As practice brokers, we are frequently contacted by dentists who have an immediate need in selling a dental practice due to retirement, disability, etc. After meeting with the doctor and reviewing the practice financials, we often find that practice revenue and profitability have declined over the past few years due to various reasons such as the dentist cutting back his work schedule to pursue other interests, not actively marketing the practice or pursuing new patients, or referring out more procedures. Unfortunately, this decline in revenue and/or profitability typically results in a substantial decrease in the value and marketability of the practice that could have been avoided with prior planning.
To prevent this mistake, it’s crucial for dentists to understand the keys to maximizing value when selling a dental practice:
- Start planning your practice transition 3-5 years in advance of selling a dental practice
- Maintain/Increase Revenue
- Increase New Patient Flow
- Control Overhead – Profitability is a prerequisite for value
- Evaluate and raise your fee schedule as needed
- Clean up accounts receivable & credit balances
- Consider updating office décor & equipment
- Reduce discretionary write-offs on practice tax returns
- Have a contingency plan for death & disability
- Work with a local, reputable practice broker
By planning ahead and focusing on these key factors, you can rest easy knowing that you will be in the position to maximize the value you receive when selling a dental practice.