Preparing to sell your dental office? Follow our 10 steps to ensure a successful Dental Practice Sale.
1. Prepare for the Transition to a New Owner & New Management
When you make the decision to sell, start to prepare your practice for the new owner. Start putting things in order so the dental practice runs smoothly and “on its own” without total dependence on your management. Maintain the current patient schedule and production levels even through an open escrow. The dental practice should not, especially now, depend solely on you. This will make your dental practice more attractive to prospective buyers and make the transition to the new owner easier for both of you.
2. Establish a realistic price for your practice
The marketplace will ultimately determine the selling price; you need to know the market value or worth of your practice. As practice are all unique and have varying characteristics such as location, size and type of equipment. Dental Practices are valued within a wide range 50% to 85% (sometimes more) of annual collections. Look to your experienced First Choice Practice Broker to make an appropriate appraisal getting the best value out of your office.
3. Accept the Financing Facts
You may need to finance part of the sale of your practice, since banks are traditionally very selective about loans for the purchase of most practices. Even SBA lenders prefer to see some seller financing as a part of the deal. Seller financing helps close the deal and seller financed practices generally sell for higher prices. Take a look at our list of preferred lenders!
4. Update & Clean Up Your Financials
Make sure the financials for your practice are accurate, detailed, and up-to-date. Questionable financials or unclear financial information can be a deal killer. Present yourself well “on paper,” look at your financials from the perspective of your buyer, rethink all those “perks” and hidden assets and make sure the financials are easy to understand and clean. Also remember that buyers won’t pay for what you can’t reliably prove. A good buyer won’t be looking at just your practice; they will look at a number of practices and buy the best one in their price range.
5. Look at Your Practice from a Buyers Perspective
You have worked hard to build your practice and naturally you are proud of your accomplishment; but you must be realistic about the practice’ deficiencies and correct or improve what you can. Put yourself in a prospective buyer’s position the next time you go to your place of practice; pretend you are a buyer looking at it for the first time. How impressed are you? With this in mind make the necessary improvements.
6. Time for “Spring Cleaning”
Remove unused and obsolete dental equipment and inventory. Buyers will not want to pay for it and they may worry that it is getting added to the selling price if they see it lying around. This is a good time to see what else needs to be cleaned up or just removed to make the best possible impression. Good dental practice buyers won’t be looking at just your practice, they will be looking at several.
Just because you are selling, now is not the time to let the practice slip. It’s important that prospective buyers see your practice at its best: bustling, and showing no signs of neglect. Here are a few areas to focus on
• Keep normal operating hours and stay involved in the practice. There is a tendency for sellers to relax and slow down when they put their practice up for sale. Maintain the same conditions even through escrow.
• Repair signs, replace outside lights, and do a general spring cleaning for first impression purposes. Tidy the outside premises (if appropriate). Spruce up the interior as well.
• Repair items that are included in the sale.
• Maintain inventory at normal operating levels during the sale and escrow period.
7. Confidentiality . . . keep your selling plans to yourself
First Choice Practice Sales understands the importance of confidentiality and it is important for you to understand this as well, confidentiality works both ways. A practice broker helps by using nonspecific descriptions of the practice in advertisements and profiles, requiring signed confidentiality agreements with all buyer prospects, and screening of buyer prospects. The broker will constantly stress confidentiality to the buyer prospects they show your practice to. However, as the seller, you must also maintain confidentiality about the pending sale in your day-to-day practice activities with customers, employees, vendors, and even your friends until the purchase agreement has been completed and accepted. Employees, suppliers, and even customers might react negatively to your “news,” and you need their stability and loyalty more than ever at this crucial time. It is best to keep your plans strictly confidential, especially with regard to your employees, suppliers, and customers.
8. Get & Use Professional Advice
Many dental practice owners think that no one knows their practice like they do. They think they can do it all, tax, legal, Practice Broker etc. You are not a practice broker, accountant, and legal advisor all rolled up into one person. Use professional help and advice when necessary, but more importantly, listen to the experts.
9. The Structure of the Deal is Important
The selling price may not be the only thing to consider. You may find that the real problem is in the details. Your First Choice Practice Sales Agent and other advisors can consult with you on this.
10. Be Prepared to Negotiate Sensibly
Don’t reject an offer without giving it serious consideration and discussing it with your First Choice Practice Sales Agent. Study it closely, just because you didn’t get your full asking price doesn’t mean it is a bad offer or it can’t be negotiated into a good one. The offer may have points that will offset the purchase price, such as higher payments or interest, a consulting agreement, more cash than you anticipated or a buyer that you are comfortable with. The right buyer may be more important than a higher price, especially if there is a seller financial involved, which is often the case. If you must counter-offer, do so only on those points that are really critical to you. Be flexible and willing to negotiate on the important points.