When it comes to buying a new dental practice or selling your practice at retirement, it’s one of the most exciting and important events of your life.
We specialize in making this process as efficient and effective as possible, and we encourage you to contact us for a free consultation. If you’re just starting to consider it, here are some of our top tips for buying/selling a dental practice in the St. Louis region.
- When buying a practice, you must sign a Confidentiality Agreement.
In it you agree not to disclose financial and other personal information about the practice you are considering. You can share that information with an accountant or attorney who is assisting you in the purchase process.
- Make sure you receive at least 3 years of tax returns…
…plus a dental fee schedule, a copy of the office lease, a depreciation schedule for the equipment, information on the history and staffing of the practice, types of procedures performed, insurance carriers accepted and other information deemed necessary to help you decide if you are interested in the dental practice and at what price you would be willing to pay.
- Seek help from a transition specialist who has experience dealing with dental practices.
- If you want to sell your practice in the next 5 to 7 years, you need to be cognizant of the information that will be needed to expedite the sale.
Consider what you could do today to enhance the value of your practice and increase its marketability for a future sale.
- We offer ValuationPlus to give you an idea of your practice’s present value as well as suggestions to improve the value of your practice today in preparation for tomorrow’s sale.
In the future, there will not necessarily be a buyer for every practice. If you plan ahead, you may be able to increase the odds that there will be a buyer for your practice.
- Don’t wait too long to start your practice transition.
We recommend people begin planning for their future 3-5 years prior to retirement.
- What should I do if I am not ready to sell but probably will want to in the next 3-5 years?
Four steps to take now are:
- Does your office need to be refurbished? Some new carpeting, painting, and maybe some new waiting room furniture will help sell the practice when you are ready.
- Do whatever you can to increase or, at least, hold patient receipts steady. Don’t cut down on your hours worked as that usually “stretches” out your collections. What you used to collect in 12 months may then take 14 months, but on the tax returns, it looks like the practice has declined.
- Keep track of referrals to specialists. A buyer may want to do endo or ortho and information on referrals can add to the appeal of your practice.
- Look at your staffing- if you are overstaffed, you should correct it. If your wife is working in the practice, she should phase out or be ready to do so.
- What should I do about my fees?
If you have a lot of PPOs in your practice, you may not be able to do much about your fees. The PPO will only pay you their scheduled amount regardless of your fees. However, if you have a lot of private patients, keeping your fees current can help offset increases in expenses and preserve the value of your practice.
- What about credit balances in my patient accounts?
If you have patients that have credit balances due to overpayment by them or by their insurance companies, you should refund them on a regular basis.
A buyer will expect you to do so before or at closing, so it is a good idea to keep current on these every year rather than have a lot to refund just before closing.
- What should I expect during the sales process?
Expect this to be a stressful time. Most dentists cannot leave a profession in which they have invested 25, 30, or 40 years of their life without feeling stressed. It’s natural to have second thoughts or fears about the future. An experienced broker who understands the emotional aspects of selling your practice will be able to help you through this difficult time.
We hope that these tips give you a solid understanding of what is involved when buying or selling a dental practice. Please know that we are here to help you navigate this process just like the hundreds of other dentists we’ve helped in the St. Louis area.