You’ve spent your entire career working tirelessly to build a dental practice you’re proud of. And now, you feel it’s time to hang up your hat. But how can you ensure you sell your business to the right buyer who will effectively carry on your legacy?
In this article, we’ll share everything you need to know about selling a dental practice, so you’re well-prepared for a successful sale when the time comes to bid farewell.
You can’t sell on a whim
The process of putting your business up for sale is much more complicated than selling your house. It requires hard work and a tailored strategy to ensure the sale is completed successfully.
While it can be a lengthy endeavor, here’s our “selling a dental practice checklist” to help you accelerate the process.
Do your due diligence
You can’t ace a test if you don’t do your homework. Well, the same goes for selling your dental business. Sufficient preparation is essential to making sure you have a streamlined selling process. This includes implementing a proper exit strategy and assessing the current financial state of your practice.
Don’t make an Irish Goodbye
This isn’t a Christmas party with your annoying aunt where you can sneak out the garage door while she grabs another drink. So, if you’re thinking, “I’ll just sell my dental practice without telling anyone,” it’s a surefire way to damage your reputation.
Thus, make sure you take the time to create an exit plan that appropriately notifies your patients and staff about your transition. Likewise, any stakeholders critical to your business should be made aware in advance of your plan to sell.
Check your finances
Buying and selling dental practices are intricate transactions that require a great amount of financial assessment in the pre-selling stages.
So, you must analyze the current state of your finances before handing over your business to someone else. This includes organizing your cash flow documents, the history of your gross revenue, profit and loss statements and accounts receivable. All of this information will be of great value to a potential buyer and help aid in expediting the sale.
Know your value
Before you put your dental company up for sale, you need to know what you’re worth. To determine your practice’s worth, make sure you conduct a practice valuation or a dental practice appraisal.
You’ll work with a valuator or an appraiser who specializes in the dental industry and can give you an accurate estimate of your practice’s value.
Goodwill is your best asset
Your business’s goodwill is an intangible asset that accounts for the majority of your practice’s value. Thus, it should never be undersold. Goodwill includes your practice’s reputation and your reputation as a care provider. It can also include your company’s brand awareness and intellectual property.
These assets contribute to your total practice value, and in turn, your buyer will profit from these intangible assets. So, when you appraise your practice’s market value, make sure you take the value of your business’s goodwill into account.
Tell your story
When it comes time to pass the baton, you need to communicate your practice and patient philosophies to prospective buyers. When a buyer understands your core characteristics and visions, you’ll feel reassured that they’ll be able to successfully grow your operations. So, if you want to know how to sell a dental practice without compromising your legacy, you need to tell your story.
Optimize your online presence
The best time to sell a dental practice is once you’ve achieved a notable presence online. Because we’re living in a digital era, it’s crucial for healthcare practices to leverage the marketing power of online communities. Whether that’s through social media channels or your company’s website, optimizing your page can help you attract and retain patients to showcase the value of your practice before you move to sell.
How much do dental practices sell for?
The amount of money you’re able to sell your business for will depend on current market conditions and your practice’s value. Other variables that will affect the final selling price are your practice’s location and current financial condition. Moreover, if you sell your physical office space along with your dental practice, you’ll have to raise your selling price.
Putting your office up for sale with your practice
Selling your property along with your practice will influence the amount you sell for. But, you can only choose to sell your physical office if you own it.
If you own your office space
Let’s say I’m a dentist who’s ready for retirement, and I want to know how to sell my dental practice with my office space. Since I’m the current owner, I have two choices: I can either include the property in the total sale price or lease my property to a new owner.
Including the property in your sale will boost the final selling price, while leasing will provide you with a steady source of income for a set period.
What if you don’t own your office space?
If you’re not the owner of your office property, you’ll need to get your buyer in touch with your landlord. Then, your buyer will have to decide whether they want to negotiate new lease terms with the landlord or draft a new lease altogether.
What’s the cost of selling a dental practice?
When you sell your practice, you’ll incur some expenses. The costs you may be responsible to pay include legal fees, appraisal costs, and real estate fees if you own the office space. You also may need to pay for business consulting services, for example, if you choose to hire a financial advisor.
Work with a financial advisor
Hiring a trusted advisor you can count on for financial advice will ensure the final sale of your practice works in your best interest. A financial advisor can help you attract the right buyers and expedite the selling process.
How long does it take to sell a dental practice?
The answer to this question depends on multiple variables related to your sale, such as the location, value, size, and market. Global events, especially unprecedented ones like the Covid pandemic, may influence the timeframe for selling as well since they can drastically shift the supply and demand balance.
Why selling a dental practice to corporate buyers can be a smart move
You may want to consider expanding your target buyers beyond other dental practitioners. In fact, many dentists argue that the best way to sell a dental practice is to target corporate buyers, like a DMO.
What’s a DMO?
DMO stands for Dental Management Organization. It’s a group of dental practices that are managed under the same corporate umbrella; thus, the dental practices all share the same name. DMOs employ advisors who have excellent administrative skills and typically focus on a particular regional market.
Who are DMOs owned by?
Every DMO is owned by a combination of investors, venture capitalists, dentists who have entrepreneurial spirits, and in certain cases, business advisors.
How you can benefit from selling your practice to a DMO
Selling your business to a DMO comes with certain advantages. This type of corporate group is very well-managed and has access to critical resources that support the scaling of dental practices. So this means that if you sell your practice to a DMO, you’ll receive benefits such as operational and management support. For example, your staff will get training and continuing education to ensure they remain current on medical laws and dental innovations.
Thus, selling to a DMO confirms that your practice will be left in great hands. But talk with your financial advisor and any other consultants you hire before you pull the trigger. Every dental office is unique, and you want to make sure a corporate buyer will be the best fit for your practice.
Your ultimate guide to selling a dental practice
Follow this guide to sell your practice with confidence while streamlining the process. With patience and effort, you can ensure you get the best deal with a buyer who will continue your core philosophies.