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
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