UNDERSTAND YOUR OPTIONS WHEN ITS TIME TOSELL YOUR DENTAL PRACTICE

Since many dentists are inherently “Do it Yourself-ers”, they sometimes try to sell their practices on their own.  They may or may not have a decent idea of what is important or reasonable, and usually a myriad of details falls through the cracks.  If they then finally engage a broker, the marketplace will not respond as well now that the “bloom is off the rose”.  This will frustrate both the seller and the broker.

Even if you have a current associate or a dentist already in mind, I would still advise you to hire a broker. We generally will decrease our commission in this situation. This keeps the buyer honest in the negotiations and ensures their performance. Every year I end up listing several practices where the doctor was strung out for months or years waiting for the associate who expressed their desire to buy the practice but never did.

All practices need to be appraised or analyzed for any lender. We provide a rough draft of the contract of sale and navigate the arrangements between the attorneys and accountants. Most of our time and efforts occur AFTER we have designated a buyer! There is a reason we say we “practice” dentistry, and there is a good reason to hire an experienced broker! In short, hiring a broker allows you to do what you do best….caring for patients!

Many times, we hear people in our profession advising doctors to sell at the peak of their careers. We do not necessarily agree with this advice. Your career is not like selling a stock, where it absolutely makes sense to sell at the top. Your practice is a long-term income stream. It is also something that gives you value in your life.

After you have consulted with your financial planner and accountant, you can then decide when the best time to sell is. Most of us have too many “what ifs” to say with certainty that we are completely set financially. If you still enjoy practicing dentistry for at least 20 hours a week, it might make more sense to continue to practice even though your practice is starting to slow down. Since a practice sale only averages about two times what you make as income for a year, it is simple math to see that it does not take too long to make up for the difference you might have lost by selling your practice once the numbers started to decline. Think about it, you could work your practice just an extra two years after you hit your “high mark” and match what you would have made by selling your practice.

The single-most important factor in determining the practice sales price is the collection total of the previous calendar year. Lenders and Buyers like to see stability without large variances from year to year. It should be obvious that steady, slight increases in revenues are always better than even the slightest of decreases. Poor performance of one of three years should not affect pricing, unless it is the last calendar year that shows a significant drop. Therefore, try to maintain a stable practice, make sure you finish strong and make all your December deposits for that last year you will be filing! Most importantly, since practice values are based on gross receipts, keep up the good work!

The next step would be to speak to one of our experienced brokers to discuss a strategy and plan for your transition.  This can be as simple as clicking the Contact Us button, sending an email to info@westernpracticesales.com or calling our toll-free number (800) 641-4179. 

Previously, Delta Dental allowed Delta Premier providers to “up-bill” any Delta PPO or DPO patients to their premium fee schedule and have the patient elect to pay the difference.  This is no longer the case.  Delta Dental has implemented a policy that all new Delta Premier providers must be providers for their PPO or DPO plan also and accept PPO fee schedule as full payment.  We don’t believe that the value of the practice is diminished, unless there is a significant portion of the patient base who have been joyfully paying the difference between the fee schedules.

Normally, most doctors do not inform the staff until we have a signed contract, a signed lease, and the buyer’s financing in place to complete the purchase. We usually try to have all these important elements in place at least two to three weeks prior to close, but for many reasons, these key elements may not come together until just before the closing date.