Sell your dental practice successfully with these 5 tips
Having spent a number of years as a practice owner, you may now be looking to ease off a little. Or, you have built up a large patient list, have an excellent reputation and feel that the time is right to maximise your profits. Whatever your reason for selling your dental practice, you’ll want to ensure that the process is well organised and stress free. Below are five helpful tips to help you achieve the best possible outcome.
Get your house in order. Consider when you want to be selling your dental practice; is this something you want to do in the next 12 months, or in 3 to 4 years’ time? Whatever you decide, make sure your financial information is accurate and up to date. You will need to show your financial performance to prospective clients. A practice with incomplete or poorly drafted accounts is bound to raise questions for any potential buyer and their accountant. This may well cause delays and additional costs during the due diligence stage of the sale. Poorly drafted accounts can also create issues for the buyer when seeking to obtain finance.
If you have a patient plan, ensure that it is maintained. A coherent patient plan will tell a lender that cash flow is steady. Again, this will make it easier for buyers to get funding in place.
Have copies of all contracts readily available, including associate contracts and those of employees. You will have service contracts with a number of providers and records of those should be kept too. Having a PDF/scanned folder of all those documents on a storage drive/disk helps immensely – label them appropriately so they are easier to search.
- Essential improvements
Consider what changes and improvements can be made to the business to make it a more attractive prospect. Are your policies, procedures and contractual documents up to date and readily available? A prospective buyer will want to see that the practice is running effectively and efficiently, and that staff members are being properly managed.
Whilst there is limited benefit to upgrading equipment, ensure that any broken equipment is fixed and servicing is up to date. It is also worth considering how the practice looks, and undertaking a limited amount of cosmetic repairs to ensure that the premises look clean and fit for purpose.
- Seek Advice
Get professional help early. By seeking advice on valuation and compliance at the outset, you are more likely to save money in the long run. Identify lawyers, accountants and brokers that have experience in similar transactions. Using the same solicitor who helped you sell your home is unlikely to assist the transaction of a dental practice. Ask around, look for reviews and have a chat with those professionals. You will probably have an idea of a professional’s experience in the area once you have had a conversation with them.
- Consider all offers
You may receive various offers; however, it is important to review these carefully and with due diligence. It is also imperative that you know who you are selling your dental practice to. Whilst you may have an idea of the type of person you want to sell your business to, you must keep an open mind. Whilst you may be offered less money by a large corporation, it is likely that they will have the resources to fulfil any offer they make to buy, and to do it quickly. Your friend and associate may have the will, but simply not the way to move forward with the sale.
It is likely that any purchaser will ask you to remain at the practice for a period of time to ensure a frictionless transition. Have in mind exactly what you are and are not willing to agree to. Don’t agree to remain at work for the sake of a quick sale if, for example, you intend to retire weeks later.
- Set Heads of Terms
Once you have agreed a sale in principle, move quickly to put Heads of Terms in place. These will allow the parties to put their intentions clearly in writing and avoid misunderstanding and renegotiation of terms later down the line. Normally the buyer’s solicitors will draft the Heads of Terms, but there may be occasions where these are done by the broker or agent. Make sure that the document is clear and accurate, and always ask you lawyer to review it before signing.
At this stage the parties will commence the due diligence process. This can be complex and time-consuming process, which will require the disclosure of information relating to all aspects of your business. You must be prepared for full disclosure and be ready to answer all questions asked of you.
We hope the five pointers above have helped you to consider certain aspects before deciding that selling your dental practice is the right decision. If you need assistance with a transaction you are considering, then please contact us on firstname.lastname@example.org.
Please note that the information contained in this article was correct at the time of writing. There may have been updates to the law since the article was written which may affect the information and advice given therein.