Preparations to Make When Selling Your Dental Practice
When you make the decision to sell your dental practice, you may be ready to hang up your lab coat and tools the next day to pursue the next stage of your life.
Unfortunately, the reality is that selling a dental practice takes time. Because the industry is reliant on patients who come and go — and are often loyal to you as their dentist — it can sometimes be more challenging and time-consuming to sell a dental practice.
Furthermore, dentistry is a skilled profession that takes years of training and practice to master. As such, there aren’t as many viable buyers as there are for some other types of business.
That’s why it’s important that when you’re ready to sell your dental practice, you are patient. It will be a process that may take longer than you initially anticipated.
Still, there are preparations you can make to help set you up for success when you’re selling your dental practice. Here are the top four things you should do to prepare to sell your practice.
1. Figure Out Whether You Can Afford to Sell
You may mentally be ready to sell your practice, but can you afford to do so? There are several factors to this answer.
First, what do you plan to do after you sell your practice? Are you going to retire? Are you going to work another job?
Your personal finances are going to be completely different after you sell your dental practice. Make sure you’re prepared for this big change by first analyzing your overall financial picture.
This analysis may be best conducted with the help of a financial advisor, who can help you bring in all elements of the situation so you can weigh your options. You don’t want to sell your practice only to find out you don’t aren’t financially secure enough to do what you want with your newfound free time.
2. Figure Out the Tax Implications of the Sale
Depending on the details of the transaction, and where your dental practice is located, there will be tax implications to selling your business.
For this analysis, it’s a good idea to bring in an accountant’s point of view. He or she will be able to show you the full tax picture and what you will owe once you sell your dental practice.
An accountant will also give you pointers on how you can reduce the tax impact of the sale. Maybe there are different ways to structure the payout or the sale itself to reduce your tax liability. Maybe there are investments you can make with the proceeds that would reduce how much tax you owe.
After working hard for years in your dental practice, you want to maximize the after-tax return you get when you sell. An experienced accountant will be able to show you all your options from many different angles.
Then, you can make informed business decisions based on the real-world financial impact they will have on your bottom line.
3. Figure Out the Type of Sale to Pursue
There are options for how you can structure the sale of your dental practice. It’s important to figure out which structure is the best for you before you actively pursue a buyer.
One option is to sell your entire business outright. This structure would see you exit the business completely, turning over control to the new owner.
In this scenario, you could either exit immediately or gradually take a step back. If your buyer is an experienced dental practitioner who is wrapping your practice into theirs, this may be a viable option.
It’s also possible the buyer may want you to stay on for a short period of time to help with the transition. In this case, you would still practice but at a reduced workload, and slowly but surely transition your patients and business practices over to the new owners.
Another option is to bring on additional practitioners and sell part of the business to them. In this scenario, you could take a gradual step back from practicing — as above — but you’d wouldn’t be removing yourself from the business completely.
This type of sale could be beneficial if you’re looking to cash out some equity in the business in preparation for retirement or to invest in another project. At the same time, you’d still ensure some active income since you’d still be seeing patients and owning part of the company.
In essence, you’d be expanding your practice by adding to its total patient hours while reducing the hours you work — and the responsibilities you have — in the meantime.
4. Keep Working Hard Until the Sale
You can’t slow down your working pace when you make the decision that you want to sell your practice. In fact, it’s important to do the exact opposite.
All the way through the finalization of the deal, it’s important that you work as hard as you ever have. In a service industry such as dentistry, this is particularly essential, as your revenue is based on the patients you take in.
Until the sale is finalized, you should approach your work as if you’re in it for the long haul. Continue to work hard. Continue to attract new patients. Continue to seek new areas of revenue.
In the end, it’ll help to increase your valuation.
Our best advice? Don’t waste another day and talk to a Sunbelt South Florida broker today!
Sunbelt Business Brokers of West Palm Beach provides dedicated business brokerage services for all of your selling needs. Whether you are an established business owner nearing retirement and looking to sell, or an ambitious entrepreneur seeking your next investment opportunity, there is no reason to look beyond Sunbelt Business Brokers. Visit us at 800 Village Square Crossing
Suite 216 Palm Beach Gardens, FL 33410 or contact us at (561) 832-9222.