purchase, banks will typically require a minimum non-compete distance and duration to secure their investment in the deal.
Empathy Leads to Fairness At PeerDent Solutions, we believe that empathy and good faith are the cornerstones of a fair and swift non-compete agreement. It’s about finding a balance that respects both parties’ interests and ensures a smooth transition for the practice, the patients, and the dental community.
Remember, non-compete agreements are a standard part of dental practice transitions, and navigating them with care is essential for a successful change of ownership. Let us help you understand and negotiate these agreements to protect your interests and support your professional journey.