Careers have a funny way of shaping themselves out. One minute, you’re setting foot in a dental practice you’ve recently purchased, and the next, you’re trying to figure out how to move from it. If you’re currently in that position—planning to sell to your dental practice soon—you’re reading the right article.
This article will discuss all you need to know about selling your dental practice. From getting a transition team to ensuring you tick off a list of post-closing activities, we’ll highlight the steps you need to take to transition from your current dental practice ownership experience to the next phase of your career and life.
Why Dentists Choose to Sell their Dental Practice
For many dentists, practice ownership is an incredible venture and experience. There’s nothing like running a dental practice with a staff dedicated to providing the best dental care possible to patients. It’s a lifelong goal for dentists and an achievement that shouldn’t be understated.
Although there are several perks associated with owning a dental practice, there comes a time when dentists have to decide to sell their practice. It’s never an easy decision, but it’s one that most dentists have to make at some point. And in most cases, dentists choose to sell their practice because they are retiring or seeking a better location.
Retirement is a phase of life that many dentists look forward to. It’s not solely limited to dentists who are elderly; it could also refer to a transition from practicing dentistry. And when you’re about to enter this phase, you have to decide what to do with the practice you own.
On the other hand, some dentists decide to sell their practice because they want to move to an insurance-friendly city or one with a better target market. In this case, selling your dental practice could help inject some capital into your plans to buy a new practice or reignite your career in a new location.
Whether you’re retiring or simply moving, you have to keep specific steps in mind before, while, and after selling your practice. This is one of the biggest decisions you could make, and it is crucial that you get it right.
With that in mind, in the next section, we’ll review seven steps to take before selling your dental practice.
7 Steps to Take Before Selling Your Dental Practice
- Get a Transition Team
Having a transition team is key to ensuring your dental practice transition process goes smoothly.
Your transition team should consist of individuals who are experts or well-versed in the dental industry. Their responsibilities include advising you on key decisions, reviewing contracts and other necessary documentation, and addressing any questions you might have during the process.
An excellent dental practice transition team should include a dental broker, a certified public accountant, and a dental attorney or lawyer. Together, these three professionals will help facilitate your transition from start to finish.
- Keep It Confidential
While planning to sell their dental practice, many dentists tend to make one common mistake dentists: announcing their intent to sell too early. Your dental practice sale or transition process can be quite challenging if it isn’t kept confidential. Remember, nothing is agreed upon until it is signed.
Resist the urge to announce it even to your staff before documents are signed. This could impact your team’s morale and might result in resignations and patient exits. And if the potential buyer gets wind of your low patient retention, the conditions of the sale might look very different from what you’d want it to be.
In fact, many dental brokers will insist that potential buyers sign a confidentiality agreement and so, on your part, the least you can do is keep quiet for now.
- Set a Timeframe
If you’re planning to retire or relocate, you likely already know when it would happen. So, just as you plan for your retirement or relocation, plan ahead of time for your dental practice transition. It is vital to set a timeframe during which you intend to find potential buyers, close a sale and undergo some post-closing activities.
Your timeframe can be as earlier as five years or as little as a year from intended retirement or relocation. It should not be less than a year. Remember that you need ample time to put the pieces together, compile paperwork, gather a transition team, sort out all necessary documentation and finally sign on the dotted lines.
- Plan to Pay off Debt
Before you can sell your dental practice, you will need to take care of any debts owed by your practice. It will be challenging to close a sale if your debts aren’t paid. So, be sure to have a plan in place to pay off your debts.
If you’re unsure about how to proceed, start by figuring out what assets belong to your practices and what debts are owed on those assets. If you’re in the United States, you can conduct a Uniform Commercial Code Document Search (or UCC Search) to look through your practice’s financial records and point out any loans you’re secured in the past.
When you’ve identified payments that need to be made, you can get payoff letters from the lenders, so you know how to proceed. You can also get a broker involved in the loan payment process. When you finally make payment, be sure to follow up with the lenders to ensure they’ve filed for termination.
- Get Your Practice Appraised
A practice appraisal is an unbiased professional opinion of your dental practice’s value. To sell your dental practice, you will need to get a valuation from a practice transition specialist.
This specialist will consider your practice’s historical financial performance, assets, demography, location, staff, net cash flow after expenses, amongst other factors. They will use this information to suggest a dollar value of your dental practice.
An appraisal report is essential because it can prevent you from lowballing yourself or pricing your property out of the market. Make sure you get it done as soon as possible.
- Gather Relevant Documentation
So much paperwork goes into selling a dental practice. You must start gathering all the files and documents you need early. Having the right documents ready and in hand can speed the process and help you remain prepared for sale and closing. Any qualified dental practice buyer will ask to see your practice’s documents before proceeding.
You can review this checklist of documents needed to get a better sense of what to start gathering. Contact your certified public accountant when you’ve gathered all your documents. Get them to review your documents to ensure you’ve got all your ducks in a row.
- List Your Dental Practice
By the time you’re listing your dental practice, you should have all the documents needed.
This step also involves promoting your listing. If you’re working with a broker, they can share tips on advertising the listing via directories, association websites, etc. If you’re not using a broker and you decide to advertise publicly and online, be sure to keep tabs on potential buyers’ requests and send replies on time.
What Dentists Should Right After Selling Their Practice
Congratulations, you’ve finally sold your dental practice. You and your transition team have worked to find a good buyer, and you’ve finally signed on the dotted lines. Now, it’s time to move on to the next phase of your career and life.
But just before you ride into the sunset, you’ve got to take care of few things first.
- Talk to Your Staff
Earlier, we discussed the importance of keeping things confidential over the course while you’re looking for a buyer or negotiating with one. We suggested that you shouldn’t announce your intentions to sell your dental practice even to your staff. However, if you’ve closed a sale and signed all proper documents, you can go ahead and let your staff know.
Depending on the situation, reassure your staff that they will be in good hands with the buyer. Let them know when you intend to conclude your transition process, i.e., your last day at the office. Your staff will likely have many questions when they find out about the sale, so put together a document that addresses some of their questions.
Also, be sure to express your gratitude for their years of service.
- Introduce Your Staff to the Buyer
You should consider introducing them personally to the buyer. This will be good for both your dental team and the new buyer.
Personal introductions can be a great way to help the buyer understand each staff member’s role, value, and contributions so they can make informed decisions on their future. For staff members, personal introductions could help reassure them and encourage them not to look elsewhere.
- Let Patients Know
Once the staff has been made aware of your decision and sale, you should announce the news to your staff. This can be done via mass email communication or direct mail to all patients on your mailing list. If your practice has a social media profile, you can also make the announcement there too. Also, don’t forget to update your dental website with the news.
In your announcement, you can let patients know why you’ve made this decision now and introduce the buyer to them. Use this as an opportunity to reassure patients that they are in safe and good hands with a new dentist. Also, let them know when your final day at the practice will be.
Selling a dental practice can be a challenging process. For many dentists, it will be the most crucial professional decision and step they ever take. You need to position yourself and your dental practice to be in good shape long before making that decision. This means implementing essential dental marketing strategies that will boost your patient acquisition and requisition and, ultimately, improve your practice’s valuation.
Speak to a Connect the Doc specialist today to learn how to take your dental marketing to the next level.
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