It’s taken fortitude to establish and grow your dental practice. But now, you’ve decided the timing is right to sell. Before the “for sale” sign goes up, though, it’s important to think through the steps. Here’s what you should consider when selling your dental practice:
Enlist help from experts
You may be tempted to handle the sale on your own, but it’s never a bad idea to surround yourself with experts to make sure the sale of your dental practice goes as smoothly as possible. Find a qualified dental transition company, which can draw on its previous experience, help you identify an accurate value, and maximize your return. You’ll also want a good accountant and attorney.
Be financially prepared
Make sure you have all your financial statements in order because you’ll need to show the fiscal health of your practice. That means preparing and reviewing monthly and quarterly profit and loss statements with your accountant.
You’ll also need:
- Tax returns (last 3-5 years)
- Lease agreements (last 3-5 years)
- Salaries/bonus structure of staff (last 3-5 years)
- Status and financing of office equipment (last 3-5 years)
- Patient encounters, services rendered, gross collections, bad debt (last 3-5 years)
- Payer mix (cash, third-party insurance, Medicare/Medicaid)
- Intangibles: clinic protocols, referral sources, online reviews
You’ll also want to get current industry averages for revenues, expenses, new patient flow, fee schedules and more from the American Dental Association, a member of the Academy of Dental CPAs, or your transition specialist. Buyers will want to compare each line item on your profit and loss statements to the industry averages. So it’s important that your accountant explain any differences because it could cause you to lose significant value in your practice.
Receiving offers and negotiations
As you near the end of the process, you’ll receive offers. At this point, you’ll have several options. You can accept the offer as presented, counteroffer and begin negotiations, or decline the offer. Make sure you feel comfortable with whatever option you choose and that you’ve properly vetted buyers.
If you decide to accept an offer, then you’ll finalize paperwork. This is when you look at the offer in even greater detail and where your attorney is particularly important. You’ll need to draft the asset purchase agreement, bill of sale, lease assignment, letter to your patients, etc., which will need to be approved by all parties.
Once these steps are complete, you can rest easy. You’ve officially sold your dental practice. Enjoy the fruits of your labor.