Preparing To Sell Your Dental Practice
You have spent your whole life building your practice, and you only get one chance to make the right sale. At Menlo, we strive to make the selling process as simple and seamless as possible. If you're considering putting your practice on the market in the next few years, the following steps will help you prepare for your future sale:
Do not incur any new debt. A practice’s value comes largely from cash flow and patient loyalty, not equipment. There are a few exceptions to this rule (such as a digital conversion), but we recommend you talk to a dental advisor before taking on more debt. At Menlo, we are always happy to help answer your questions.10%
Do not postpone treatment plans, even implants or Invisalign. Buyers care more about your collections than what is in the treatment plan file.20%
Do not cancel participation in any PPO plans, as it can result in decreased new patient flow and can be seen as a negative.30%
Do not coast to the finish line. The time before the sale of a practice is crucial. Do not take excessive vacations or cut down work days or hours. Cutting back can lead to lower collections and reflect poorly on your bottom line. No matter what the reason is, lenders will not ‘pro forma’ your collections.40%
Do objectively evaluate your staff. Tenure is seen as highly valuable when selling a practice, so continue taking good care of your employees. If you have a spouse or other family members working for your practice, consider phasing them out in order to have a fully functioning team trained up before your departure. New buyers rarely want family members of the former dentist as employees.50%
Do review your last tax return. Clean up all discretionary spending (Costco bills, family cell phone plans, country club memberships, home remodels, etc.). Most lenders won’t add those expenses back in when determining practice cash flow. Be sure to report all your collections.60%
Do make sure your Dentrix Collections are the same as your tax return and your bank deposit. Make sure these annual figures are generally reconciled each year. These amounts are not expected to be perfectly reconciled, but they should be in the same range.70%
Do consider an office makeover. Just like prepping a home for sale, a fresh coat of paint and new carpet will give your office a fresh and clean feel, which is more attractive to buyers. Wear and tear on an office can be seen as evidence of a carelessly run practice.80%
Do clean up your patient accounts and credits. Ballooning A/R can indicate to a buyer that your patients have bad payment habits, your staff isn’t performing or you don’t have good systems in place.90%
Do figure out associate contracts. You must have a legal non-compete and non-solicitation agreement with your associates in place before the practice is put on the market.100%
