11 Steps to Evaluating a Dental Practice


Evaluating a dental practice for sale is a multi-step process. If steps are skipped, problems can arise before, during and after the transition. If this process is completed properly, however, the transition will be carried off in a professional and successful manner.

Step 1: The Initial Consultation

The initial consultation for a practice valuation should cover topics such as professional history and experience; professional goals and objectives; target dates; personal considerations; concept and approach; programs and services; scope of assignment; time frame; and fee schedule. This lays a solid foundation for a successful transition.

Step 2: Data Gathering

After the initial consultation, the data gathering phase begins. Professional practice and personality profiles will be generated, an analysis of your personal needs will be conducted, and financial statements will reviewed.

Step 3: Market Value Analysis and Options Assessment

At this stage in the game, the market value of the practice is assessed and various transition stages and options are explored. A few topics covered at this point include pre-sale, deferred pre-sale, sale walk away, equity partner(s) or associate(s), office sharing, and the possibility of a practice merger.

Step 4: Plan of Action

After all of the options have been considered, a plan of action is created that meets the individual’s needs and goals. During this stage, establishing pre-transition guidelines, setting up target dates, and exploring opportunities are the priorities.

Step 5: Locate and Review Match

At this point, the Practice Prospectus, personal goals and objectives, personality profiles, financial resources, and other factors will be reviewed to locate and review potential clinical matches. The goal of this specific step is securing an offer to purchase from a qualified match.

Step 6: Transition Plan Designed

A clinical practice is, in many ways, like a family. Making all employees aware of the transition plan is the top priority at this step. Time schedules will also be established, obligations and responsibilities will be reviewed, financial considerations will be addressed, and accountants and attorneys will be contracted to make the transition as smooth as possible.

Step 7: Putting Together the Agreements

Attorneys need to review the contracts, key issues in the transition need to be identified and addressed, a win-win solution needs to be established, and new options need to be identified for bringing about a mutually equitable resolution.

Step 8: Pre-Closing Reviews

Pre-closing interviews will be conducted with clients, attorneys, accountants, and banks. These are extremely important as a chance for any previously identified issues to be brought to the table and resolved.

Step 9: Transition Closing

Closing the transition requires three things to happen: contracts are completed, financial settlements are reached, and related documents are drafted and reviewed. Once the paperwork is done, the physical transition of the practice takes place.

Steps 10 & 11: Follow Up and Maintaining a Good Relationship

Follow-up is a key part of maintaining a good relationship. Letters should be drafted, referrals and introductions made, financial procedures reviewed, and results tracked. It’s vital that both parties hold up their ends of the agreement through meaningful feedback. After the transition is closed, effective communication is the key to successfully maintaining a good relationship between all parties. A successful transition should enhance both the seller’s and the buyer’s lives.

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