As a dental practice owner who has put a lot into your practice, it’s only natural that you would see your practice in a different light than a potential buyer, who is not as familiar with it. However, when making the decision to place your dental practice for sale, considering the needs and wants of potential buyers is of the utmost importance. The following are some key things you should keep in mind during the practice transition process.
Appearance: First impressions matter, especially when selling a dental practice. In fact, buyers are likely to undervalue practices that aren’t kept up and organized. Keeping your practice neat and in good repair can go a long way in fetching a better sales price. Many buyers are looking for a dental practice that is “move-in” ready. Practices with equipment less than three years old have a leg up on practices with equipment that is old or needs to be replaced.
On the same note, the buyer may ask for an inventory of your equipment and have it inspected to ensure everything works properly. In addition, lenders may require this list before approving a business loan. To get a head start, it is a good idea to put together a list (and include the value of each item).
Documentation: Past performance is a good indication of whether a dental practice will be successful in the future or not. For this reason, you must keep organized records showing your past income, profits and expenses so you can easily prove the health of your practice.
Price and Terms: Sellers always want to sell for as high as they can, and buyers want to buy for as low as possible. To expedite your dental practice sale, you need to ensure that your practice is priced competitively – but that doesn’t mean undervaluing your practice. If you have the facts to back up why your practice is valued at a certain price, you have a higher chance of selling your practice than someone who has their practice priced by someone who is unfamiliar with the dental market.
We can work with you to get your practice accurately appraised to ensure that the asking price is fair and will result in a successful sale.
Seller’s Discretionary Income: Many buyers have dental school loans and other expenses to consider when deciding on the right practice – making discretionary income a key factor in the decision-making process. Our practice transition specialists can evaluate your practice and re-cast your financials to accurately reflect your discretionary income from the practice.
Financial Leverage: Buying a dental practice is one of the biggest investments a dental practitioner will make, and a savvy buyer will want to ensure that their return on investment (ROI) is maximized. Our practice transition specialists have access to the top lending sources in the industry, and can help buyers find a lender that will fund 100% of the capital. This allows the buyer to purchase a larger practice with a more attractive bottom line.
Lease: Unless you own the building outright, buyers will want to ensure the lease is good before making an investment in your practice. Generally, the length of your practice lease should be the same as the length of the buyers’ loan to ensure the new owner will be protected.
Timelines: Buyers look at a number of practices when going through the purchase process—and their offers can be withdrawn before they are accepted by the seller. To make sure you don’t miss out on any offers—or that the buyer doesn’t lose interest—you should respond to all offers within a reasonable amount of time.
Reason for the Sale: In the buyer’s mind, if something seems too good to be true, it probably is. Some buyers may be afraid you are selling your practice because there is something wrong with it. To allay any fears, be upfront with your reason for the sale. Are you retiring? Moving? Interested in making a career change? Just let the potential buyer know.
Selling a dental practice can be a daunting process; fortunately, we understand the transitions process from both the buyer and seller side. For more information on what buyers want when purchasing a dental practice, contact us to schedule a confidential consultation.
Did you like this article? Check out our other dental industry blog posts such as things to know before you sell your dental practice and steps to successful dental practice sale!
If you have any questions or would like additional information, please call us at 678-482-7305 or email at firstname.lastname@example.org