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WHERE TO START
(1) Planning (2) Practice Improvements (3) Maintenance (4) Ready, Set, Go!
1) Planning - If possible, you should start planning the departure from your practice 3-5 years before you transition. Discuss with your CPA, Legal Counsel and a Practice Transition Specialist. (2) Think Improvements - A fresh coat of paint on the walls, re- upholstery of your dental chairs, remove the clutter, steam clean the waiting room rug etc. will give your practice a fresh look, and will make your practice much more attractive. More drastic measures such as replacing dental units, x-ray units and other equipment should be considered if your equipment is old and worn. (3) Maintenance - make sure whatever equipment you do have is in good working order. (4) Ready, set, go - Be absolutely sure that you are ready to sell. No indecisions at this point. Take into consideration this is a very emotional time.
PRACTICE VALUATION Get your practice valued by a Practice Transition Specialist. It is imperative! They know the market; you don’t. If you don’t get a valuation, you take the chance of trying to sell your practice at too high a price where it probably will become stale on the vine, or at too low a price leaving some of your hard earned $$’s on the table.
SELL TO AN ASSOCIATE OR SELL ON THE OPEN MARKET You can sell your practice to your associate. Ask them if they are interested. If their response is positive you can: (1) Create a Buy In (2) Sell to them at a defined future date (3) Become Partners or (4) Sell outright to them immediately. If they are not interested in a purchase, then sell it on the open market.
FOR SALE BY OWNER (FSBO) OR HIRE A DENTAL BROKER (1) "For Sale By Owner" (FSBO) is a Seller who sells their practice directly to a Buyer (2) Practice Brokers are Brokers who specialize in the Marketing and Sale of Dental Practices. You can sell yourself or list with a Broker. Statistics show that a Seller will reap more in a sale if an independent third party assists the Seller in the sale price negotiations even after taking into consideration sales commissions.
WHAT’S INCLUDED IN THE SALE A detailed inventory list of equipment should be made and included in the Purchase Agreement documentation and Bill of Sale. You should also determine if you wish to include the Account Receivables in the sale. It is much easier to include them, but generally you will have to sell them at a discount. Should you not include them, make sure the Purchase Agreement allows you access to the patient billing information to collect your Receivables. Identify, list and include in the Purchase Agreement any and all Account Payables/On Going Contracts that you wish the Buyer to assume. These include such things as yellow page ads, credit card machines, copying machines, and computer leases.
WHAT THE BUYER WANTS TO SEE (PRACTICE PROFILE or PROFORMA)
Potential Buyers will wish to see certain practice information in order to determine their degree of interest. A Practice Profile or ProForma should be prepared and provided to the Buyer. The following minimum information should be included: (1) Gross Collections/Net Income and the Overhead % (2) Equipment Inventory and Condition (3) Is the staff willing to stay? (4) Status of the Account Receivables (A/R’s) including amount, age and if included in the sale. (5) Lease status or is the building for sale (6) Are current provider contracts transferable? (7) Practice trends (8) Patient characteristics (9) Business hours (10) Referred out procedures (11) Breakdown of Practice production (12) Sample of Practice fees (13) Assumed Payables/On Going Contracts. If you wish to keep this information confidential, require the Buyer to sign a Non-Disclosure Agreement.
PURCHASE CONTINGENCIES Once you have an acceptable Buyer you need to address the Purchase Offer Agreement. All offers should include the following (4) contingencies which will help protect both you and the Buyer: (1) Acceptable Purchase Loan (2) Acceptable Lease or Building Purchase (3) Acceptable Due Diligence - Book Check & (4) Mutually Acceptable Buy-Sell Agreement, Covenant Not To Compete, & Purchase Price Allocation. Should one of the contingencies not be met, you or the Buyer can cancel the transaction.
TELLING THE STAFF Generally speaking, it is advisable not to alarm the staff with a possible sale until a solid Buyer has been secured and all of the purchase contingencies have been met.
PROFESSIONAL HELP There are several professional disciplines available to the Seller, who can make the process less risky and more manageable. They include: Dental Practice Brokers, CPAs/Accountants, Practice Consultants, and Dental Attorneys.
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