Want to Sell Your Practice in 2-5 Years?
Broker/Production/Collection Consultant, Omni Practice Group
If you are considering selling in a few years, contact a broker now that has lots of dental experience and can assist you to prepare. You may want to continue the way you have until you sell, but if you have any interest in doing a few things to secure a higher price and have a desirable practice to buyers, continue to read.
There are usually a few easy ways to increase collections which gives you more money now and in the future at sales time. No, you don’t want to do an expensive remodel and purchase all the new equipment and technology available, but you do want to have up-to-date flooring and paint, and good curb appeal. You can determine your new equipment options with your favorite rep if yours is really old and not functioning properly. A new buyer needs to be able to come in and start producing immediately without shag carpet and 1970s decor.
When did you last update your PPO and UCR fees? The last thing a bank wants their new buyer to do is to raise fees immediately and risk losing patients. Confidently set your fees now based upon your skill level and overhead. Patients expect to pay for quality care and by simply adjusting your fees you could add tens of thousands of dollars.
What is your patient retention? If you’re not looking at this and providing tools to your team to be successful, you could be losing patients without even trying! One easy way to calculate this is to determine if about 2 times 85% of your active patient count equals the number of adult and child prophys and perio-maintenances in the last 12 months. So, if you have 2,000 active patients, you should have completed around 3,400 of codes 1110, 1120, and 4910 in the year. How full are your hygiene schedules in 4 months, 5 months? Ensuring every patient has their next hygiene appointment can increase collections by tens of thousands of dollars and it means you are providing ideal care.
Have you spoken with your CPA and/or financial planner? It’s important to have a plan for the money you will get from the practice sale. There are retirement plans that allow you to put much of it in tax-free, but either way, you will want to get a tax plan together to try to ensure you pay off any debt in a way that makes sense, save as much in taxes as possible, and put your money in the right “place”.
Your CPA and/or financial planner will assist you to determine if you have the money needed to fully retire. If you decide for financial reasons or you’re having too much fun to quit completely, determine if your practice can provide enough patients/money for 2 dentists. The banks will want to know that the new buyer is making enough to pay off the practice debt and feed themselves and family. Do you want to do what it takes to increase new patients? Will you be dropping days? It’s also time to think about how you will truly feel “sharing” your practice. You will not be the owner and you will be living with a new roommate in the space and practice that you created and lead for years.
If you don’t want to make any changes as you practice for the next few years, that’s certainly your choice, but don’t expect your practice price to be higher than reality dictates. If your collections have decreased, banks will want to know why. If collections decrease, ensure spending decreases appropriately as well, such as team payroll and dental supplies. A good dental practice broker can assist you to transition out of your practice in a successful and smooth way. This is a very important time for you and your family.