First Steps toward Selling Your Dental Practice
Doctors who decide to take advantage of a favorable market should act quickly to launch the selling process. There are vital steps to take – and crucial realizations to face – in preparing for this all-important transaction. Here are the first steps you should make when selling your dental practice:
1. Once you have made the decision to sell, you should gather the information needed to market and subsequently sell your dental practice. Here’s a list of the key items needed:
• Three year’s profit and loss statements plus a current year to date profit and loss statement (last years P&L needed for first meeting)
• 3 years of Federal income tax returns for the dental practice (helpful, but can follow later)
• List of fixtures and equipment (needed when listing business)
• The lease and any lease-related documents (needed when listing practice)
• List of loans against the dental practice with amounts and payment schedule (needed when listing practice)
• Copies of any dental equipment leases (needed when listing practice)
• An approximate amount of the inventory on hand (needed when listing practice)
• List of all current contract, HMO PPO, Medicare, IPA, Union, etc.
• Bank statements verifying deposits for last 2 years & current year.
• Names of outside advisors (needed when listing practice)
2. Financial records must be accurate, up-to-date and reflect the dental practice’s actual financial performance. Some buyers may be willing to buy potential, but they won’t pay for much for it, thus your bottom line performance is the critical factor that establishes the market price of your practice. Sellers should be open about all aspects of the dental practice that might affect the sale; otherwise, once the real facts are discovered, the deal may fall apart and the sale plus a qualified buyer may be lost.
3. Sellers should also seek the advice of a dental practice professional in determining value. A First Choice Practice Sales Broker will apply industry-tested valuation methods, and will incorporate those intangibles to ensure that the practice will not be under priced. At the same time, your First Choice Practice Sales Broker will point out to sellers how the price is dictated by the marketplace and that realistic pricing is an absolute must. Buyers carefully compare the prices and financial performance of various practices’s on the market and generally will not even consider overpriced practices.
4. Remember that you are part of the marketing team. Your practice broker can’t do it all and might even ask you to come to an office meeting to tell the rest of the staff about your practice. Follow your First Choice Practice Sales Broker’s advice about dealing with prospective buyers—there’s a right and a wrong time to meet them.
5. Sellers benefit many times over from the guidance of a practice broker professional. The practice broker who lists a practice for sale represents the seller and works toward completing the transaction in a reasonable amount of time at a price and terms acceptable to the seller. The broker will also present and assess offers, and, at the appropriate juncture, he or she can also help in structuring the sale transaction itself. The broker and the seller become a team, involved in a relationship of mutual trust, with the common goal being the successful sale of the practice.
Seize the Moment: Is This the “Right Time” for You?
If you have made the decision to sell your dental practice, the wisest first move is contact your qualified First Choice Practice Sales Broker professional, who can . . .
• Advise you on pricing and structuring the sale of your practice.
• Prepare the marketing strategy, using professional resources.
• Screen and qualify buyers for your business.
• Educate buyers in the practice-buying process.
• Keep you informed about market reaction and buyer interest.
• Present offers and point out strengths and weaknesses of each offer.
• Facilitate negotiations and structure the deal.
• Keep you informed, with regular communication from the buyers
When it comes time to sell, one of the best decisions a dentist can make is to continue managing his or her practice efficiently (and profitably), while depending on the services of your First Choice Practice Sales Broker to forge the steps of the sale. The practice broker professional is an invaluable advisor during the entire process, offering both objectively and negotiation skills honed through years of experience in the buying and selling of practices.