Planning is key when it comes to brainstorming and developing a successful exit strategy for your dental practice, then putting a plan in motion. Here are few points that should be considered in order to make this as effective and smooth of a transition as possible.
- When Do I wish to retire? Whether you are planning on selling your Practice in 10 months or in 10 years you must start working on it NOW! Way too many doctors work IN their Practice and too few Doctors work ON their Practice. What price range are you seeking? Do you wish to retire fully and walk away from the Sale of your Practice or do you wish to maintain some control either by your individual efforts or through efforts of other family members? So in short summary, you must start with the END IN SIGHT!!!!!!!!
- Although Profits and sales are important to the marketability of your practice you do not just want the Final Sale of your practice to be determined by some multiple of sales or cash flow. By creating higher value and not just income this approach will increase the Final Sale price. For instance, Practice location increases value. The number of operatories creates more value. Lower overhead creates more value. Increasing and growing the Hygiene Department creates more value. Specialists under contract and part of the staff create more value. Close proximity to a major high school creates more value. Time- tested business systems create more value.
- Focusing on key statistics will increase the sale of your practice. Key metrics that we at Choice Transitions lump together when describing a “5 STAR” Practice might include Average # of new Patients per Month, Active Patient Count, Total Dollar value per new patient, number of crowns done each month, Ratio of Simple Hygiene vs. Periodontal therapy patients and an Average number of Patient-Friendly Hours per week.
- Focus on the Timing of the Sale of Your practice. Selling your business for the following reasons is never ideal a) Divorce, b) Illness & Poor Health, c) Family members decide not to take control of the Practice, d) and finally business slowdowns due to economics or otherwise. These are all negative situations that lend themselves to making pressured and time-sensitive decisions. The resulting effects are either a lower Asking Price and/or Bad Terms. Selling under duress is never good.
- Much like selling your own home (residence) take a close look at what realtors call “curb appeal”. Perhaps the office could use a fresh coat of paint, new carpeting and new “Reception Area” furniture. A few well-spent dollars in this area can lead to either a better selling price or just perhaps a “faster” selling price. One doctor/client of mine did not even realize that he allowed his patients a clear view of his totally disorganized private office. Patient files were not only piled up but were also strewn everywhere including the doctor’s office floor. After taking a picture of this view from the reception area for the Doctor’s benefit and then showing this picture to the doctor he finally realized what his patients were seeing every time they visited. How embarrassing? Even presenting the paperwork to your office financials in a neat and organized fashion gives the potential Buyer the confidence that they need to look further.
- Speaking of presenting “financials”, please put yourself in the shoes of the potential Buyer and even in the vision of the Bank (the lender). If I were buying this practice what information would I hope to see and what message would I like to walk away with. Perhaps the message should ring loud and clear that this practice is operating with very low overhead and perhaps over the last 3 years of tax returns the bottom line is increasing. This again would give me more confidence in going forward with the deal.
- Align yourself with a Transition Team that has cultivated relationships with Buyers who have been successful with other purchases of their Practices. In order to fully maximize the sale of your Practice please ask us at choice Transitions about Buyers looking for 5 Star Practices and their willingness to pay above-average sale prices for such.
Please let us know if you have any comments or questions regarding these key considerations when it comes to planning your exit strategy for your dental practice.