Tips for Selling a Dental Practice (from a Former Lender)

By David Haynes, MBA

Selling your dental practice is one of the most important decisions of your career. Proper preparation and strategy can make all the difference, ensuring a smooth transition and maximizing the value of your practice. Here are some tips for selling a dental practice to help you succeed:

1. Clean Up Discretionary Expenses

Doctors often run personal expenses through their dental practices, but this custom can make it difficult to determine the practice’s true value. Buyers and lenders need clear financial records to assess the value of your business.

Avoid complicating the sale process by eliminating discretionary expenses well before listing your practice. Presenting clean and transparent financials builds trust with potential buyers.

2. Avoid Last-Minute Insurance Changes

Making major insurance changes, such as moving to fee-for-service or dropping a provider, can create uncertainty for buyers and lenders, especially when done close to a sale.

Avoid changing insurance policies immediately before selling. Allow sufficient time to show that any new structures are successful before listing your practice.

3. Evaluate Associate Buyouts

Owners often want to transition their practice to an associate because of the associate’s familiarity with the staff and patients, but this approach can present challenges without proper planning.

Obtain a professional appraisal to fairly value your practice and work with advisors to ensure a seamless practice transition to your associate.

4. Maintain Revenue Consistency

Revenue drips or fluctuations can raise concerns for buyers and lenders, so it’s important to demonstrate financial stability.

Keep revenue consistent in the months leading up to the sale and be ready to explain any irregularities to reassure the other parties involved.

5. Focus on Historical Performance

Many owners highlight future growth potential when selling, but buyers and lenders are more interested in seeing a proven track record of consistent performance. (See tip #4.)

Strengthen your historical performance before listing your practice and manage expectations about the impact of future projections on valuations.

6. Understand Seller Carry Notes

Seller carry notes involve the seller financing part of the sale themselves, and this option requires careful consideration to ensure a smooth transaction.. These loans are sometimes required for very small or large practices but are usually unnecessary for mid-sized practices with qualified buyers.

Work with a dental-specific lender to avoid unnecessary seller carry notes and for a smoother financing experience.

Selling a dental practice is a complex process that requires strategic planning and professional support. By taking these steps, you’ll position your practice for a successful sale while ensuring a smooth transition for all involved.

Contact Menlo Dental Transitions today to discuss your transition plan and take the next step toward a successful sale.