Plan in advance – I often speak to principals who have booked their celebratory holiday even before getting their practice valued. Succession planning is vital and ideally you should be considering your options at least three years in advance.
Always get a valuation – even more so if you are approached privately – do not accept any offers until you know what your practice is really worth by having an independent valuation. Many principals are amazed how much their practice would attract on the open market. I recently spoke to a principal who was about to sell for £815,000 when his practice was worth in excess of £1,500,000 – nearly £700,000 more!
Make time to sell – being a clinician, business owner and allocating time to sell needs real discipline. If you have agreed to sell to an associate, private individual or corporate don’t underestimate the time and skill it takes manage the deal through to completion. It will require your attention for several months. It is well worth exploring what support you can get from an agent – the time (and stress) saving can be significant.
Understand the current market demand in your area – Frank Taylor & Associates currently has over 4,300 dentists looking to buy a practice in England or Wales. With 14 banks lending to dentists we know they are not just looking, but have a genuine interest and sufficient access to funds.
Are the premises freehold or leasehold? If leasehold, make sure there are at least 10 years left to run. If not, then find out if a shorter lease will impact on the goodwill value. If you want to sell the freehold, arrange for a commercial valuation.
Really consider your future options – just some of the things to think about include; do you want to stay on at the practice? How many days will you want to work? What associate fee would you work for?
Due diligence – this is the assembling of all the essential paperwork required to sell your practice. I cannot stress enough the benefit of starting this yesterday – this will be your Achilles heel in delaying the sale. This routinely takes 3-8 weeks to complete. The sooner you can start the better – savvy sellers start before they find a buyer.
Engage a specialist dental solicitor – it will make a huge difference to your transaction speed.
Choose the right agent – some agents work for both the buyer and seller which clearly creates a conflict of interest. Also, check they have access to a good supply of dentists who want to buy. Use the open market; ensure the agent you have chosen will take the practice to the full open market. Talk to a couple and then decide which suits you best.
Don’t lose motivation, it is vital to keep the ‘show on the road’ as any buyer will be looking at the practice performance all the way through the sale process, and could look for a reduction in the sale price if your figures drop.