I do NOT offer practice sale listings or brokerage services. In general, I believe dentists should use an approved dental practice broker to help sell their practices. Brokers are able to provide many key elements that help sell your practice quickly at a fair price: preparing your practice for sale, determining the practice's fair market value, reviewing the practice to create summary and detailed practice profiles for buyers and lenders, locating and showing the practice to qualified buyers while maintaining confidentiality, answering questions, providing the parties a process and timeline for the transaction, and identifying other practice transition professionals (possibly for a referral fee) required to complete the sale.
However, if the dentist has already located a qualified buyer (for a full sale or partnership), hiring a practice sale broker is prohibitively expensive and unnecessary. I offer these dentists advise on how to (1) prepare their practice for sale, (2) determine the practice's fair market value, and (3) use my services available to provide contracts, answer questions, provide process and timeline information, and identify other practice transition professionals (without referral fees), all at a much lower overall cost. For dentists who are up to the significant challenge of finding and screening their own buyers, rather than using a broker to do so, I offer advise on that aspect as well.
Preparation for Sale
1. Plan Early. You need to allow ample time to prepare your practice for sale, and negotiate and close the purchase, and allow for a sufficient transition period. If possible, I suggest giving yourself at least two years lead time before your anticipated retirement date. You need that time to prepare your practice for sale, negotiate and close the purchase, and allow for a sufficient transition period. You should also inform your professional advisors (such as your practice transition attorney, estate planning attorney, CPA, investment advisor, and insurance agents) of your intention to sell the practice - there may be some special planning issues to be completed ahead of time.
2. Prepare Your Practice For Sale. There are a number of steps you can take to increase the value of your practice to potential buyers, in the year before you start marketing your practice for sale. Here is an excellent summary provided by one of my recommended California brokers: Seller Pre-Sale To-Do Checklist. These suggestions should be followed whether or not you hire a broker to sell your practice.
3. Maintain Confidentiality. Once your staff, patients and/or referral sources become aware of a potential sale, they may start looking for another dentist and tell others of your impending sale. Losing staff, patient base and/or referral sources so close before sale will completely destroy your practice's value. As a general rule, do not tell anyone other than your spouse and professional advisors about the proposed sale until it has actually closed.
4. Pre-Qualify Your Practice for Fair Market Value Financing. Once your practice is prepared for sale (see 2. above), contact two approved dental lenders to determine the maximum amount those lenders would lend to a well qualified borrower to buy your practice. The lender will say that it has not given a practice appraisal, but is only saying that the anticipated post-closing cash flow of the practice to a well qualified buyer would support lending that amount to the buyer to purchase the practice. However, that loan amount effectively IS the fair market value of the practice! You could choose to back up this valuation with a paid appraisal from an approved practice broker. In many cases, that valuation will not equal the amount you thought your practice is worth - but getting the lender's viewpoint is a reality check that you may not get from the broker that wants to list your practice. Remember, too, that the price you receive will not be reduced by the broker's commission percentage, so you could sell your practice at a somewhat lower price and still come out ahead.
5. Hire Your Practice Transition Attorney Before Providing Practice Details. You need legal consultation and documentation to maintain confidentiality of the sale and practice information, set deadlines, and conclude the sale. At minimum, you must obtain a signed confidentiality agreement (I strongly prefer a signed letter of intent) before the prospective buyer receives access to your tax returns, patient records, computer reports, marketing programs, lease terms and other detailed practice information. Ultimately, you will also need to notify the landlord of the prospective sale for credit checks and lease assignment and/or extensions, and the full set of practice sale contracts. I can provide you this legal consultation and documentation (in association with a state licensed attorney, as necessary), but it is important to contact me before you provide any practice details (like tax returns, chart review, marketing systems) - once a buyer asks for more information, a signed confidentiality agreement or letter of intent is absolutely necessary.
If you want to find your own buyer,
continue with the following steps:
6. Prepare a Confidential Summary Practice Profile. Prepare a confidential summary practice profile to provide to inquiring buyers (limit to one page). That profile should be brief but provide sufficient detail to inform potential buyers of the important aspects of the practice: location (by city and/or region), specialization (if any), number of operatories (plumbed and unplumbed), special equipment, days/ hours worked, last 2 calendar years' gross and adjusted net, availability of transition assistance or seller financing, other special factors, and most importantly offering price. Interior photos can also be included.
7. Advertise Your Practice - Confidentially. Ask the lenders with whom you pre-qualified your practice if they have any pre-qualified buyers that might be interested in your practice, and provide that lender with your confidential summary practice profile. Buy ad space in online dental marketplaces and your dental society, state dental or other professional association publication. There may be some regional or local publications, or specialized professional publications, that may also be good places to buy ad space. If you are computer literate, you could advertise a "CITY Dental Practice for Sale" pay-per-click ad on Google and/or Bing. Placement offices at the professional schools will also provide wonderful opportunities for you (although dental lenders generally will not lend to buyers with at least one year of dental experience). The military is another good source of potential buyers. Links to a number of dental publications, dental societies and dental schools are provided at Marketing Links. Your advertising should not allow specific identification of your practice, since knowledge of an impending sale can cause employees, patients and referral sources to abandon the practice. To do so, pay for ads with anonymous money orders, rent a P.O. Box, install a separate phone line with answering machine, and/or obtain a confidential e-mail address, to receive inquiries. Ad text can be much briefer than your summary practice profile- include the location, specialization (if any), 1 year gross, one special factor, offering price, and confidential contact method. Be prepared to receive inquiries from commission based brokers wanting to market your practice.
8. Screen Potential Buyers. You don't want to waste your time showing the practice to unqualified buyers. Before providing potential buyers with further information, require a pre-qualification letter from at least one of the lenders from which you received your practice's pre-qualification review. That letter should show that the buyer is qualified to borrow your asking price as set by your own pre-qualification letter from that lenders. Also, require a CV that shows the potential buyer's level of technical training and experience, since the buyer must be able to perform or quickly develop the same dentistry you provide in the practice (type, quality, speed) without hiring outside help (a buyer that fails in a practice is more likely to sue you later). Only after you confirm the buyer qualifies as a good match for your practice should you take the next step of showing your practice to that potential buyer. NOTE: federal and state non-discrimination laws prohibit you from considering protected classifications (e.g., sex, age, race, religion, national origin, sexual orientation) when determining whether a potential buyer is a good match for your practice, so do not ask these kinds of questions or include them in your consideration of a "good match."
9. Show Your Practice - Confidentially. Before providing potential buyers with further information, require them to provide you a pre-qualification letter from at least one of the lenders from which you received your practice's pre-qualification review. That letter should show that the buyer is qualified to borrow your asking price as set by your own pre-qualification letter from that lender, and keeps you from wasting your time with unqualified buyers. Showings should take place on non-workdays only - no staff or patients should be present. The buyer should see the building exterior (including parking), office layout, air/ water/ cabling/ electrical layout, equipment (including computers and compressor location), front office setup, computer software, and (if not already provided) a copy of your confidential summary practice profile the buyer can take with him. Follow up with each potential buyer within a week to see if they have further questions.
Selling your practice without a broker, with only the services of an experienced practice transition attorney, is workable if you are willing to put in the time and effort required, but it is much easier to do it yourself if you already have a buyer in hand and have a dental lender's pre-qualification of your practice to set the price. Good luck!
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