Selling a dental practice is a huge life decision. You have likely been working in the industry for decades, developed a routine, and come to know your patients personally. Not only that, but you’re selling a practice that you have poured yourself into, and perhaps built from the ground up. Before you jump into the market with both feet, take time to ensure that you are sidestepping some of the most common mistakes during the selling process.
- Too Fast, Too Soon
The idea of retirement may be appealing, but don’t leave the business before you—or your dental practice—is ready. Too often, sellers will seek an immediate opportunity to walk away, but end up robbing themselves of their practice’s full value because they have let their practice deteriorate or have not kept up with capital investment. By detailing a transition plan, including financials and potential buyers, 5-10 years ahead of retirement, sellers are afforded enough time to assess their greatest needs and make changes to maximize value.
- Selling Yourself Short
Knowing the value of your practice before selling might be a no-brainer, but without an industry standard for valuation are you sure you are getting your maximum worth? Some professionals in the industry might encourage you to sell for 60-75% of total collections, but this doesn’t account for unique variables in each practice. Since no two practices are alike, invest in a Certified Valuation Analyst (CVA) to assess every aspect of your dental practice. A CVA can provide you with the most accurate selling price, and suggest steps to increase value before putting it on the market.
- Leaving for the Wrong Reasons
If you’re like most dentists, you joined the industry to serve patients, not to manage investments or head up the HR department. Unfortunately, today’s dental practice needs more than an office and a chair. Dentists feeling overwhelmed by managerial duties may decide that it’s time to move on to the next chapter when they find they aren’t able to focus on their patients. Before throwing in the towel, explore your options to continue practicing, while leaving the managerial side to business-minded individuals.
Walking away on closing day can be difficult. Rather than selling your practice outright, ease into retirement by staying on after you sell. Most buyers prefer a slow transition to maintain patients and ensure continued growth after the sale. Structure an agreement with a gradual scale down to continue focusing on your existing patients, while limiting your involvement in managerial responsibilities.
Alternatively, Dental Support Organizations (DSOs) provide critical business management and non-clinical support to dental practices, letting you hand over the managerial reigns and focus on what matters most: your patients.
- Taking It On (Alone)
Selling a practice is a huge undertaking full of potential tax consequences, financial missteps, and complicated analyses. But no one said you had to do it alone. Hire a team of experts (including CPAs, CFPs, and CVAs) that can guide you through the complicated process of structuring agreements and finalizing a sale.
Whether you’re starting to think about selling your practice or well underway, our team can help you navigate some of the more difficult nuances of the process. Contact us to get a free dental practice evaluation.