Many doctors approaching retirement have decided to delay plans of selling their practice until the economy recovers. As we begin to see signs of economic stability, now might be an excellent time to prepare for a transition and take the first step to sell your dental practice. If you anticipate a dental practice sale in the next five years, we have provided some suggestions on how you can prepare your practice so that it is attractive to buyers. These recommendations will also aid you in obtaining top dollar on the sales price.
- Meet with your financial advisor. Have an advisor help you determine whether you are financially able to retire. He or she may wish to draw up a financial plan to help you assess the risks involved and prepare for retirement.
- Review the tax implications of a sale with your accountant. An accountant will help you determine how to carefully allocate goodwill between yourself and the practice and explain the extent of goodwill you will retain after the sale.
- Get a comprehensive practice valuation. Reputable brokers can provide a formal, comprehensive practice valuation. This is an essential step for determining how to market and price your practice. Be sure that the broker is sensitive to the various methods of performing a valuation, and provides you a thorough explanation of how he or she performs the valuation.
- Keep working. Do not slow your pace or stop accepting new patients. Potential buyers want to see that the practice is thriving.
- Draft an Employment Agreement. Make sure that you have a non-solicitation clause for patients and staff. Ask your attorney to draft a covenant if you do not already have one in effect.
- Evaluate your facility. While it may not be wise to make significant investments in new equipment, it is a good idea to perform any needed cosmetic updates before placing your practice on the market.
- Collect any outstanding past due accounts. Try to collect any accounts that are 90 days past due. Uncollected payments will adversely reflect your negotiations with potential buyers.
- Increase your fees. If you fall below the average fee percentile for your area, increase your fees. This can potentially add value to your practice.
- Work with an attorney with dental experience. Your broker can refer you to attorneys who have specialized experience and understand the unique challenges facing the industry.
- Give yourself time. It is easy to set unrealistic expectations. Allow your broker enough time to responsibly conduct the transition. Your financial security and long-term satisfaction are more important than rushing through the transition.
These preliminary steps will place you upon the right path to sell your practice. It is vitally important not to rush into the transition, so take the time now to avoid complications later. Remember to consult an experienced dental practice transition specialist early in the transition process.
Want to learn more about how to sell a dental practice or an orthodontic practice? See our seller’s steps.