Is it time to sell? What are the steps you should take from deciding it’s right to sell your dental practice to the vacation you’ve been longing for? We’ve had our hand in a number of successful sales and have more than a few tips to share. The right planning, mindset, and team are essential to any dental practice sale, especially the profitable ones. It can all be a bit overwhelming so we’ve broken it down into three easy phases.
Phase 1: Deciding to Sell
What is motivating you to sell?
Are you ready to retire? Are you looking to take on less responsibility? Or are you trying to escape a less-than-successful practice? The answers to these questions are essential and ultimately decide if it’s a good idea to sell as well as what your timeline to sell should be. If your practice isn’t reaching the metrics you had hoped for, bringing in a consulting team to reach the financial and personal goals you were hoping for could change your mind. If you aren’t ready to retire and want to stay on an associate or part-time doctor, that’s something to determine now and include when negotiating with buyers. If you are ready to retire, do you have a plan to reinvest the funds from the sale of the practice into your retirement? Speaking with a financial advisor or a member of our team can help set you on the right path.
Phase 2: Preparing to Sell
Is for sale by owner (FSBO) the way to go?
Many practitioners ask us if it’s safer, smarter, or more profitable to sell their practice themselves. We typically recommend not to. In execution, emotions take the place of ease and improper evaluations and breaches of confidentiality lead to loss of deals. You’ve worked hard to build your practice, make sure to sell it at the price it’s worth. Using an expert team experienced in the dental field who can recognize these advantages and make this transition efficient will mean all the difference in the end.
Should you inform your team?
In most cases, we don’t recommend it until the deal is signed. Hearing even a rumor of a sale can lead to loss of staff, loss of patients, and even loss of associates which can inevitably lead to loss of the sale. Have a transition plan and timeline set with your transition team. We can help you set one up and even help ensure you reach the timeline you’re looking for as well.
Don’t forget to pay off your debts.
Many practice owners forget to evaluate all their debts before a sale. Be aware that these will need to be paid off before or at closing. Many doctors will use the proceeds of their final sale to pay off their debts but others prefer to have all their t’s crossed before the offer is finalized. Either way, discuss this with your transition team so the finalization of the sale is seamless and you aren’t sidetracked during crunch time.
Optimize your practice before the sale.
This is one of the most important steps so we’ll spend a little more time here.
Your practice by the numbers. Are you in tune with your numbers? You need to have an in-depth understanding of the health of your practice so when the time comes, you can showcase the true value of it. Make sure to keep track of production. Set measurable growth goals and track metrics for each week, month, and year to make sure you’re hitting them. Speak with an accountant to ensure you’re tracking accounts receivable and patient credit balances effectively. What is your true collection percentage? Have you been tracking your write-offs? What about each doctor’s or hygienist’s numbers? Start tracking a daily average so you can improve it and reflect this growth in the final sale.
New patient flow. Do you know where most of your new patients are coming from? Continue building your referral base but have a better understanding of whether your internal and external marketing efforts should be improved. We offer a full spectrum of consulting services that include dental marketing and advertising. It’s easier to sell a practice with a growing patient base than one that’s purely dependent on referrals.
New investments. Your timeline determines if you should invest in improvements such as technology. If you’re planning on staying for more than two years an update in equipment, if necessary, may not be a bad idea. It can not only can make your practice more profitable, but it can also add value to the sale. Investments can also come cosmetically. No matter what your timeline is, we encourage a cosmetic cleanup for a deep-clean of the office, to sort through forgotten storage rooms and paper files, and to invest in small touches that make patients and buyers more interested. It’s likely time for a new coat of paint anyway.
Get all your ducks, and documents, in a row.
You’ll need to run reports that aren’t usually your responsibility. Start pulling quarterly reports now so there’s no suspicion later. Some of these are the production numbers we discussed but we can guide you on everything a buyer and appraiser will want to see so you’re prepared before the time comes when you really need them.
Have your practice appraised.
Once you’re a little closer, make sure to seek out an appraisal so you know the true value of your practice. They’ll consider the details of your practice’s numbers and evaluate the current health and market value of it. The stronger your numbers, the larger the return on investment later.
Find the right team to help.
This transition is best executed by a team experienced in the dental industry. Make sure to start consulting with a team of professionals who have the right connections and take the smartest approach. This will save you months, if not years, of time and hassle.
Phase 3: Selling and Next Steps
Know what you will and will not compromise on upfront. Not being clear with possible buyers can lead to them choosing an easier purchase elsewhere. However, you should be flexible in a few ways including your time. Scheduling a time to meet or tour the practice may come up more than once. Be available so this phase doesn’t become drawn out. Be open to discussing practice’s philosophy, answering detailed general questions, and addressing topics of concern with the potential buyer.
When to tell the team.
As we said before, once an offer is signed, and only then, should you tell the rest of the staff. After you finalize the closing documents, set up a meeting to introduce the new owner to the rest of the staff and offer to stay on at some capacity during the transition. Explain to your staff the reason for leaving and be there for them during this time. However, find a balance so you don’t overstep by consulting with the new buyer.
Call the Professionals
No matter what phase of the process you’re in, we can help. With decades of experience in dentistry, we can help make the selling process smooth, seamless, and profitable. Connect with a JK Consulting Group professional by calling 973-809-5466. Whatever your next step is, we’re excited to help get you there.