Preparing to Sell a Dental Practice: Eight Tips for a Smooth Practice Transition.
Selling a dental practice can be challenging for many. Consult an experienced dental broker before you sell your dental practice for professional insight and guidance during the transition process. Prepare for a smooth practice transition with these quick tips:
Confidentiality is Important when Preparing to Sell a Dental Practice.
Telling your staff, your friends, and your patients that you are considering retiring in two years will guarantee that you will have no practice left to sell in two years. Your patients will start looking for a new and younger dentist, and your staff will have their ear to the ground for their next job. There will be plenty of time for your retirement announcement after you have sold your practice and your check has been deposited in the bank. Make sure that your CPA, your significant other, and your children realize the importance of non-disclosure.
Maintain Marketing Efforts When Selling a Dental Practice
When selling a dental practice, it’s important to continue both internal and external marketing efforts, including your mailing lists and website presence. Ask your patients for referrals to continue driving business. Selling a dental practice is easier for dental offices that are thriving.
Consider Organizing Your Systems
Most dentists have the intention of getting their systems in order at their office but never find the time. Have your staff clean up the accounts receivable, the unscheduled treatment plans, the active patient list, and the recall system. Most computer programs will guide the staff through this process.
Review Your Profit and Loss Statement
If you lower the overhead of your practice closer to 50%, your practice is more profitable now and more attractive to a buyer. This also helps you save money for retirement. Print out a copy of your current profit and loss statement with percentages of income listed to the right of the actual expense. You should check the percentages of your dental supplies, lab, and staff compensation to make sure these expenses are not excessive.
Ensure Treatment Plans are Documented
Treatment plans should be either in the computer or in the chart in a format that includes the treatment required, the number of visits, and the recall schedule for maintenance.
Manage Your Personal Finances
- Calculate what you spend in a year. (Your yearly living expenses).
- Create a spreadsheet of your assets and liabilities.
- Pay off all debt (both personal and business debt).
- Meet with your ADS broker to calculate or estimate your practice value.
- If you own your building and plan to sell it in the future, get a commercial appraisal on your building.
- Determine if you have enough money to retire or if you will have to work in your office or elsewhere after the
sale of your practice.
You may need to focus on equipment and office updates as well to ensure that you get the maximum value for your practice.
Upgrade Necessary Equipment when Preparing to Sell a Dental Practice
You will not recover dollar for dollar the money you spend on equipment prior to the sale of your practice. Only purchase equipment that you have time to use prior to the sale. Before updating your equipment, determine the years until your transition. If you plan to continue to work for less than two years, do not buy large items or “go digital”. However, if you plan on practicing for three years or more, upgrading equipment will make your office more productive prior to the sale and may make your office more attractive to buyers. The upgrades will not appreciably
“add to the value” of your practice, but they will make your practice easier to sell.
If you’re considering selling a dental practice, it’s worthwhile to discard broken and older equipment to help make the office more attractive to buyers.
- Discard all broken equipment and instruments.
- Do a cosmetic update to your facility, but do not spend thinking you will recover your expenses. Cosmetic updates
- Thorough cleaning of office and storage rooms
- Painting the walls
- Replacing broken or tattered pictures and furniture if you are three or more years from the sale.
Contact your dental practice transition broker to help you determine which updates will provide the greatest return on investment. The sooner you consult with an experienced broker, the longer you’ll have to improve your practice and get a high valuation.