Optimal Timing – When Should I Sell My Dental Practice?
You’ve spent years building a successful dental practice, which is why it can be a tough transition to think about retirement or a change in your career path. The critical thing to remember is that your practice is a valuable asset – and the timing of your sale will impact the amount of money you receive from the transaction.
What should you be considering if you are preparing to sell your dental practice? Here are a few tips to help with this important transition.
There are several reasons why dentists are ready to sell their practices:
- Retirement: After a lifetime of working, it’s time to enjoy the fruits of your labors. Selling a dental practice is an essential step when you are ready to retire.
- Relocation: If your family is moving to a different area, you might want to sell the practice because of the commute. You are either preparing to open another practice in your new neighborhood or find a job where you can practice in another dentist’s office.
In some situations, dentists don’t need to sell their practices. For example, if a dentist is retiring and has a child who is also a dentist, they might choose to pass the practice down the family line.
Many factors go into the optimal timing for selling your dental practice. Start with a full review of your business: financial reports, profitability, income, assets, and expenses. Also, look at the projected outcome for the business in the future to determine a valuation for the company.
It takes work to prepare for a dental practice sale, but it’s worth the effort so you can maximize your profits on the sale. First, prepare the financial details, then search for the ideal buyer who is willing to pay your asking price.
Buyers want to invest in a business that already has a solid foundation. You need to be able to show that your dental practice is thriving. Often, the best time to sell is when your business is doing great. Buyers will be looking at these Key Performance Indicators (KPIs) to determine the success of the practice:
- Daily, weekly, monthly, quarterly, and annual production
- Accounts receivable and accounts payable
- Patient retention rate
- New patient acquisition
- Overhead expenses and costs to run the business
- Overall profitability: money left after paying expenses
As you are preparing to sell your dental practice, follow these steps to increase your KPIs so you can maximize the selling price:
- Minimize overhead by cutting unnecessary expenses
- Invest in technology and new office equipment if needed
- Boost marketing investments to bring in new patients
- Renovate the office with fresh paint and new furniture
- Evaluate staff performance and effectiveness
Remember that a dental practice is a major asset, which means that you can’t expect overnight results when you are ready to sell. Often, dentists find it stressful to continue running the practice while also dealing with the ongoing responsibilities to sell the business. It can be helpful to bring in an expert team who can assist with preparing your office for the sale and maximizing the price you will receive.
JRA is here to assist. Contact us if you are preparing to buy or sell a dental practice.