We know that your medical practice is your baby. You’ve spent years building it up, hiring the right staff, providing care to your community. But now, you’re ready to sell, for whatever reason, be it retirement or just need a change of scenery.
Dental practice transitions are not like selling a house. There is a lot more involved. Here are a few things you should do before listing your general dental practice for sale.
Decide if you are going to sell to a corporation or a private entity
Deciding whether you want to sell your healthcare practice is a major decision in and of itself. And then, there is the dilemma of deciding if you want to sell to a company or sell to an individual. Of course, it comes down to personal preference, but there are pros to selling to either type of buyer.
Selling to a corporation could mean a hospital wants to annex your practice into theirs. Corporations usually pay handsomely. But they may want you to commit to a 5-year employment contract and meet their particular requirements and/or standards. The good thing about the 5-year contract, though, is that it’s guaranteed employment and income.
Selling to a private practitioner could be an option as well. It’s the route to take if you are looking to exit the healthcare profession quickly. Maybe you’ve been grooming a junior practitioner within your clinic for a dental practice transition. Because most private practitioners cannot match what a corporate entity can pay, selling to a private practitioner could come at a loss.
Make sure your books and paperwork are in order
Probably the most important tip here is to make sure you have your paperwork together. Medical practices can get away with charging certain expenses to the practice that would otherwise not be expensed in a more corporate setting.
If you are looking to sell your practice within 18 months, then you need to go through your books. You want to show potential buyers how much your practice can make in a 12-month cycle.
Get legal advice
Speaking of paperwork…make sure your patients’ records are protected during your dental practice transition. A legal advisor will likely recommend you use a non-disclosure agreement or NDA to protect your yourself and your staff.
Have your practice valuated
It’s highly recommended that you have your dental practice evaluated by an independent third party. Having an unbiased evaluation of your practice will be invaluable assessment of what your practice is really worth on the market. This will help you to make the needed changes and adjustments you may have missed.
Take into consideration your buyer’s finances
Depending on whether your buyer is a private practitioner or a corporation, their finances will affect the length of the process. Either way, you will want to have the last two years of your practice’s financial history in order and available for the buyer’s lender.
Also, offer your buyer a handover period to reduce the risk of your practice transition. Lenders will want to include a restraint of trade written into your contract of sale to prevent you setting up a business just down the road from the practice you are selling, taking your patients with you.
As long as you ensure complete transparency with all involved parties, including and especially your patients and staff, selling a dental practice to a corporate or private practitioner should be relatively painless.
