When planning to sell your dental practice, it is important
to follow a few important steps to realize the most value from your practice.
Implementing these steps from the beginning will make your practice sale
significantly easier and more profitable.
1.
Continue to generate and maximize your gross
collections. It is easy to fall into the
trap of declining revenues when you know that you are planning on selling your
dental practice. Unfortunately, that
will also decrease the sales price of your practice. A prospective buyer wants
to see a steady and growing practice when looking to purchase. If it is declining then they become much more
reticent and that will show in their offer and may even put them off to
presenting an offer. In addition, banks
will use the down year in their calculations when determining whether they will
approve a loan.
2.
If you are planning on selling in the next 2-3
years, continue to invest in modern dental equipment, or at least keep the
equipment as up-to-date as possible. A
prospective buyer will offer less for the practice if they see that they will
need to invest in new equipment early on in the process. Buyers like to see that the dental practice
they are purchasing is a practice that has kept up with the times. It also lets them know that the patient base
is used to a more modern and current practice, which is the practice philosophy
of most buyers today.
3.
Your overhead numbers should be true
and
accurate. If your overhead
numbers include a lot of discretionary expenses, the buyer will see an inflated
overhead and may be frightened off by the overhead percentage. While a buyer will need to perform their own due
diligence, you want that process to be as smooth and accurate as possible. A buyer may not even get to the point of due
diligence if they are frightened off by high overhead numbers. The sooner a
buyer can have their due diligence performed, and not be impeded by removal of
discretionary overhead numbers, the sooner you will be able to move on to a
successful transition.
4.
If you are in a lease situation for your
practice, it is important to have all the lease information available for the
prospective buyer at the time they are engaging in the process. A seller should be sure that their lease is
transferable or assignable prior to selling the practice. If a buyer needs to
negotiate a new lease with the landlord vs a transferrable lease with lease
options they may be discouraged to buy the practice. Having to negotiate a new lease will be more
expensive for the buyer and they may not want to get involved in that
situation. It would be beneficial to
have all that information ready for a prospective buyer when they are first
showing interest in your practice.
5.
It goes without saying that the appearance of
the office is of the utmost importance.
The first impression the buyer has is of the appearance of the
practice. Just like buying a house,
maintaining “curb appeal” is critical.
Most buyers are willing to paint and make the practice “their own”, but
they want to start with a good, clean canvas. Keeping the practice clean, well-organized and in top shape will
bring a more positive offer from the buyer.
6.
Having data that is verifiable is crucial for a
young buyer. They will want to see
practice management reports for demographics, fee schedules, participating
insurance reports, A/R, and P & L statements. Presenting this information in the beginning
will keep the process moving in a positive direction and will keep the due
diligence process moving along.
For more information, contact Ellen Dorner (410) 616-2042. www.NLTransitions.com
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