Once you’ve determined that this is the right time to sell your dental practice, you should act quickly to take advantage of a favorable market. The following are the critical first steps you should take to initiate the dental practice sales process.
Step One: Seek the advice of a professional to determine the value of your business. At Southeast Transitions, our sales brokers will apply industry-tested valuation methods to ensure your practice will not be underpriced. Your dental practice broker can also explain how other practices are performing on the market so you understand—and are comfortable—with the sales price. Because buyers carefully compare prices and financial performance, they are wary of considering overpriced practices. Market value is a major factor in determining practice sale price, so you should only work with consultants active in dental practice sales with at least 10 years experience in the industry.
Step Two: Gather your financial records and ensure they are up to date and accurate. When evaluating dental practices for sale, buyers want to understand their past financial performance. Some buyers may be willing to pay for potential, but this won’t account for much—making your bottom line performance a critical factor in your market price. You should also be upfront about all aspects of your practice, even if they are unfavorable; otherwise, once the truth is discovered, the deal may fall apart and you will lose a qualified buyer.
Here’s a list of the key financial records necessary for a dental practice sale:
- * three years of profit and loss statements (plus a statement for the current year to date);
- * three years of federal income tax returns;
- * inventory of fixtures and equipment;
- * copies of equipment leases;
- * your lease and lease-related documents;
- * a list of loans against the practice with amounts and a payment schedule;
- * list of all current contracts (HMO, PPO, Medicare, IPS , union, etc.); and
- * names of outside advisors.
Step Three: Remember that you are a vital part of marketing your practice. Your practice sales broker will offer advice on meeting with prospective buyers and telling your staff about the sale to ensure you put your best foot forward.
Step Four: Respond to all offers in a timely manner. Your broker’s number one goal is to get an offer at a price and terms that are acceptable to you. He or she will present and assess offers to ensure you get the best deal; however, you must address these offers in a reasonable timeframe to prevent the buyer from withdrawing it or losing interest.
Making the decision to sell a dental practice is huge, and you want to get the best price (and buyer) possible. By completing the steps listed above, you can put your practice ahead of the game and facilitate a successful dental practice transition.