Top tips to follow when thinking of selling your dental practice
With the value of goodwill at a consistently healthy level, you may as a practice owner be considering your future options, we have listed a number of points you should consider.
PLAN in advance
It can be daunting when we speak to principals who have started to arrange before even getting the practice valued. Succession planning is vital and ideally you should start considering your options at least three years in advance.
Always get a valuation
Even if you are approached privately (which is always flattering!) 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.
- If you do go for a private sale, be it to an associate/friend or a corporate, protect yourself by employing a reputable dental agent – we deal with a high percentage of private sales and at a reduced commission fee are worth it!
- Choose the right agent – some agents are contracted to work for the seller but are paid by the purchaser. We believe this can only produce a conflict, and remember there is no such thing as a free lunch!
- Use the open market to your advantage and ensure your chosen agent will take your practice to the full open market, not just to a group of preferred purchasers.
- Once you have a buyer, don’t lose motivation, it is vital to keep the turnover up as any buyer (and his/her bank) will be looking at your figures all the way through the sale process, if there is a significant drop in turnover there could be a demand for a reduction in the sale price.
- It’s currently a seller’s market, why? because we have just under 5,000 dentists looking to buy practices in England or Wales and we know they are not just looking, but have a genuine interest and access to funds as apart from the bank of mum and dad, there are 14 banks currently lending to dentists.
- Corporates and mini corporates are very active in the market place and approaching many principals directly, it is always worth considering an offer but please never say yes until you have had an independent valuation as you may not only be underselling but you could be tying yourself into earn outs and targets that could be avoided. And, remember corporates do this for a living and without an agent involved and acting on your behalf the original offer may not resemble the final offer on the table
- Are the premises freehold or leasehold? Buyers are interested in both and if you do own the freehold you may want to talk to your financial advisor as to the benefits of keeping the freehold and creating a lease. If it is leasehold, make a note of how many years are left on the lease as it may impact on the value of your practice.
- What are you going to do with the funds once you have sold? A tough problem to have but with the current market getting the right investment is crucial to your long term planning. Talking to a specialist IFA who really understands dentistry may help. We can always signpost you in the right direction.