10 Top Tips for selling a dental practice
When to sell your practice is probably one of the most emotional questions you’ll face as a practice owner. You’ll no doubt have poured your blood, sweat, tears, money, emotion and time into the practice and to consider selling it to someone else is a big decision and not one to be taken lightly.
You might be selling a dental practice to move on to new adventures, a change of personal circumstances or quite simply you might want to cash in on all that time and money you’ve invested over the years.
Whatever the reason behind your drive for selling a dental practice, here are 10 key factors you must think about.
- Consider your future options when selling your dental practice. Selling a dental practice is a big decision so be sure about what you want to do next. Retire? Take a well-deserved holiday? Or stay on at the practice? The decision is yours! Life tends to be decisions around time and money, so you are strongly advised to seek some financial advice whilst you still own the practice. It is easy to focus on the sale price without regard for the net amount which will hit your bank account. Good financial planning will ensure you maximise the tax benefits whilst still a business owner.
- DIY Sale vs Sales Agent
You have the option to manage the sale yourself or engage an agent. A self-managed sale can take upwards of 150 hours and for confidentiality reasons you will need to do much of this work away from the practice. If you’re going to work with an agent be clear from the outset, they solely have a duty of care to you, and you alone. Some agents work for both the buyer and seller which clearly creates a conflict of interest. If you opt for the agent route, then you are strongly advised to choose a partner that is committed to the Practice Sales Promise code of practice.
- Getting a Valuation when selling dental practice
You wouldn’t sell your house without considering the market, so the same should be considered for your dental practice. Make sure you have an up to date valuation of your practice which is based on the current market and importantly cross-checked against comparable sales. Comparable sales need to be from your geographic area and for practices of a similar size and style. Never accept a valuation of your business based on the opinion of the buyer or their adviser – they may just be biased.
- Trusted Partners
As a sector dentistry has a good supply of specialists who dedicate themselves to the needs of dentists. With a solicitor, accountant, CQC application, sales agent and investment advisor most likely all needed you are strongly advised to take advantage of these experts. The added value delivered from specialists should more than cover their cost. Finding people with a similar outlook to you and with capacity to deliver the service you require are both vital.
- Leasehold vs. Freehold
Are the practice premises freehold or leasehold? If freehold, you need to decide if you plan to sell the property with the business or create a lease. There are merits with both options, and it will come down to personal choice, investment strategy and the need to raise capital. If an existing lease is in place you need to ensure the remaining term is adequate to not compromise the goodwill value of your practice. Property issues are often the ‘achilles heel’ of a deal and ensuring the lease and/or title deeds are in good shape prior to the sale commencing is time well spent.
- Use the Open Market
Direct approaches are all too common such is the demand for good quality dental practices. A good agent, and this is by no means common practise, will promote your practice to the full open market and not just to a select group who may be paying a sizeable fee for access to your practice. This promotion can be anonymised, so confidentiality is preserved.
- Potential Purchasers
You need to filter out the time wasters as quickly as possible. Experienced agents will have already sounded out buyers so that only those with genuine interest and pre-qualified for finance will be put forward. It is also important to know who your practice information is being shared with.
- Managing Your Time
The DIY route will require hour by hour management so your practice performance does not suffer through the process, which in turn will impact on the value. Equally don’t underestimate the time required even if you have an agent. The best person to show potential buyers around the practice is you, the practice DNA will be part of you. Allocating specific time to ensure you have the capacity to assemble the due diligence paperwork, deal with your CQC application and build a relationship with your buyer will pay dividends through the process. A reputable agent acting on your behalf will make all the difference in dealing with the admin and ensuring the sale stays on track.
Through the sale process, you’ll need to maintain a positive open dialogue with your sales agent. Being readily available helps keep momentum in the deal which is critical as most deals fail due to a lack of communication or it being so slow the deal withers and dies. A good agent will drive the pace of the sale to ensure it moves as swiftly as possible through to completion.
- Don’t Lose Motivation when selling a dental practice
A sale will take time. There’s a lot to be dealt with but most challenges are avoidable with just a little advance planning and a bit of expert help along the way. Less than 3% of Frank Taylor & Associate deals fail to complete once an offer is accepted.