Posted on Apr 8, 2013
Image Credit: © Dreamstime.com
Posted on Apr 8, 2013
During the last installment, we discussed ways to make your dental practice more attractive to a prospective buyer. Sometimes it can be difficult to think like a buyer when selling a dental practice because, most likely, you are excited about your upcoming dental practice transition. Nevertheless, it’s important to view the practice from a buyer’s perspective to ensure the smoothest possible sale.
The following are two additional components that may help you think like a buyer:
4) Increased Earnings’ Potential: At this point, you are benefitting from years of effort and investment in your dental practice. A buyer who can easily see how making a few small changes will greatly increase business income is more apt to make an offer (and offer asking price).
One way to help the buyer see these opportunities is to work with your NAPB dental practice broker and get a dental practice valuation. Discovering, quantifying, and showcasing any of these areas where small influxes of energy or effort can increase profit is advisable when getting ready to market your dental practice. Also, implementing one or multiple initiatives wouldn’t hurt either. In my experience, seeing is believing, especially for a potential buyer.
5) A Good Buy: As in the case for you, this is potentially one of the largest assets for a prospective buyer so they are facing one of the greatest outlays of cash in their lifetime. Out of necessity, buyers are savvy about a fair asking price. Have you listed the practice too high? This appears to be a smart approach, because who wouldn’t want to leave room to counter offer? Or better yet—have a bidding war over your practice?
Nonetheless, I’ve found that, most of the time, a dental practice is bought for very close to accurate market value. The buyer will appreciate an accurate price (and often their advisors, attorneys and accountants will get them close to market value anyway). It saves everyone time and energy when you’re at a fair price from the get-go. Work with a local NAPB dental practice broker to value your practice and have them pull related comps in order to set a fair price.
6) Quality and Quantity Clientele: In my experience, most buyers are turned off if the majority of your clientele is on Medicaid or consists largely of DMO patients. Dentists are usually looking for a practice with primarily a PPO patient base or a fee-for-service patient base. If your practice consists primarily of this buyer-perceived “less attractive” clientele, there are a few options. Do an inventory of the insurance plans that you accept and cull it to shift the spread in your favor. You may need to look at the demographics in your area to assist in this plight. Working to make your PPO and fee-for-service patient base more robust is also a good idea for when the practice hits the market.
Keep current as far as the number of patients in the practice. There should be a consistent number of both new and returning patients. Keep on top of your retention and conduct internal surveys, ask for referrals, or increase marketing if you find you base is waning.
Consult with an NAPB dental practice broker for a free consultation today. They can help you think like a buyer when you are ready to sell your dental practice.