Six Things To Consider When Selling Your Dental Practice



When a potential buyer is looking to purchase a dental practice, the physical location is one of the first considerations. The dental practice location is comprised of not only the actual address but the demographics and population trends of the area. Your dental practice is strongly affected by changes in the area, whether it is new housing developments, new businesses, and industries that are moving into the area of your dental practice or changes in the age demographics. The changes above can have a very positive effect on your practice and the future of the dental practice for the new owner. As the current owner, it is important for you to keep on top of changes surrounding your dental practice location, so you are able to take advantage of any growth opportunities. This will only increase the value of your dental practice as you successfully adapt to the changes and plan for a future dental practice sale.


The value of the intangible assets of a dental practice will have a significant impact on a practice sale. This is called good will. Some examples of good will are the reputation of your dental practice, the customer service or patient experience you provide, the quality of clinical care, long-term staff and employee retention, and patient loyalty. All of these are critical to the success of your dental practice while you are the owner and also critical to the value of the practice to a potential buyer. It is difficult to actually assign a dollar value to each of these examples, however, they can be actually more valuable than the tangible assets of a dental practice.


Over the years that you have owned your dental practice, you have invested in equipment and technology; this is part of the tangible assets of the practice. While having state-of-the-art technology may be viewed as an asset to a potential buyer, it is not always wise to make costly investments in new technology right before your dental practice sale; however, that may play a role in a buyer’s offer. It is critical, however, that the current equipment is maintained properly and kept in good working order. Just as if you were selling your home, the overall condition and esthetics of your dental practice will certainly deliver a stronger first impression to potential buyers.


Just as removing clutter from your dental practice improves “curb appeal”, it is equally, if not more important to clean up the management systems of your practice. A chart audit should be done and any presented treatment that has not been performed should be scheduled. This will not only increase your collections, but adds to the value of your practice. Accounts receivables should be reviewed and every attempt to collect them prior to the sale of your dental practice will, again, benefit not only you but the actual value of your practice. Having strong management systems in place shows a buyer that your dental practice is well-run, well-organized and profitable.


Is your practice still growing or are you just coasting until you sell the practice? You have worked hard to build your dental practice and deserve to reap the benefits of all that hard work. However, working less hours or seeing less patients just when you are ready to sell will have an effect on the market value of your practice. It will not only have an effect on the market value but financial lenders will also question the revenue trend of your dental practice. If the net revenue is showing a negative trend, it will be more difficult to support the higher end of a sale price to a lender. If you want to take more time off, you would be better off selling your practice a little sooner than you originally planned. Plan on selling while your practice revenue is either still growing or at lease stable.


A strong, loyal team enhances the value of a dental practice. One of the goals for a dental practice sale is for the staff to stay on with the new owner. Potential buyers will always ask is if the staff is planning on staying on after the transition. When to tell your staff that you are selling your dental practice can be very tricky. The fear in loss of job security may cause employees to leave during the sales process. Many doctors will not tell the staff until there is a definite sale, while others may tell the staff during the sale process. If you choose to tell your staff prior to the final sale, it is critical that you impress upon them how valuable they are to the new doctor. They are a strong part of the good will that the doctor is purchasing and will be critical to the transfer of trust with patients.

Regardless of how many years you have until you sell your dental practice, it is important to plan and take a proactive role in the transition process. Waiting too long to plan or act on the actual sale can result in significant loss to the value of your dental practice. Be sure to use your advisors in helping you plan and implement your practice transition.