Posted on Jan 9, 2012
Image Credit: © Dreamstime.com
Posted on Jan 9, 2012
By Paul A. Maimone, MBA, D&M Practice Sales
There are many reasons to sell a dental practice: retirement, a desire to slow down or move to a new area, health challenges are among the most common. This blog addresses where to start when you begin to consider a dental practice transition.
Planning: If possible, you should start planning the departure from your practice 3-5 years before you transition. Discuss your goals with your CPA, Legal Counsel and a Dental Practice Broker Transition Specialist.
Improvements – A fresh coat of paint on the walls, re- upholstery of your dental chairs, removing clutter, and a thorough cleaning will give your practice a fresh look, and will make it more saleable. More drastic measures such as replacing dental units, x-ray units and other equipment should be considered if your equipment is old and worn. Make sure whatever equipment you do have is in good working order.
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.
Dental Practice Valuation – Get your practice valued by a Dental Practice Transition Specialist. This 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.
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 – 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. Include: Gross Collections/Net Income and the Overhead %; Equipment Inventory and Condition; Status of Accounts Receivable (A/R’s) including amount, age and if included in the sale: Lease status; Current provider contracts; Patient characteristics; Business hours; Referred out procedures; Breakdown of practice production; Assumed Payables/On Going Contracts. If you wish to keep this information confidential, require the buyer to sign a non-disclosure agreement.
Telling Your 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.
Hire a Pro – 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. An NAPB Dental Practice Broker can guide you through the intricacies and streamline the transition process.