One of the most important events in the life of a dentist is when he/she sells the dental practice. All too often, retirement is the only event that doctors prepare for. There are other events in a dentist’s life that may necessitate selling all or part of the practice. Preparations for these events are equally, if not more, important than a planned retirement. What happens when a dentist becomes disabled, dies, decides to bring in an associate, make a career change, or merge his/her practice with another dental office? Preparation for the sale of a dental practice should start the day the practice is established.
Is your practice ready to sell?
Instructions with regard to people and companies that you do business with:
- Preparation starts with writing a list of instructions to deal with the sale of your practice. This is particularly true in the event of death. The instructions should include the name of your attorney, your accountant, your financial planner, your dental consultant, your broker, your dental-supply house, your dental laboratory, and any other person or company that you deal with on a dayin, day-out basis.
- If you have not made preparations for the sale of your practice, start today. The time and effort you spend today could assure you that you will receive the best possible price for your practice in the future.
Instructions should be written defining the role of each individual. Copies of the instructions should be sent to the appropriate parties, with a signed and dated copy placed with your legal papers. Get all of the above-mentioned people together and review the role each is to play. These people not only can help in the event of death, but can be used as advisers when you are confronted with major decisions about your practice and the establishment of wealth.
A list of the things that need to be done to make the practice ready for a sale should include:
- Keeping up-to-date information on the practice that a buyer would need. This would require keeping good records that show charges, payments, adjustments, and the profit of the practice for at least the past three years.
- A list of staff members, date of hire, hours worked, salaries, benefits, and job descriptions.
- OSHA records and manual.
- A breakdown of procedures by ADA procedure code, showing the quantity and dollar amount of each procedure done by month for the past three years.
- A current copy of the building lease or information on the building if you own it.
- Your office or practice philosophy, an office policy and procedure manual.
- A list of equipment, date purchased, and amount paid at time of purchase.
- A breakdown of income and expenses for the past three years.
- A current count (done annually) of the number of active patients in the practice. (Active patients could be defined as patients who have been in the office at least once in the past 12, 18, or 24 months.)
- The number of new patients the practice sees monthly.
- Marketing that you are using to attract new patients. This can be broken down by internal and external marketing.
- Information on the geographic area in which the practice is located.
- If you have signed up for HMOs or PPOs, you should have copies of their contracts.
If you have not made preparations for the sale of your practice, start today. The time and effort you spend today could assure you that you will receive the best possible price for your practice in the future.
Tom Smeed is founder and president of Healthcare Practice Management, Inc., a dental broker, appraiser, and dental practice-management firm. He is one of the founding members of American Dental Sales, the largest group of dental brokers, appraisers, and consultants in the United States. For more information, contact Tom Smeed at (913) 6421988 or the ADS member in your area. See ADS Classified ads for names and phone numbers of other ADS members.