It is not just a dental practice you have built over the last tens of years; it is your legacy. You have been thinking about passing the baton over but it is a very emotional and could be a stressful process. We at Umbrella Dental Partners have acquired multiple practices over the years and have advised many more practices on both the buy and the sell side. Below are three things that you can start preparing today in order to position you and your practice for that day when you are ready to hand over the keys.
Every deal starts with a financial review. Nothing says more than a clean accounting book and getting all the categories right. Let’s say you have been working with your CPA and maintained great books. Next thing to understand are you financial statements. While this is not an exhaustive list a few things such as how as the top line (revenue / collections) grown year over year, how have your expenses varied and are there any fluctuations in your expenses and the reasons behind those are couple of things that you as a seller need to be aware and be ready to answer. In most of the cases your advisory team which typically includes your CPA and a business broker you are working prepare you for these questions, but at some point during the due diligence process you as a seller will talk to a buyer and these questions typically come up. You are in a much better position if can answer these questions.
As a buyer buying a practice that is called Dental Associates of South Ridge is better than buying Dr. John’s dental practice as capital (money) need not be spent on rebranding / marketing a new name. While you may have come up with a name for your practice 20 years ago thinking that you would one day sell it but understanding what the buyers are looking for will help you. I am not suggesting you go about changing the name of your practice, making subtle changes to your brand such as adding a tag line “Family dentistry of Gurnee” will appeal to a broader set of buyers and that is what you want. Selling a practice is not a lot different than selling a house. If 10 buyers look at your house, 6 will be interested and 2 end up making an offer. The more offers you have the more terms you can negotiate in your favor.
Any buyer is really buying your patient base. As a seller you could have a great and even personal relationship with your patients. But as a buyer the more personal relationship you have the higher the attrition rate of patients they expect. The more you can demonstrate that your patients understand that in the near future someone else will be running the practice, more successful you will be elevating some of the buyers concerns. One such way is to ask a few of your ‘fav’ patients to leave testimonials / reviews on this topic.
While this is not an exhaustive list our hope at Umbrella Dental Partners is for when you start thinking about selling your practice you partner with and surround yourself with the right partners and give yourself ample time to address a few concerns that potential buyers may have and be in a best position to get the terms you want.