Want to Sell a Dental Practice? – Here’s How to Be Prepared
What should I do to prepare my dental practice for sale?
You might be surprised by the amount of thinking time and procrastinating that takes place compared to the lack of preparation undertaken prior to selling a dental practice. Putting your seatbelt on when you get in the car is being well prepared; waiting until you are rapidly approaching a stationary vehicle is madness! Being poorly prepared doesn’t mean you get to side-step the necessary work it just shifts when it gets done – preparation for selling a dental practice invariably ends up getting done at the same time as a mountain of other things.
If you are about to embark on the sale process, there is still time to get ready and that time starts now. The best time to plant a tree was ten years ago, the second-best time is today!
Here is a quick checklist to follow if you are planning to sell a dental practice within the next two years:
- Plan in advance – it can be unnerving when a principal excitedly tells you they have booked their round the world cruise to celebrate the sale before even getting the practice valued. Exit planning is vital and ideally you should be considering your options at least two years in advance.
- Don’t lose motivation, it is vital to keep the performance of your practice steady as any buyer will be reviewing your figures through the sale process, and in some cases, have demanded a reduction in the sale price to reflect the drop in turnover. ‘Business as usual’ is the daily mantra right up until exchange of contracts.
- Prepare your paperwork early on when you plan to sell a dental practice – employment contracts, service warranties, planning permission etc. If there is something missing you will have plenty of time to fix it. If a leasehold practice it is critical the lease is reviewed early on to make sure there are no deal-breakers – this is the single biggest reason for deals to fail.
- Corporates are active in the market place and whilst it is always worth considering an offer never rely on their valuation – they may just have a vested interest in being conservative with their valuation! You would never allow someone who was buying your house to set the value.
- Likewise, if you are planning to sell to an associate, don’t underestimate the time and skill it takes and employ a reputable agent to act on your behalf. A good agent will negotiate a better deal for you, should more than cover their cost in time saved and also be the intermediary to manage any delicate issues allowing you to maintain good relations in the practice.
- Are the premises freehold or leasehold? If they are leasehold, make sure there are at least 10 years left to run. If not, then renegotiate the lease and aim for at least 15 years – the sooner you can do this the better as landlords can be very slow to act. If you want to sell the freehold, arrange for a commercial valuation.
- Choose the right agent – some agents work for both the buyer and seller creates a conflict of interest. If you are selling for free and the buyers pays your agent you are not being well looked after. Your practice should be available on the open market and not just to a select group, this is a sure fire way to miss out on the very best offers.
- Always get a valuation – even if you are approached privately – do not accept any offer 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.
- It’s currently a seller’s market. Why? Because we have over 5,000 dentists looking to buy a practice in England or Wales, and with many banks lending to dentists we know they are not just looking, but have a genuine interest and sufficient access to funds.
- Engage a specialist dental lawyer early on – it will make a huge difference. A good lawyer will give you some time for free initially and set you on the right path to gathering the essential information to make the transaction go through smoothly.
- 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 fee you will want to charge?
Getting your ducks all lined up will really pay dividends when you decide to push the button and begin to sell a dental practice.