For many dentists who are embracing the idea of selling their practice, the same question gets asked time and time again, “how long does it take to sell a dental practice?”
As with the sale of any business, the length of time it takes to transition a practice depends on a number of different variables. For example, if a dental office is clean and in good condition, has four or more operatories or the capacity to expand, is based in a desirable location, and is fairly priced, it could sell rather quickly – even as soon as two to four months from start to finish.
In addition to aspects about the practice itself, the decision of when to sell can also influence how long it takes to transition. The first two quarters of the year can oftentimes work in a seller’s favor, as the peak time in which dentists are looking to buy a practice is the spring and summertime.
If you’re a dentist interested in a better understanding of how long it will take to sell your dental practice, here are additional things to consider.
When selling a dental practice, location is one of the most important aspects that influences the sales process. A dental practice with a convenient, easy-to-access location will often have greater resale value than a practice based in a remote area. That’s not to say dental practices in remote locations can’t be successfully sold in a timely manner. Rather, planning for a longer sales period and having a well-constructed transition strategy is often needed.
The resources and experience of the dental Advisor will play a significant role in the timeliness of your sale. Dental practice Advisors are responsible for overseeing the transition process between the current owner and the prospective buyer.
In addition to managing the practice transition, a dental Advisor is also responsible for evaluating your dental practice. Once a dental practice valuation has been made, a fair sales price can be assigned. It can be advantageous to work with a local Advisor who has experience transitioning dental practices in your area, as they are knowledgeable with the dental market trends.
Determining the value of a dental practice, and therefore its selling price, is often subject to misconceptions and differences of opinion. Some dentists believe their practice is worth an average of 70% to 80% of their last three years’ collections. Others believe it’s a simple multiple of 1.5 times their net income.
There’s no question that every practice is a unique entity with a plethora of differentiating factors that must be taken into consideration. Aside from analyzing the practice financials, such as collections and expenses, there are several additional factors that must also be considered. Some of these factors include the location, staff, reputation, longevity, equipment, procedures offered, and patient mix.
Weighing how much impact each factor has on a practice’s value and selling price is more of an art than it is a science. In any case, the selling price of your practice will impact how quickly it sells. An attractively priced practice in a prime location will often sell much quicker than a remotely located practice that’s appraised at a premium.
Prospective Buyers’ Interests
Prospective buyers will often scrutinize your dental practice based on their own practice ideals and objectives. In most cases, the last three years of your practice’s performance will be thoroughly reviewed. This will include financial performance, new patient flow, the total number of active patients, and staff. Prospective buyers will also take into consideration whether they can add additional treatment services or if you are currently offering any services that they’re unable to provide.
In addition to location, the dental office itself is a significant consideration. If the buyer is seeking a minimum of four treatment rooms and you have three with room to expand, they may still consider buying the practice. Conversely, if you have only three treatment rooms but no space to expand, the lack of capacity could be a potential deal-breaker.
Selling Your Dental Practice Quickly
Transitioning a dental practice is oftentimes one of the most significant decisions of your life as well as the buyer’s. To accelerate the sales timeline, it’s important to give prospective buyers the information they need to complete their due diligence.
Sometimes it can feel like they are asking for too much information. It’s important to understand that this is the only way they can gain confidence and get comfortable with purchasing your practice. Working with an experienced Transition Advisor can help save you time, money, and frustration throughout the selling process.