There are ups and downs to every dentist’s career, but no matter what, that career is more than just a job or a way to make ends meet. Dentists who own their own dental practice pour their life’s work into building a thriving office, managing the staff, and taking great care of their patients. That is why selling a dental practice can be a bittersweet time. It is more than just a practical decision, it is personal and wrapped up in the emotion of letting go of something you were a part of for twenty, thirty, even forty years. At DDSmatch Southwest we know selling your practice can be stressful, and we are here to help the transition move as smoothly as possible. What is the first step to a stress-free transition? Knowing the elements that make up a successful sale. Read below to learn how you can prepare yourself and your practice for a transition, whether you need to sell next month or ten years from now.
Knowing the Process Before You Start
Think about the major milestones in your life and how you prepared for them. For example, before starting dental school, you had an idea which courses you would take and how long you would be in school. But you did not know how difficult each course would be or the exact number of hours you would need to study. In the same way, while you cannot predict the specific details of selling a dental practice in San Antonio, it is important to know what you are getting yourself into. Learning how a typical practice transition works, and what common mistakes you can avoid, will keep you from being blindsided, stressed, or confused by the process.
We recommend working with dental-specific experts. If you already have a CPA, or you plan to use your friend as an attorney, you may be asking if you really need a “dental specific” expert. Unlike listing other items for sale, putting your dental practice on the market requires expertise that not everyone has. Reading online articles or books about selling dental practices will only get you so far. And you don’t want to pay for anyone else to try and learn it as they go. What you really need before putting your practice for sale is a team with expertise in the local market to guide you through the process. Here is a little more about each expert we recommend working with before and during your transition.
- Dental CPA: A CPA who has worked with other dentists in managing their practices and, especially, during their transitions will be an invaluable resource as you navigate the selling a dental practice in San Antonio. Things like asset allocation and business valuation will have a huge impact on you for years after your sale is finalized, especially if you are planning to retire and live off the proceeds of your sale. Learn more about how dental CPAs can help by reading our dental transitions blog.
- Dental Attorney: A dental attorney will help you draw up legal contracts, negotiate certain terms, and generally make sure everything that happens during a transition complies with legal standards. A dental specific attorney will have experience helping buyers and sellers, and can raise a red flag if anything in your transition is out of the ordinary or concerning. For more information on how dental attorneys can help with your transition read our interview with dental lawyer David Cohen.
- Practice Transition Specialist: Also known as a dental practice broker, a practice transition specialist is the key to a smooth and stress-free transition. Brokers connect buyers to sellers and move the process along from start to finish. Experienced brokers have seen every type of sale and can help you avoid common industry mistakes and pitfalls.
With your team of experts, the process of selling a dental practice in San Antonio does not have to be unknowable, or surprising. For DDSmatch Southwest clients, the Trusted Transition Process provides a clear and consistent roadmap, with the right amount of flexibility to accommodate your individual situation. To learn more about this process visit our website or contact us.
Setting Goals for Your Future Transition
After you familiarize yourself with the process of transitioning a dental practice, and gather a team of trusted professionals, it is time to set your goals for the future. Goal setting takes a fair amount of introspection, but also includes talking about what you can realistically expect from a sale. What kinds of goals do you need to set? When we bring this up to our clients, three of the biggest issues are: how much do they need to make from the sale, what type of transition is ideal, and when is the right time to list the practice.
How Much Do You Need to Make?
Whether you have a specific dollar amount in mind, or simply a range, it is important to think about how much you need to make before selling a dental practice. The amount you make on your sale will impact how you live after you sell, whether you are putting the proceeds toward buying a practice in a new city, or using it as part of your retirement. Of course, this number will vary based on your individual circumstances. To determine how much you need take a look at your personal finances as a whole, especially if you are planning for retirement. Sit down with your dental CPA and financial planner to discuss your current investments, expenses, and goals for the future. Do you plan to travel during retirement? Are you moving to a more expensive city and purchasing a dental practice there? For dentists planning their retirement we recommend taking advantage of our Practice Optimizer Experience. This program will take you through the steps of planning for a successful retirement, including an Ideal Retirement Calculation. For more information about planning well before retirement visit our blog post here.
What Type of Transition Do You Want?
It may sound like a simple question, but “what type of transition do you want” is actually complex. Before selling a dental practice in San Antonio you must answer questions like:
- Do you want to sell your practice quickly, to the highest bidder?
- Are you concerned with continuing your legacy, even if it means passing up the first offer?
- Are you looking for a partner who will eventually take on the practice?
- Do you want to reduce your hours before selling or keep them the same until retirement?
- Do you want to stay on for a period after the sale, and, if so, for how long?
These questions are just the tip of the iceberg when it comes to setting goals. Talk over your ideal transition with your team of experts and they will help you create a timeline. For example, if you want to bring in a partner who will eventually take over the practice you need to start that process well in advance of your intended sale date.
When is the Right Time to Sell?
Do you have an exact time in mind, such as next October, or a range, such as sometime in the next 3-5 years? The right time for selling a dental practice in San Antonio is based on multiple factors like:
- Are you financially ready to move on, or do you need to add value to your practice before selling?
- Is there an external factor compelling you to sell before you thought you would?
- Do you have an “ideal” timeline in mind already, such as retiring by the age of 65?
One of the most important things you can do when determining the right time to sell is to make sure you are mentally and emotionally ready. As dental lawyer David Cohen explains,
“I’ve dealt with some sellers in the past that think they may be ready to sell, and they’re not. And it ends up being time-consuming for all parties involved . . . If they can do the best they possibly can to begin with, really do some soul-searching and make sure they’re ready to sell. I think that’s extremely important before they start paying legal fees and spending their own time and money, and also other people’s time and money.”
Planning Ahead When Selling a Dental Practice in San Antonio
The final element of a successful sale is proper planning. It is never too early to start thinking through your ideal type of sale and gathering your team of experts. A good rule of thumb, though, is to start planning five years before you intend to sell. This is especially important for dentists moving toward retirement. Unfortunately, many dentists nearing retirement haven’t saved enough to maintain their current lifestyles.
For this reason we recommend getting a practice valuation at the beginning of your journey. Practice valuations are typically thought of as the report you need to provide the buyer, detailing what is included in the sale and giving a true and fair value. However, practice valuations can be helpful to dentists preparing their practice for a sale because they show what you can expect to make on your practice if you sell now. Taking information from the report you can determine whether you are financially ready to sell, take on an associate, reduce your hours, and more. If your practice valuation is lower than you expected, knowing earlier will give you time to build value before selling a dental practice, and help determine the areas where you can improve.
Our transition experts work with third party valuator Blue & Co. to provide fair and reliable reports. Each 70 page report provided by Blue & Co. details every financial aspect of your practice, taking into account years worth of data and trends to determine a fair market value. Matt Howard, dental CPA and certified business valuator, explains, “our job in this process is to really help really work through the practice financials, the historical financial statements, and just basically help sanitize or normalize the numbers as we see them [so] the true operations of the practice are reflected.”
Oftentimes dentists are surprised when they receive their initial report, not realizing what a big impact they can have on their practice when they choose to reduce their hours, spend more on marketing, hire additional hygienists, and more. After taking a look at your practice valuation you can make an educated decision when it comes to things like hiring an associate. Again, Matt Howard explains, “Every practice has a limited amount of resources, of ops, of time for the staff to not hit overtime. So there’s a lot of variables at play here.” This is one reason why we advise that, five years before you plan on selling your practice, make sure you are using all of your resources to build value.
Selling a Dental Practice in San Antonio? Contact the Experts
As you can see, a lot goes into selling your dental practice, and the earlier you start preparing the more successful you will be. Familiarizing yourself with the elements of a successful sale is just the beginning. However, you shouldn’t need to be an expert in the market to complete a successful sale. All you need is the right team to guide you through the process.
At DDSmatch Southwest you will find just that. Our experienced brokers have completed many sales throughout Texas and New Mexico, always focusing on helping buyers and sellers have as smooth a transition as possible. With our Trusted Transition Process you don’t have to worry about details falling through the cracks.
If you’re thinking about retirement ask about our Practice Optimizer Experience. This program was created for dentists who are 3-7 years away from retiring and selling a dental practice. It helps dentists prepare for retirement by completing important steps like preparing your estate, evaluating insurance, and building value in your practice. Our experts can also help identify areas of your practice that are underutilized in order to take advantage of growth opportunities.
Whether you are ready to put your practice on the market today, or you just want more information about the elements of a successful sale, contact the experts at DDSmatch Southwest. During your consultation we will help you determine your goals for the future and map out a successful practice transition. Visit our contact page or call 855-546-0044 to get started today.