10 Questions To Ask Before Selling Your Dental Practice

Selling your dental practice can be quite an undertaking. It's a decision that warrants serious consideration, as the impact it can have on your life is no small matter. Yet, there are enormous benefits to be had for those brave enough to take the plunge.

But here’s the deal:

Before you commit, it's important to ask yourself 10 crucial questions. And only by answering these questions can you make the most out of this important life decision.

So take a deep breath, and dive in - your future self will thank you.

Selling Your Dental Practice: Pre-Sale FAQs

1. What Is Needed To Sell My Dental Practice?

To answer this question, let's take a look at some of the common requirements that buyers look for when they are considering purchasing a dental practice:

• The ability to provide solid financial records showing that the practice is profitable and has been so for at least the past five years. Profit & Loss (P & L) statements and Tax returns are examples of essential documents you need to prepare beforehand.

• A well-established reputation in the community for providing excellent service and care to patients.

• If you have a team, they should be qualified and well-trained.

• Also, create a compelling Executive Summary which is a document that would provide concise facts that would entice a potential buyer.

Summary: As a seller, it's important to present your practice in the best possible light and be prepared to provide evidence of its value to potential buyers. By meeting these requirements, you can increase your chances of attracting the right buyer and securing a successful sale.

2. How Long Will It Take To Sell My Dental Practice?

The answer to this question is, of course, dependent on many factors. However, in general, it takes about three months (90 days) to put your practice up for sale.

Selling Your Dental Practice: Valuation FAQs

1. How Much Will My Dental Practice Sell For?

Generally, factors such as location, patient demographics, the condition of the equipment, the quality of the staff, and the profitability of the practice can affect its value.

It's important to note that the selling price of a dental practice may not always align with the owner's expectations. Sometimes, an owner may overvalue their practice, leading to a longer sale process or no sale at all. On the other hand, a practice may be undervalued due to a lack of marketing efforts, resulting in a lower selling price.

It's a tricky balance to strike.

That's why it's crucial to work with a professional who knows the ins and outs of the market and can accurately value your practice using best-in-class approaches that take into consideration current market conditions as well as your practice’s unique selling points including its goodwill rather than rule-of-thumb or cookie cutter methods that estimate value based on multiples.

2. How Do I Get The Maximum Value For My Dental Practice?

Selling a dental practice can be a treacherous journey, filled with twists and turns that leave even the savviest businessperson feeling lost. The surest bet if you want to get top dollar for your dental clinic is to work with a trusted advisor who can help you navigate the murky maze of marketing and sales negotiation - two critical elements where most sellers miss the mark. Don't leave your success to chance - seek out the right partner, and watch as they help you achieve a return on your investment that can be up to 2x or more than you ever thought possible.

Selling Your Dental Practice: Finding Buyers FAQs

1. What Type Of Buyer Should I Consider Selling My Dental Practice To?

There are a few different types of buyers to consider:

Individual Practitioners, partners, private equity firms, etc.

Each type of buyer has its advantages and disadvantages, and the best choice for you will depend on your specific situation and goals. But you know what?

When it comes to private equity firms, there are undeniable benefits:

Unlike other buyers, they're not interested in meddling in the day-to-day operations of your practice. Instead, they provide financial backing and administrative support. And the best part? You get to maintain your practice's legacy while reaping the rewards of their capital investment and streamlined operations.

2. How Hard Is It To Find The Right Buyer For My Dental Clinic?

The answer: it depends.

Listing on classifieds sites, running ads in trade publications, and placing posters are examples of marketing strategies that’ll make it difficult to find a buyer that ticks all the right boxes. Instead:

If you want to sell your practice fast and for top dollar without feeling like you’ve walked on hot coals, then you need to work with an advisor who can provide you with access to a network of pre-qualified buyers, and market your practice through targeted channels on your behalf to ensure you get the best possible deal.

Selling Your Dental Practice: Terms Of Sale FAQs

1. What Should Be Included In The Sales Contract?

If you're selling your practice, you need a sales contract that's airtight. No loose ends. No ambiguities.

The sales contract should include details about the purchase price, payment terms, the assets being sold, and any contingencies or warranties related to the practice. And let's not forget about the transition period or post-sale obligations. These are all critical components that can't be overlooked.

2. How Do I Protect My Interest Before Signing The Sales Contract?

To protect your interests, it's important to ensure that the sales contract includes confidentiality provisions, indemnification in case of any failure to pay as at when due, interest charges, and keep payment terms under five years at most.

You should also carefully review the buyer's financial and business background, as well as use an acceleration clause, and get a large initial down payment. Finally, do not forget to keep a legal interest in your practice - this means that the buyer can’t be deemed as the owner until all payment is made.

Working with an experienced attorney who can review and draft the contract is important to ensure it covers all necessary details and protects your interests.

Selling Your Dental Practice: After Sale FAQs

1. Do I Have To Stick Around After The Sale? And for How Long?

Yes. The length of time you'll need to stick around after the sale will depend on the terms of the sales contract and the buyer's transition plan. Generally, a transition period of 60 to 90 days is common to ensure a smooth transfer of patient care and administrative responsibilities.

2. When Do We Tell Our Doctors and Key Staff Members? How Do You Suggest We Do So?

It's important to keep any information regarding potential sales under wraps. This way you’ll avoid any negative outcomes such as client and worker turnover that may arise due to uncertainty about their future.

And when the time comes to share the development with your staff, it's important to be honest and transparent about the reasons for the sale, the expected timeline, and any potential impact on their employment. You may want to offer support and resources to help them navigate the transition period, and encourage them to ask questions and share their concerns.

Final Words

Remember that selling your dental practice is not just a financial transaction but also a personal and emotional one. It's essential to ensure that your legacy, patients, and staff are protected throughout the transition and that your hard work and dedication to your practice are honored.

By asking the right questions and working with a trusted advisor, you can achieve a successful sale that meets your needs and sets you up for a prosperous future. Looking for a trusted advisor to guide you through this process? Book a free consultation!