Selling Your Practice
Or
Planning Your Future Sale
20 THINGS YOU SHOULD KNOW
By: George D. Stollings, D.D.S.
Before
offering your practice for sale, or planning your future sale, you need to have certain basic knowledge about the dental practice
market, and an adequate understanding of the practice sale and transition process.
Information Needed By All Practice Owners
Whether
offering practices for sale on the open market, planning to sell to their associates, selling to specific potential buyers (potential
buyers already identified), or planning their future sales, all practice owners should know the following.
1) Practice Value. Your practice’s value, obtained via a Practice Valuation (also commonly called “Appraisal”)
2) Reasonable Price Range. The reasonable negotiating price range for your practice (maximum price reasonably possible, minimum
price reasonably acceptable.)
3) Sale / Transition Structure. The sale and transition structure option
that best matches your practice and best achieves your career goals and financial objectives.
4) Dental Practice
Specific Issues. The specific issues, that are unique to dental practice sales and transitions, that you and your attorney should
address in your negotiations and sale contracts. (This is in addition to issues that are addressed in all types of business
asset sale negotiations and contracts.)
5) Sale Process Steps. The required steps in the sale process,
and the order in which to execute them.
6) Buyer Information Package Preparation. The types of practice
data and information that you should present to your buyer for review because: (i) buyers and their advisors need / want to see this
information; and, (ii) sellers need to make adequate full disclosure.
7) Income Potential Estimate. A
properly adjusted expense and pre-tax cash-flow analysis for the buyer’s review and consideration.
8) Office
Space Analysis. Office space purchase or lease factors to address, and how they’ll affect your sale process.
9) Seller Employment Analysis. Seller’s post-sale work & income potential analysis.
10) Accounts Receivable Valuation. Methods to value accounts receivable, if they are to be added to the sale.
11) Purchaser Loan Sources. The banks
that are most likely to make the type of loan required by practice buyers, and who to contact within those banks.
12) Closing
Preparation Checklist. Listing and organizing things that must be accomplished before your sale can close.
Additional Information
Needed By Owners
Who Have Not Yet Found A Potential Buyer
If no specific potential buyer has been found or identified, practice
owners also need to know the following. (Applies when offering practices for sale on the open market, or planning future sales
and transitions.)
1) Equipment / Facility Analysis. Determines if equipment upgrades would increase your
practice’s sellability, and if so, would your practice’s value / sale price increase enough to cover their costs.
2) Buyer Profile. The type of buyer you’ll need for your specific practice.
3) Most Effective Advertising
Methods. How and where to best advertise your practice for sale.
4) Prospect Screening Process. Important questions required for initial screening of buyer prospects.
5) Sellability Analysis. Rating
of the sellability of your practice. (How likely are you to find a buyer? Should you count on your sale actually occurring?).
6) Value Impact Factors. Factors that, if improved, could increase your practice’s value.
7) Value Preservation
Factors. Aspects of your practice that you must preserve or maintain, to keep your practice value from declining between now
and your sale.
8) Associate Addition Feasibility & Income Impact Analysis. Determines if your buyer
could join your practice as an associate before the sale date, and what impact might that have on your income.
Whether you choose
to list your practice for sale with our Company, or prefer to conduct your own sale, we offer services that can provide you with all
of the above analysis and information. If you’d like to know more about our services, and the information and / or assistance
that we can provide, contact Dr. Stollings by either of the following.
Telephone: (304) 486-5714
E-mail: george@gdstollingsassoc.com