India Flag

UK Flag

US Flag

How to Sell a Dental Practice in 2021

Is It the Best Time to Sell a Dental Practice?

For anyone thinking of selling a dental practice, I would say now is a good time to do it. There is a higher number of potential buyers than there are practices for sale, so the chances of getting plenty of interest are high. Of course, this does not necessarily mean that it’s the right time to sell. There are several other factors to be taken into account. 

Signature on a page

Is the Business Performing Well??

The best time to sell a dental practice is when it’s doing well. It’s tempting to just stay on board for a little longer when this is the case. However, it’s worth remembering that the factors which determine that the business is doing well are likely to be attractive to potential buyers, making it easier to sell the practice at a good price. Holding off on the sale could be a bad move as the situation may not be as good in the future. For instance, more competition may move into the area, turning a practice for sale into a less attractive proposition. 

Is Selling the Best Thing for the Immediate Future?

Pile of coins with a clock in background

Having said that, holding off on a sale may be a bad thing; it’s also not a good idea to jump straight in with both feet. It’s important to make sure that plans are in place for the immediate future and beyond and that selling the practice really is the best choice. Think about considerations such as:

  • Is there a robust financial plan in place, for life post-practice ownership?
  • Is there still an opportunity to work as an associate if required?
  • Is a change of lifestyle really the best choice, is stepping away going to be too difficult?

Once a practice is sold, it’s too late for a change of mind, so it’s important to be certain about a decision to sell. 

What Analysis and Planning Has Taken Place?

Any decision that is made about selling a dental practice needs to be backed up by analysis and planning, It’s not good enough to simply wake up one morning and decide that a change of career path is needed, and the practice must be sold to fund it. This is likely to lead to an impulse listing for sale, which is never a good idea. 

Lack of planning means that the practice may have to be withdrawn from sale, and this can be seriously damaging to a reputation. It can also make it more difficult to sell the practice if it’s re-listed as potential buyers automatically think that there is something wrong with it. 

Speaking to an experienced team of advisors, such as Samera, is often a good idea at this point. I know I have helped plenty of clients to see the wood from the trees in the past and encouraged them to consider the market, prices and future financial planning before making a decision to sell. 

Reasons for Selling a Dental Practice 

Person reading a book

There has been considerable growth and demand in the world dental practice market over the last few years, recognised as one of the strongest growing trading sectors, growing from $28.1bn in 2016 to $31.5bn in 2018.

For single site practices completion prices average at around x6 and x7 EBITDA. I’ll take a look at EBITDA in more detail a little later. For now, it’s sufficient to say that there is money to be made from selling a practice, if the process is completed in the right way. 

So, is selling the best option? It’s up to the individual to answer that question. There could be several reasons why deciding to sell is a suitable option. 

Retiring from a Dental Practice

Old couple sitting on a bench

Planning for retirement from dentistry can be difficult. In many nations, there is no legal requirement to stop at a certain age, so it can be tempting to simply carry on. The fact is that at some point, slowing down has to be a consideration. There is a choice available that involves selling the practice, often to a corporate buyer or an existing dental associate, and continuing as an associate in the short term. This can make transitioning to retirement a lot easier.

Selling a Dental Practice Due to Health Issues and Burn Out

I recently read an interesting survey in the British Dental Journal which referenced the fact that “High levels of stress and burnout were found in UK dentists.” There can be many reasons why this stress emerges, including high levels of regulation and fear of litigation. The fact is, owning and running a dental practice isn’t easy and can become a burden if stress has become an issue or if other health issues are present. 

Quality of life is important, and for anyone who is suffering from ill-health or burnout, selling the practice and moving on to something new may be the best idea.

Selling a Dental Practice to Relocate

Selling can simply be a practical consideration, if a dental professional is looking to relocate. This can involve moving to an area of the country where profits are likely to increase, or moving abroad. Either way, the money from the sale comes in useful.  

Changing Career Direction

It’s a fact that fewer people are choosing dentistry as a career. You can take a look at more information about this. There are many pressures in the world of dentistry which are undoubtedly a contributing factor and can contribute to many current dentists looking for a change of career, and selling a practice as a result. With the future of public service dentistry so uncertain, many dental professionals are selling up and looking to invest their money elsewhere. 

If one or more of these circumstances apply, it may be time to think about selling. However, it’s not a decision that should ever be taken lightly, and the timing of the sale also needs to be considered. 

Retirement and Transition Planning 

We all dream of living out our golden years as the captain of our own ship – free from the stress and frustration of managing a successful dental practice and finally able to pursue our other passions. After decades of toil and service to the medical community, you definitely deserve it.

Unfortunately, most dentists are woefully unprepared for the realities of navigating their retirement transition  – and it is easy to understand why. For the last couple of decades you have been preoccupied with running your own business, while also providing essential health care services to patients who may even have grown into your closest friends and family. 

No one wants to think of the day that, for better or worse, it all comes to an end. If you are like most healthcare professionals, you probably never even considered the idea of retirement until that one day you realise, it’s time to maybe take a step back. And, that’s okay, all you need now is for someone to help show you the way.

What is the Right Age to Retire From Your Dental Practice?

Most people fail to understand how physically demanding it is to be a dentist. The constant bending over, sitting down, standing up, cleaning, polishing, drilling – it takes a toll after 30 or 40 years!

Don’t forget to factor in the stress of being in business for yourself in a field that can often be rather thankless. I mean, how many more articles must you read where people confess to being more afraid of the dentist chair than the grave? The harsh reality of the dental field is that you cannot do it forever, even if you want to. Your body and/or mind simply won’t allow it. So, what is the right age to retire?

Most people want to be retired by their early-to-mid 60’s, and it’s no different in dentistry. However, the desire to retire is much less important than having the ability to follow through with it. That is why it is of the utmost importance to begin planning your exit strategy in your 40’s and 50’s. Every day after your 60th birthday is practically a countdown until your back begins to falter, your knees become stiff, and the dreaded arthritis causes your skilled hands to swell and shake.

You neither have to burn out, nor fade away. By planning your exit strategy now, you can rest easy knowing that you can step away from your practice gracefully and still seemingly at the top of your game without having to deal with the inevitable ravages of time (at least not publicly).

How To Handle Your Dental Transition

Fortunately there are many options available for dentists on the verge of retirement. It doesn’t matter if you own and operate your own practice, work with a group of partners/associates, or are a member of a corporate group.Of course, everything relies on your ability to plan ahead so here some of your options.

Sole Practice Owner

As the owner of a sole practice, you have the most “elbow room” to manoeuvre in regards to your retirement transition.

The most (financially) beneficial arrangement favoured by most dentists is a flat out sale of their practice to a corporate group, a transaction with which we are very familiar. However, another route that might be for you is to take on an associate dentist. After spending some time mentoring the new associate dentist, and training them on how to care for your patients, they should be able to buy you out of your own practice. Yet, this method does require a considerable amount of time and effort if you do not choose your associate wisely. 

Partnership

Transitioning management of your dental practice from you to your partners can be a mutually beneficial option for larger practices.

Through an equity buy-in, buy-out, contract you can arrange the “sale” of your practice, decades before you even need to. This saves you from dealing with a lot of stress and frustration further down the road. It should be noted though, that transactions between people who have known/worked with each other for years can sometimes get complicated. If you wish to preserve the relationship you once had with your partners and still get the best money for your practice, we highly recommend contacting a qualified Dental Practice Broker like Samera Business Advisors.

Corporate Group

If you are already a member of a corporate dental group your transition should be fairly straightforward. This means that it should already be more or less spelled out within the terms of your contract with the organization. Yet, sometimes it is difficult to negotiate the final offer on your share of the practice. 

Letting your partners and employees know about your retirement

Informing your staff or partners about your imminent departure from the business is the most uncomfortable aspect of selling your dental practice. These people may have been with you since the beginning of your career. They have watched your skills develop and your business grow and they have reaped the rewards along the way. Telling them that you will no longer be around to help or give advice could be a terrifying concept for them. Therefore, there is no easy way to go about it.

We recommend that you approach the subject with compassion and tact. Choose the right time to let people know about your retirement. Ease their stress by letting them know what your plan is, and your timeframe. Take the time to talk with them privately about what their options are moving forward.

If you are concerned about how your staff will take the news, there are ways that you can make them feel involved in the process. For instance, there are some transactions where you can include terms that require the future-buyer of your practice to develop the original staff. Of course that is not always the case, and if you want terms such as those included in the sale of your dental practice, you should consult with a qualified Dental Practice Broker. 

Letting your patients know about your retirement

Similar to informing your staff and partners, telling your patients about your retirement can be incredibly stressful.

We recommend sending a personalized letter to your current patients thanking them for their years of support and friendship. Involving patients with news like this plays hand-in-hand with good marketing. You want your patients to feel comfortable and at ease with their dentists, and that begins with having a great patient and dentist relationship. In the letter, you should comfort them by explaining what your transition means for them.

  • Do they need to find a new dentist?
  • Will a new dentist be provided for them?
  • Can you give them a referral to another qualified dentist in the area?

These are just some of the questions that will immediately come to their minds, so make sure to answer them in as much detail as possible – before they have to ask.

However, do not inform your patients of your transition until after it is fully planned, with a buyer already secured and an exit strategy in place. You do not want them to feel as though you are leaving them “high and dry” with no support for their healthcare needs.

Determining the Value of a Dental Practice 

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) is currently used as part of the dental practice valuation process. As I mentioned earlier, the current range of prices that a single practice can expect to attract averages at between 5x and 7x EBITDA. However, let’s put EBITDA to one side for now, and look at what factors come together to create the value of a dental practice. 

It’s important to remember that every practice is different. There are several factors that can form part of the value of a practice including the accounts over the previous three years, the potential for development and expansion and whether a time-limited public contract is in place or an open-ended contract. There are too many variables to list them all but one of the most important things to remember is that pricing should always be competitive. 

The Importance of Competitive Pricing

There is great demand for all types of dental practices, so it’s certainly possible to sell profitably. However, it’s important that a practice is not over-valued, restricting opportunities for sale. Buyers are often looking for a practice that they can buy with a view to add value and to re-sale at a profit in the future. This means that they do not want to overspend. The sale price of a practice should always be based on transparent figures and evidence. 

The price has to be supported by the value that the practice represents. It’s easy to adjust an EBITDA upwards, to try and demand a higher selling price, but this tends to simply lead to a bad reputation for the seller. Getting help from a specialist dental sales agent is always a good idea. I know I have ensured that several clients have embraced competitive pricing over the years, making completing a sale a lot more profitable, simpler and quicker for them. 

EBITDA Multiple Explained

I have mentioned how important EBITDA is to the value of the business, so I thought it might be a good idea to explain why this is. There is more detailed information available to read, but I am going to cover the basics here. 

The Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) represents the true operating profit of a practice. The figure is calculated by adding interest, taxes, depreciation and amortisation back on to net income. It’s worth noting that EBITDA does vary between practices, depending on what costs are involved in running a business, and how it’s run. A realistic EBITDA figure should reflect the value of a practice. 

EBITDA Multiples 

Upon calculating a figure of EBITDA, valuers apply a multiple to EBITDA to yield a value for the business. Every sector multiple varies, which is really dependent on the demand for businesses in such sectors. For instance, in the tech sector, we see very high multiples applied to EBITDA, whilst in Dentistry we see multiples ranging from 6-7 x for single businesses and usually a higher multiple for larger dental groups.

Associated Costs that Buyers Will Scrutinize

It’s not just the basic value of a business that factors into a potential buyer’s decision. I have certainly noticed over the last few years that buyers are a lot more savvy when it comes to the business aspect of owning a dental practice. Profit is king at the end of the day. This is why there are so many other associated costs which are scrutinized by anyone looking to buy a dental practice which sellers need to be aware of. 

Cost of support staff

It’s important to look at staffing costs before a dental practice is placed on the market. These costs represent significant outlay, and potential buyers could be put off if they are higher than would normally be expected. Generally, it’s normal for the cost of support staff to be around 15-16% of total revenue. Most successful practices should already have a measure of this situation as operating costs should already be optimised. 

Associate costs

Associate costs are an essential factor when determining the profitability of a practice. This is why they are likely to be one of the first costs that is scrutinized by potential buyers. When selling a practice, it is important to be able to provide a breakdown of the salary of each dentist, as well as the income created by their activities. 

Hygienist and therapist income and costs

The income and related costs associated with hygienists and therapists employed at the practice will normally be considered separately by buyers. This is because some of the services they provided come at a lower cost than when they are provided by associates and can generate a similar level of income. 

Retained principal and property costs

There are other costs which may factor in the decision making process of a buyer. Two of the main ones are:

  • The cost of a retained principal who will normally take earnings as a dividend or from the profits of the business. 
  • Associated rental costs. Most buyers will check to see if they are competitive. 

The Selling Process

Stack of files

No dental practice sale is identical to another. It usually takes at least 6 months for the process to be completed, but this varies depending on the type of practice that is involved and the support structure that is in place. The process itself should always involve certain important steps. 

Work Out Your Timeline to Sell Your Dental Practice

When are you looking to sell your dental practice? Is it in the next 12 months, or is it in 3-4 years time? Are you thinking of selling but still working at the practice or are you looking to make a clean break when you sell?

Once you have a clear idea of when you are thinking about selling, work backwards, and plan what you think needs doing. Ask yourself these questions:

  • What is the financial performance of your dental practice like?
  • How profitable is the dental practice?
  • Does it show a steady improvement or decline?
  • If in decline, what needs to be done to turn the situation around?
  • How dependent is the practice of your income generation?
  • How dependent is the practice of any key income earners?
  • If you fell ill at the practice, would it still be profitable?
  • If not, what would need to be done to make it profitable in such a scenario?

If you have no idea what the answers are to these questions, then you have your work cut out for you, and you really need to get your ducks in a row to ensure you achieve the sale you want in the timeline you envision. Otherwise, you will struggle to get a qualified buyer with the right money for your dental practice.

Creating a Power Team to Make the Selling Process Work

Running a dental practice is one thing, selling it successfully is something completely different. It is vital to have the right professionals in place to ensure that the process progresses smoothly. Creating a power team makes it far more likely that a sale will be secured at the right price. 

There are a variety of industry experts that are necessary to have on board. This needs to happen before the practice even goes on the market, as they need to understand the practice in order to provide the best possible advice and support. 

Specialist Dental Sales brokers 

Making sure to engage a specialist dental sales broker is important. It provides far more value than trying to sell a practice without professional assistance. Specialist dental sales brokers have access to a long list of potential buyers who they can introduce to clients. They can also professionally value practices, create sales brochures and deal with questions, queries and interest in a practice. The normal cost of using this service is around 2.5-5% of the sale price. 

Specialist Dental Accountants 

A specialist dental accountant and tax advisor helps a seller to get the most from the sale of a practice. They know how to present accounts in a way that is attractive to buyers. They can also provide advice on aspects such as ownership of the business and how to optimise the tax position of the seller. 

Seek advice early from your Specialist Dental Accountant. You need to do this before selling as there may be tax structures that could be considered before the final sale which could save tax.

Specialist Dental Solicitors 

It’s never a good idea to use the services of a solicitor who has no experience of the dental practice market when selling a dental practice. They may be an excellent solicitor when it comes to dealing with the sale of a home, but without the required specific experience they could cause serious delays with the sale, or it could collapse altogether. Do not forget, the solicitor that is chosen will be advising on vital aspects of the sale such as the contract, due diligence and property transfer, so expertise in the field is essential. 

21.3 Getting your financial house in order

Whilst high-quality clinical dentistry is essential in order to sell your dental practice, it is critical to have accurate and up-to-date financial information about your dental practice as well. Why? Well, the reasons are two-fold.

  1. If you are serious about improving your financial performance, you will need to know where things are working, but also where the problems lie. Not knowing the figures means you don’t really have your finger on the pulse with respect to your practice performance and therefore, its valuation. Knowing your financial performance, and adjusting it accordingly, is imperative to maximising the sales value of your dental practice.
  2. When it comes to showing off your financial performance to prospective buyers, having an up-to-date set of accounts, plus recent management accounts really are essential. These can be a deal breaker if not available, as a serious buyer is only going to buy your practice if they have accurate financial information about your practice in the first place.

If you have up-to-date financial information, it is then imperative to ensure your cost base is managed well, whilst your revenue is strong in order to maximise your EBITDA.

For instance, look at your staff costs; have you got too many staff for the revenue you are generating? Are your laboratory bills carefully managed? What about your materials, have you sourced cost-effective suppliers? And do you have a tight control over ordering each month? Marketing? It is very easy to spend on this and is often worth the money but you need to take a step back and reflect, are you getting a good return on it? 

Run through each line of your accounts and see where you can make potential savings, then act on making the changes needed. Why? Because every pound saved increases your profit, which then increases your EBITDA, and correlates to further increase your practice valuation.

In summary, if you want to get a great price for your practice, make sure you have up-to-date and accurate financial information for any prospective buyers while you have also ensured your cost base is well managed, and your revenue is maximised.

Marketing a Dental Practice for Sale

From my own personal experience, the person best placed to extol the virtues of a dental practice is the owner. They are also the best person to answer any buyer questions, honestly and thoroughly. This is why I would always recommend the seller is present when buyers view a practice. 

This is an important part of marketing a dental practice, as it’s an opportunity for the seller to highlight the positives. In order to get to the point where people are viewing the practice, the specialist sales agent will carry out a detailed market appraisal of the practice and compile a brochure highlighting the aspects of the practice which potential buyers should focus on. 

Non-Disclosure Agreements

Non-disclosure agreements are an essential feature of a dental practice sale. They prevent potential buyers from discussing the sale with anyone except their own financial advisors. This is important as you do not want any details of the sale to leak out prior to completion. 

It’s not even a good idea to disclose any information to people working in the practice. There is no certainty that a deal will go through, until completion actually happens. It’s not worth creating stress and uncertainty amongst the dental practice team when there is no valid reason to do so. 

Considering All Offers Carefully

All offers received should be considered carefully. An offer that guarantees a large sale price may seem like the best choice, but it’s not a great deal if the buyer making it is going to struggle to secure funding. There are many things to consider when looking at offers that have been made. Here are a few which are fairly common. 

  • Can the buyer secure funding easily and quickly?
  • Is a lower offer the best choice as a quick sale is guaranteed, so associated costs will be reduced?
  • Is staying on as an associate part of the offer?
  • Are any of the current team part of the offer, Do they need to agree to stay in order for the deal to progress?
  • Does the buyer have the substance for the sale to be successful?

It’s never as simple as just picking the highest offer and running with it. 

Negotiating a Deal

Once an offer comes along which looks interesting, it’s time for the dental specialist sales broker to structure the right deal for the seller, taking into account what the seller expects from the sale and what their tax situation is. There are several different arrangements for payment that can be put into place. 

  • Upfront payment transfer for public-service driven profits.
  • Deferred payments when performance based criteria comes into play. 
  • Earn out agreement when a buyer is not willing to meet the sale price now but payment of an additional amount based on profits can be made at a later date. This can mean that the seller achieves more than the original sale price at the end of the day. 

Once the deal has been negotiated and agreed, Heads of Terms should be put in writing so that there is no room for misunderstanding. These terms will normally be written by the buyer’s solicitor but they should be scrutinised by the seller’s expert dental solicitor. They should always be marked as “subject to contract”. 

A timeline for exchange and sale can be agreed at this point, but is subject to due diligence being completed successfully. 

Carrying Out Due Diligence 

Once this stage of the selling process has been reached, it’s time for the buyer to carry out due diligence. It’s important that the seller is able to provide the required information and documentation in a timely manner. This information falls within three areas, legal, clinical and financial. Information that the seller is expected to provide includes:

  • Historic accounts and financial records.
  • Patient records.
  • Governing body registration details.
  • Employment contracts. 
  • Associate agreements.
  • Supplier contracts.
  • Hire purchase and lease agreements. 
  • Performance data.
  • Complaint details. 
  • Inventory lists. 

This list is not exhaustive. Due diligence can be a complex process and sellers always need to be prepared to provide any requested information and to answer buyer’s questions in a transparent manner. 

Standard Purchase Agreement

Both parties should be protected as part of a Standard Purchase Agreement. The buyer’s solicitor will normally request a warrant from the seller to state that all contractual and financial information provided is accurate. The seller’s solicitor should negotiate to ensure that any inclusions in the warrants minimise the risk of any potential future claims. 

A Standard Purchase Agreement will normally include:

  • Sale of the practice and assets.
  • Handover.
  • Post completion considerations. 
  • Partially completed treatments.
  • Employees of the practice. 
  • Non-Solicitation and restrictive covenants.
  • Warrants.
  • Guarantees. 

Exchange and completion

Once the due diligence is completed, it’s time to agree to the exchange and completion. If money is being paid up front, this will normally be transferred into the bank account of the seller’s solicitor on the date of completion. 

Choosing a Dental Practice Sales Agent 

When you’re putting your dental practice up for sale and are looking for a good person to sell to, you need to make sure that you choose a dental practice sales agent that you can trust to ensure that the process progresses smoothly and that you can secure the best possible price for your practice. You need to enlist the services of experts in dental practices for sale who can make sure that your practice comes to the notice of as many potential buyers as possible.

They should also be able to help you with all aspects of having a dental practice for sale, such as preparing your practice for sale, carrying out the valuation and dealing with the process of due diligence, before a sale is finalised. There are several factors that you need to consider when choosing a dental practice sales agent. 

At Samera, we have helped many clients successfully sell their dental practices on the best terms available across the market.

What Size is the Database of Registered Buyers?

A successful sales agent, who has experience in dealing with dental practices for sale, should have a significant database containing the names of potential buyers for your dental practice. Ask about the number of names that are in this database, so that you can get a good idea of the number of people who will be made aware of the sale of your practice. Sales agents should also be able to market your practice outside of the names in this database.

What is the Valuation Process?

Getting an accurate valuation for a dental practice for sale is an essential part of the sale process. You should be able to access an easy to use valuation service. This should be followed by the provision of a sales pack containing details of the sales process.

What Dental Practice Health Check Services are Available?

In order to secure the best price for dental practices for sale, each practice needs to be as healthy as possible, before the sales process begins. The dental practice sales agent you choose should be able to perform a comprehensive health check for your practice. Areas that should be covered include:

  • The performance of the practice.
  • The profitability of the practice.
  • Comparisons with other practices.
  • A breakdown of the valuation process.
  • Advice about how to improve the value and marketability of the practice.

This type of health check is vital when selling a dental practice.

How Good is the Seller Information That is Provided?

Sales agents who are dedicated to providing a high standard of service when dealing with dental practices for sale should provide excellent seller information. This includes facilities such as a comprehensive website FAQ, so that sellers can easily see what the process of selling a dental practice involves.

Is There a High Level of Availability?

Selling a dental practice is not something that happens at a certain point of each day or week. If you are selling a dental practice, you need to be able to contact your sales agent when necessary, and be sure that you will get a timely response. A reputable sales agent should respond to any queries within 24 hours of contact.

Are There Any Success Stories?

Successful dental practice sales agents will have several ‘dental practice for sale’ stories to tell. They should be able to provide evidence of satisfied clients and be able to promote their experiences in the field. This information should help you to see how they could put the services involved in those success stories to use in helping you to complete the successful sale of your practice.

Is There a Good Standard of Communication?

Good communication is something that is essential to any successful sale of a dental practice. This communication includes all provision of advice and support, from sales process advice on the website to readily available communication systems, such as email and telephone. You need to make sure that you can easily communicate with the professional that you choose. As I previously mentioned, they should be able to get back to you within 24 hours.  

You also need to make sure that the communication you have is easy to comprehend. The sales agent should have well-developed communication skills that enable them to give you advice and support that you can understand. You want someone who is able to get straight to the point without messing you around or keep you waiting.

Is There a High Level of Expertise With Tax Issues and Due Diligence?

Your dental practice sales agent needs to be experts in all aspects of the sales process. This includes dealing with any tax implications and ensuring that due diligence is successfully completed before any sale is finalised. The due diligence process can be complex, so it’s important to have the right professionals in place to help.

These professionals can help you make sure that you have all the necessary documentation in place. This documentation includes:

  • Accounts and financial records.
  • Patient records.
  • Registration details.
  • Contracts of employment.
  • Associate paperwork.
  • Contracts with suppliers.
  • Lease and hire purchase agreements.

If you have a dental practice for sale, you need to make sure that you take all of these factors into account, when you are choosing a dental practice sales agent. Choosing an agent who can provide examples of previous successes means that they are more likely to be able to help you successfully sell your practice.

You also need to think about all aspects of the sale process including finding and engaging potential buyers, dealing with tax implications and ensuring that due diligence is completed with no problems. Again, sales agents need to be able to communicate openly and clearly with you, so that you understand what is happening, throughout the sale process. There needs to be complete transparency. 

7 Learning Points I Wish I Had Known Before Selling My First Practice

Back in 2013, I was in the process of selling my first dental practice. Since 2004, we had built 3 private dental squats from scratch and then in 2013 sold one of our practices.

These are the 7 points we wish we had known before selling our first dental practice, and how we would do things differently now.

Learning Points:

  1. Whilst it may be flattering to get someone out of the blue wanting to buy your practice at a profitable price, understand their motives.
  2. Get an independent valuation of the practice, don’t entertain direct offers until you get an independent valuation done.
  3. Looking back, whilst we would have had to pay a broker a fee, if they had been any good, we still would have walked away with a price much closer to the offer price.
  4. Provide sufficient information up front to the buyer so there is a reduced likelihood of them chipping away at the price. In addition, make sure the Heads of Terms offer some protection to you if such a situation arises.
  5. Ideally prepare your practice for sale. Improve the revenue and profits and then go to the market.
  6. Don’t entertain just one buyer, see who else is in the market that may want to buy your practice, therefore, use an experienced broker.
  7. Get in touch with a Practice Sales Agent like Samera, they will help you exit your business on the best available terms in the market.

Summary: Selling a Dental Practice

There is plenty of scope to make a good profit from the sale of a dental practice. However, it’s important to make sure that selling is really the best option, and that the practice is in the best possible position to achieve a good sale price. Making changes to plans half way through, and withdrawing a practice from sale, can only have an adverse effect on the reputation of the seller. 

EBITDA may form the basis of determining the value of a practice, but the sale price must be competitive. Being over ambitious with the sale price is only likely to reflect badly on the seller, and can seriously restrict the amount of interest there is in the property. 

Making use of specialist dental sales brokers, dental accountants and dental solicitors is essential, if the sale is to progress efficiently. They have the knowledge and expertise that is needed to market the practice effectively and ensure that all aspects of the sale are dealt with in the correct manner. 

The process of due diligence is an important aspect of the successful sale of a dental practice, so it’s important for the seller to have all of the relevant information prepared, prior to the start of the sale process. Once the sale is completed, it’s important for any seller to consult with a specialist dental accountant and tax expert regarding the matter of reducing the amount of Capital Gains Tax payable, if possible. 

Other Sections:

Start a Dental Practice

Market a Dental Practice

Grow a Dental Practice

Download our new eBook to make 2021 your most successful year?

  • Buying or starting a dental practice
  • High performance digital marketing
  • Strategies for growing a practice
  • Maximising your exit valuation