How to sell a dental practice | Dentive
Learn how to sell a dental practice with our step-by-step guide. Discover key strategies, tips, and insights on maximizing the value of your practice.
How to Sell a Dental Practice: Selling Guide | Dentive
Selling a dental practice is a significant decision that involves careful planning and consideration. It marks a pivotal moment in a dentist's career, often driven by personal goals, minimizing risks, and market conditions. The process requires evaluating the practice's value, understanding its financial health, and assessing its strengths and opportunities.
Dentive stands out with its expertise and unique partnership model. We are committed to a partnership-first approach that respects the individuality of each practice we support.
We seek out growth-minded doctors who want to grow their practice with a true partner in business. Our doctors retain clinical decision-making authority while gaining access to the resources and operational support they need to succeed. Partnering with Dentive also means joining a community of like-minded professionals dedicated to excellence and innovation in dentistry.
Why Sell Your Dental Practice?
Doctors decide to sell their practices for various reasons, often driven by both personal and professional factors.
Personal readiness is a significant factor; doctors must carefully evaluate their goals and the next phase of ownership. Often, they have built a strong business and are looking to eliminate risks while increasing growth potential. Financial stability is equally important. Doctors want to see the value of what they have built, and as more consolidation happens in the market, they desire to investigate their options more.
Other factors include wanting to eliminate the various administration tasks associated with running dental practices and wanting access to a network of doctors. This is where a Dental Support Organization (DSO) or Dental Partner Organization (DPO), like Dentive, becomes a desirable option. By joining Dentive, doctors can improve patient care by eliminating admin work and not feel isolated from running their own dental practice.
When is the Right Time to Sell Your Dental Practice?
Determining the right time to sell your dental practice involves balancing personal, financial, and market factors. Ideally, you would sell when you’ve built a healthy practice with demonstrable growth potential, along with strong financials and a stable patient base.
How to Prepare Your Dental Practice for Sale
Preparing your dental practice for sale involves several key steps to ensure a smooth and successful transition. It is essential to gather and organize financial and patient records. Well-organized financial records provide transparency and build trust with prospective buyers, making your practice more appealing and easier to evaluate.
Focus on increasing the value of your practice by maintaining a strong patient base and enhancing its efficiency by streamlining operations. This includes optimizing appointment scheduling, improving patient management systems, and ensuring your staff is well-trained and motivated. Efficient operations improve patient satisfaction and demonstrate the practice's potential for growth and profitability to buyers.
How to Value a Dental Practice: What Buyers Look For
Several factors influence the valuation of a dental practice, including revenue/growth opportunities, patient base, location, equipment, facility conditions, and doctor fit/reputation.
Potential buyers analyze financial health through metrics like revenue, profitability, and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Understanding the patient base demographics and loyalty helps buyers gauge the practice's stability and growth prospects. A diverse and loyal patient base contributes to the practice's stability and revenue potential. Other factors include the mix of billings, such as insurance, Medicare, and out-of-pocket.
Assessing operational efficiency, such as staff performance, appointment scheduling, and patient management systems, is crucial for determining the practice's value. Buyers also consider the practice's future growth potential, including opportunities to expand services, increase patient numbers, and enhance profitability. Additionally, they consider how easily the practice can recruit new staff and replace revenue in the event of a decline.
The geographic location of the practice affects its value. Offices in growing, high-demand areas tend to have higher valuations. A well-maintained office is also more attractive to buyers. Buyers also look for practices with up-to-date technology that can provide high-quality care. The doctor's fit and/or reputation are also considered, as is whether the practice offers a mix of services, including implants, Invisalign, and other specialty services.
Steps to Sell a Dental Practice
Follow this checklist when selling a dental practice.
Step 1: Assessing and Organizing Your Practice—Review and gather all essential documents, including monthly profit and loss statements, tax returns, and account receivable reports.
Step 2: Finding the Right Buyer—Start researching potential buyers, including carefully examining the DPO or DSO models. You should evaluate potential buyers based on their alignment with your values and ability for future growth. Ask yourself what responsibilities do I want to offload, and do I want to retain full clinical autonomy? Finding the key partner is critical for growth.
Step 3: Negotiating the Sale— When it comes time to negotiate, it’s essential to look at the entire deal, not just one aspect. While the purchase price often grabs the most attention, it’s only one piece of a much larger puzzle. Focusing too narrowly can lead to missed opportunities or unexpected challenges down the road. Consider key aspects such as responsibilities for the next steps, growth targets, account receivable management and integration process.
Step 4: Closing the Deal—Sign all the legal documentation, including the purchase agreement, ownership transfer agreements, and all licenses.
Common Mistakes to Avoid When Selling a Dental Practice
Some common mistakes doctors make when selling their practice include:
Not Preparing Adequately: Many practice owners wait until the last minute to prepare for the sale, leading to disorganized financial records and unresolved operational issues. Disorganized or incomplete financial records can delay or derail the sale.
Letting Practice Numbers Decline: Reducing hours or slowing down production before selling can make the practice appear less profitable and less attractive to buyers. It’s also important not to inflate numbers before the sale by working longer hours. It's ideal to provide sustainable, high-quality patient care by maintaining consistent hours and production levels.
Overlooking Staff and Transition Planning: Sudden staff departures can disrupt operations. Make sure your staff is engaged, adequately paid and happy.
How Dentive Can Partner With You and Your Dental Practice
At Dentive, we are committed to a partnership-first approach that respects the individuality of each practice we support. We understand the appeal of the DSO (dental service organization) model but recognize dentists' desire to retain their practice's culture and clinical autonomy. This is why we focus on a different approach: the Dental Partnership Organization (DPO) model. Dentive is leading this movement by prioritizing partnerships, innovation, and personalized solutions. We believe the best outcomes happen when dentists are empowered—not managed.
As a DPO, Dentive functions similarly to a DSO, providing comprehensive business support services. However, the key difference lies in the partnership structure. We collaborate with growth-minded dentists, who want to grow their practice with a true partner in their business. Dentive will work closely with each doctor to understand their goals, challenges and vision and then provide a tailored solution that fits their unique practice. We respect your vision and give you the tools to thrive without compromising your independence.
When selling your practice to Dentive, we offer a hybrid model that includes a continued ownership share of the practice, Dentive equity and a cash settlement. You will join a network of growth-minded doctors who are striving for success and will be your business partners.
Dentive will allow you to reinvest your energy into patient relationships and clinical excellence while experts manage the business side. By partnering with Dentive, you can focus on what matters most, your patients, your practice, and your legacy.
What Happens After You Sell Your Dental Practice?
Choosing a true partner like Dentive offers you a trusted partner for growing your business.
After selling your dental practice, the journey is far from over; the real work has just begun. Integration becomes a crucial task. You'll need to integrate patient and HR records, payment systems, vendor lists, and accounting software, each presenting its challenges. Ensuring a seamless transition demands patience, as integrating all key systems is essential for maintaining operational efficiency and continuity in patient care.
Expect some adjustments along the way. Running a larger business is different from managing a small, independent practice. That’s why it’s important to approach integration with a mindset of adaptability and teamwork. Together, we aim to work more effectively and efficiently, laying the foundation for long-term success.
Conclusion
Selling a dental practice is a significant decision that requires careful planning and consideration. Start by maintaining up-to-date financial and patient records and understanding your practice's value. Choosing a true partner like Dentive offers you a trusted partner for growing your business.
If you're considering selling your dental practice, contact Dentive to explore how we can partner. Our expertise and unique partnership model can help you achieve your goals while preserving your legacy. Contact us today to learn more about how we can support you and your practice.
FAQs
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DescriptiSelling a dental practice typically takes 6-9 months to complete. The timeline can vary based on several factors including the practice’s financial health, patient base, location and market conditions. on text goes here
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Description textBuyers are attracted to practices that are thriving and show potential for future growth. Ensure your patient base is stable or growing, and that your practice maintains strong collections, profitability and patient retention rates. Upgrade your equipment and ensure staff are happy and engaged. goes here
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Selling a dental practice involves several tax implications that can significantly impact your financial outcome. It’s important to consider where your practice is structured as a sole, proprietorship, LLC, S corporation or C corporation as each of these can mean different things when it comes to the tax code. Consulting with a tax advisor will be crucial to navigate these complexities and optimizing your tax strategy.
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Do your research. All DSOs are not created equally. Whether a DSO or a DPO is the right choice for your practice depends on your individual goals and priorities. DSOs provide a comprehensive solution for dentists seeking a more hands-off approach, while DPOs offer a supportive partnership that allows dentists to retain control and maintain their practice’s unique identity.
At Dentive, we believe the DPO model offers a compelling alternative for dentists seeking a supportive partnership that empowers them to thrive. If you’re looking for a way to optimize your practice’s business operations while preserving your independence and brand, contact Dentive today to discover how our DPO model can help your practice reach its full potential.
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Do your research and understand the market value of your practice. Know what is important to you and look for the best partner for your goals and objectives. Make sure to understand what is being offered and how the sale will be structured. Remain open to creative solutions and look for the best deal for your needs.