Three Items Sellers Will Need to Show Potential Buyers

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When your goal is to sell a dental practice, the smart seller’s credo is simple: Disclose! Disclose! Disclose!

Providing thorough information is of utmost importance when it comes to educating potential buyers about your dental practice for sale. You can never present too many details to a buyer. Informed and ready-to-market sellers know that information is king.

While the Doctor selling a dental practice cannot always fulfill every buyer’s complete wish list, we’ve prepared a checklist that is sure to leave a good impression on even the most demanding buyers.

Real Estate Appraisal or Lease Agreement

The seller’s property is the highest valued fixed asset in the transaction, and it is vital to provide potential buyers with an appraisal of the real estate. Additionally, if the seller leases the practice to the buyer, it is vital that the lease is priced accordingly to fair market value.

When the property is under a lease agreement, the buyer needs to know the terms of the current lease and whether it is possible to assign it, renew it, or renegotiate it for a better fit. An additional key point to keep in mind is that lenders review lease agreements, and many insist that the length of the lease align with the length of the loan made to the potential dental practice buyer.

Production Reports /Income Streams by Provider and Procedure

Show them the money!

The buyer of a dental practice needs to identify all sources of revenue, including how much is produced by the owners, associate dentists, and hygienists, respectively. This report would also include the procedures performed by each source as well as the collection process. Records need to include revenue from the past three years as well as projections for the next three years.

Understanding these procedures and records enable a buyer to determine the quantitative strengths, weaknesses, and potential opportunities for the practice. This report includes details of the associates’ agreements too. An accurate report also helps the potential buyer on multiple levels, ranging from the scope of the business to providing lenders with more accurate information to maximize lending opportunities.

Employee List with Salaries and Benefits

Buyers also need a list of all the current employees of the practice, their job duties, salaries, and benefits. A detailed list is important even if the new buyer plans on making staffing changes, because it offers a solid estimate of the expenses incurred. According to DentalEconomics.com, excluding associate doctor’s wages, employees’ expenses should be approximately 25 percent of the sales generated by a practice.

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