Deciding to sell your dental practice is a big thing. But making sure you get the best deal that makes all the time, skill, money and effort you invested into your practice worth it is even more important. This is why it’s important to prepare yourself both mentally and financially, so you can reap the biggest possible rewards from what is likely to be your entire retirement nest egg or at least a significant part of it.
To help make the sales process as smooth as possible, here’s everything you need to know about selling your dental practice, including the best ways to increase its value and how to set yourself up for a succesful sale.
How to increase the value of your dental practice
Ensure you get the best deal when selling your dental practice by making sure it’s as valuable as possible when prospective buyers begin looking into purchasing it.
Invest in the latest state-of-the-art equipment
One of the easiest methods of increasing the value of your practice and making it as appealing as possible to potential buyers is to keep your office so modern and up-to-date that a future owner can walk through the door and start working the very next day without having to spend money updating old equipment.
This also helps you secure a great deal for your business, since the buyer won’t be able to negotiate price, claiming they’ll need to spend replacing equipment.
Only employ the best staff
In most cases, your employees will stay with your dental practice when it passes hands to the new owner. If potential buyers think your staff aren’t up to standard, they’ll need to take the time, effort and money hiring suitable replacements. This is another reason they could lowball you when it comes to negotiating a price.
To avoid this, it’s important you provide a pleasant working environment in which your staff can thrive and feel good about coming into work every day. This article includes a few tips on how you can encourage staff to be star players. It’s best to avoid firing and hiring on a regular basis, as a frequent staff turnover indicates a negative, stressful working environment which will definitely put off possible buyers.
If you think your dental staff aren’t giving it their all because they’re overworked, consider hiring temporary staff via a cloud-based dental professional matching platform to take the excess work off their hands.
With Cloud Dentistry, whenever you need to fill a temporary gap in your staff, you can browse hundreds of profiles of dental hygienists, assistants, specialists, receptionists and dentists in your area. When you find some that look like they’d be a good match for your practice, you can chat to them directly to find out if they really would be suitable before hiring them just for the days and hours you need.
Passing this industry insider tip onto prospective buyers is another great way to seal the deal and help you get a good price for your practice by saving them time and money they’d otherwise waste with traditional temp dental agencies.
Consider a makeover
A little paint can go a long way to making a dental practice look fresh, new and sleek. Think about changing the color of the walls (a light, neutral shade is always preferable), replacing worn flooring with something contemporary, adding new easy-to-clean furniture to the waiting room and decorating with fresh flowers and colorful artwork. It doesn’t cost much to give your practice a makeover, but it could easily add a sizeable chunk to the offers you receive when it’s time to sell.
How to sell your dental practice
When you’ve added more value to your dental practice, it’s time to look into selling it and how to get the best price for your work.
Evaluate the possibility of selling your practice
While it’s never a waste of time to increase your dental practice’s value, it is a waste of time to begin the selling process if it’s not yet financially feasible. To determine whether it’s the right time for you to sell your practice, it’s important you review your retirement plans, any current investments, how much cash you have in savings accounts and how much you’re likely to earn from the practice’s sale.
Calculate how much it will cost to live out the rest of your life in a comfortable style and see if it’s possible to do it with the finances you currently own, plus how much the sale of your practice will get you. If not, do you have any additional assets you can sell to make it possible? If you do, then you’re ready to get started. But if you don’t, you simply need to wait until you are financially ready.
Start marketing your practice early
Selling a dental practice is often similar to selling a house. It can be a long, drawn-out process which takes years and hinges on the financial plans prospective buyers. If you can imagine yourself wanting to get out of the game in the next 1-3 years, now is the best time to start looking at selling your practice. This way, when you’ve had enough, you won’t have to wait an additional few years until you can move on.
It’s important to remember that, in most cases, the market value of your practice is based on your profit over the past few years. So if you’re nearing retirement age and you’re considering thinning out your client base to reduce your workload, you’ll need to reduce your overheads to avoid hurting the selling price of your practice, too.
Have realistic price expectations
Many business owners think their businesses are worth a lot more than they really are and dental practice owners are no exception. There are several different ways you can evaluate the market price of your dental practice. But there are always other factors that come into play.
For example, consider a dental practice owner aged 55-65 who wants to sell their practice and retire. Having been in the business for decades, they’re likely to have patients in the same age demographic as themselves. These patients are depreciating assets, creating a large gap between the worth of the practice on paper and that which a buyer is willing to pay.
If this is the case for your dental practice, it’s worth investing time in marketing to new, younger patients to increase the money you can expect to earn when you sell.
Be organized with paperwork
Prospective buyers will bombard you with questions and information requests if they’re truly interested. They’ll want to know how many active patients you have, how many new patients you’ve received over the past few years, staff payroll and benefits...the list goes on.
Having this information readily available at a moment’s notice and clearly broken down so anyone can understand it at a glance will go a long way. It will ensure the potential buyer that you really understand your business, you’re an organized person and you’re ready for the sale. All this should help you get the price you deserve for your practice.
You might be asked to work as an employee or associate dentist
It’s not uncommon for dental practice owners selling their office to be asked to temporarily stay on as a dentist following a successful sale. This is often because new buyers are concerned existing patients will disappear when the ownership changes. If you refuse to stay on when asked, it might cause the potential buyer to offer a lower price, to make up for the patients they’re expecting to lose.
To secure the best deal, and to maintain good professional relationships, it’s always worth at least considering staying on for a couple of months to encourage a smooth transition.