If one of your New Year’s resolutions was to start planning for life after your dental practice, you probably have lots of questions: What do I want out of the process? How long will transitioning take? What’s involved? Am I ready to leave?
A good rule of thumb is to start the exit planning process as soon as possible, even if you don’t plan on leaving your practice right away. For example, if you decide now that you’d like to retire in five years, but your valuation is lower than you expected, you’ll need time to address the factors that would make your practice more desirable to a buyer.
Time is the most valuable resource you have. In addition to that, consider these tips as a starting point to the process of selling your dental practice:
- Start With the Why
What are your goals? Do you want to fund your retirement, thereby aiming for the highest possible sale price, regardless of who buys your practice? Maybe you want to continue working, but without the added pressure of owning the business or managing the day-to-day operations.
Your outcome will be different depending on which of these goals you pursue. Knowing why you’re selling your dental practice can greatly influence your long-term happiness and satisfaction with the selling process.
- Know What to Expect
Be prepared for the sales process. This begins with a valuation of your practice. If you’re
unhappy with any element of the valuation, you can work on making improvements – to financial and patient records, equipment, processes, and décor (more on that later).
You also want to ensure your practice is structured in a way to maximize tax savings. Changing entity types can be done, but may require a couple of years to make the tax savings worth it, so look into this early.
Once your valuation is completed, your entity type is finalized (if you’re changing it), and you can begin making improvements to any area that will lower a purchase price. The next step is getting ready for the sales process. This involves marketing your practice to potential buyers. Have a portfolio of financial data (including three years of tax returns), business plans (including a marketing plan, if available), patient information (including the number of active and new patients), and current staffing (including staff breakdown and numbers on benefits and compensation). It will take time to assemble this portfolio, so allow enough time. Potential buyers will be easier to find and qualify if you’re an organized seller.
- Make Improvements
The office, reception area, and operatories must look current. The entire practice space should be clean and well-lit so that potential buyers will be attracted to the space. Make sure your equipment is updated, especially if you have at least a couple of years before you sell. If your practice has a website, keep it updated with useful content and educational materials. Your goal is to maintain an attractive, modern, and tech savvy dental practice.
For more information on selling your dental practice, check out our post from October 2016.
Our team can help you manage the entire sales process, from planning and due diligence to listing and sale agreements. Our partners include attorneys, insurance agents, bankers, and more. We’re here to make your transition process as smooth as possible. Are you ready to list? Contact us today to learn more.