How to Buy and Sell a Dental Practice
Whether you are looking for available dental practices to buy or are looking for a dental appraisal to sell your business, there are a lot of steps to consider. As dental transition consultants, we have dealt with many of the nuances that are involved in purchasing a dental practice or selling a dental practice.
It doesn’t matter if you are old or young, male or female (about 32% of dentists are women now), or if this is for first or fifth dentist practice, selling is an important time. You have probably spent years building up a successful practice, and you want to make sure you get a great value for the sale of your hard work. Sometimes dentists sell because they are looking to relocate to a new state. Other times it is to temporarily or permanently retire. Either way, here are some tips you should know:
Dental Transition Consultant Tips for Selling Your Practice
We have been dental transition consultants for a long time and helped dozens of clients successfully sell their dental practices for top dollar. Throughout the processes of being in the dental transition consultant business, we have learned some things. Here are the most important things you should know when selling your business:
First, Keep it Simple: If a transaction is complicated and complex, it is more difficult to find and close a buyer. Typically buyers are looking for practices that have favorable leasing, modern equipment, and a fantastic reputation. Work on boosting your Yelp and Google+ ratings to show potential buyers that the transition will be easy. Highlight the competitive aspects of your business to attract buyers, then be sure to leverage these for a great deal.
Advertise to the Correct Crowd: One of the biggest myths is that a student fresh out of dental school is the perfect target to buy a new dental practice. That is pretty far from the truth. As you can remember, dental school is expensive. Most students are strapped financially after finishing dental school and are looking to enter the job market with a low barrier to entry while they get on their feet financially. Additionally, banks are very hesitant to make large business loans to recent graduates because of their already heavy financial obligations and mediocre credit scores. As we have worked as dental transition consultants, we have noticed that dentists who are at least 3-5 years into their careers are most likely to look at purchasing a dental practice. Additionally, dentists who are experienced and moving to a new area will also frequently be on the hunt for a great dental practice to purchase.
Don’t Advertise “Potential” Growth: The growth potential of a market has very little to no value. Just because there is a potential for me to win the powerball with this ticket doesn’t mean it’s going to happen. Growing a successful dental practice takes work. Lots of it. Buyers look for mature dental practices with steady cash flow and a consistent referral program. Growth potential is great, when you have a plan. Rather than speaking about the potential growth to come, tell potential buyers about what you are doing that is causing growth to happen now, and how it will continue to cause growth in the future.
Prepare All Financial Documents: Before anyone purchases a business they will want to look at several years of your dental practices financial history. If you haven’t kept great books, as dental transition consultants we can help. Be ready for serious buyers to comb through your finances. Be ready, be organized. If appropriate, you may ask potential buyers to sign an NDA (Non disclosure agreement) to protect any special methods you use. Here are some documents you should be ready to have:
-Tax Returns (3-5 years)
-Lease Agreement (3-5 years)
-Salaries / Payroll Structure (3-5 years)
-Financing Status of Equipment (3-5 years)
-Debt Records (3-5 years)
-Any other relevant financial information
Seek Legal Advise: Selling a business takes a lot of paperwork. You are going to need legal help. As dental transition consultants, our job is to make sure every “i” is dotted and every “t” crossed. Keeping all of this in order will help ensure a smooth and profitable transition for everyone involved.