At Southeast Transitions, we are often asked by future sellers,
“What do we need to prepare to present our practice to future buyers?”
Here’s what we have found:
- Have a clear message about the reason for the sale. Prospective buyers will want to know why you are selling. A well-prepared answer will give a buyer a level of comfort, encouraging them to pursue the opportunity to buy your practice. Be clear about your intentions if it is not a retirement sale.
- Have all financial books and records ready for examination. Buyers and banks will want to see your last 3 years of tax returns, as well as, a profit and loss statement through the most recent full month. The preference of buyers is to have a Federal Tax return for each of a seller’s practices.
- Disclose seller’s discretionary earnings. Make it easy for a buyer to understand what financial benefits they will potentially receive. If there are any financial benefits to you that are not clearly outlined in P&Ls or tax returns, be prepared to explain what they were and why they were a benefit. Consult a practice broker if you need help with this.
- Share your practice philosophy. What is your approach to treatment and why have you been successful with this approach? What are the primary procedures that comprise your revenue? What procedures would enhance the revenue of your practice? Understand why your practice is a good value to a buyer.
- Set realistic expectations for purchase price and post sale terms. If the asking price is outside of what the market prices are, most buyers will not want to pursue these practices. Additionally, if the seller would like to make an unrealistic wage after the sale buyers will shy away. This is where an experienced broker can really be of assistance to you.
- Appraise your equipment and replace older items. Get your supplier to appraise your dental equipment as well as furniture and fixtures. If you have chairs or delivery systems that are more than 20 years old, consider upgrading. This process will increase the desirability of a practice and decrease it’s time on the market.
- Understand your lease and its impact on your sale. Leases can be an asset or a liability. Know the terms of your lease and how these terms will affect a buyer. Is the lease assumable, or does it require that the buyer negotiate a new lease? How does your monthly rent compare to those around you? If your lease is coming up for renewal, consult with a professional to sort out your options and the best approach to renewing your lease.
- Assess the appearance of your office suite. Go through each room of your office suite, organize everything and look at it from a purchaser’s point of view. Paint, if necessary. The last thing a buyer wants to do is redecorate after they paid a fair value for your practice.
- Plan on upfront disclosures. Disclose all relevant facts regarding the practice. If it is discovered that something was not properly disclosed, this could be the “Tip of the Iceberg” in a buyers mind. (Liens, leases, inactive patients, pending lawsuits or trouble with the board.)
- Prepare your covenant not to compete contracts. Have written contracts in place with your associates. Prospective buyers will shy away from a practice when the goodwill could go down the street with an associate. Also, be prepared to sign a covenant not to complete with the sale of your practice.
Did you like this article? Check out our other dental industry blog posts such as selling a dental practice successfully and things to know before selling your dental practice!
If you have any questions or would like additional information, please call us at 678-482-7305 or email at firstname.lastname@example.org