If you have your own dental practice, you know that one day you will need to stop actively working in that practice. Whether you are looking to retire or simply switch careers, your practice will eventually change hands to a new owner. As with anything, it’s wise to have a plan for how you will do this when the time comes. Failing to plan for the eventual sale of your dental practice will result in lost income. However, with a plan in place, you will be able to gain income from the sale of your dental practice. Doing so will make all your years of hard work worth something.
So, how long does it typically take to sell a dental practice? Every dental practice is different. The time it takes to complete the sale of your dental practice depends greatly on the quality of the plan you have in place for this transition. Selling your dental practice can take anywhere from six months to five years.
There are several factors that play into the sale of your dental practice. Some of these include the experience of the broker you choose to use and the location of your practice. The annual gross collection of the practice is also considered during this transition.
How Long Does it Take to Sell a Dental Practice?
As you plan to sell your dental practice, it is important to plan for the amount of time the sale could take to be completed. A dental practice can take anywhere from six months to five years to sell. Because of this, it is crucial that you put a plan for sale into place before it’s too late. Allowing yourself ample time to complete the sale of your dental practice will provide you with both peace of mind and maximum financial gain.
The experience of the dental broker you choose to use for this important transition will play a large role in the speed of your sale. It is crucial to hire a dental broker with lots of experience transitioning dental practices in your area. A dental broker is responsible for appraising your dental practice. After completing the appraisal, they will assign the sales price. They are also responsible for overseeing the transition process between you as the current owner and the potential owner of your practice. We will cover the role of brokers in the sale of your dental practice in greater depth later in this article.
Understandably, location is one of the most important factors that play into the sale of your dental practice. A dental practice with a prime location will have greater resale value than a practice in a remote location will. However, dental practices in remote locations can be successfully transitioned! You must simply plan for the sale to take longer to complete.
The annual gross collection of your dental practice is the primary factor that will be considered when you are selling your dental practice. The annual gross collection will give the potential owner a good feel for the amount of money they will be able to collect if they decide to purchase your dental practice. Because of this, it is usually wise to begin the transition process while your practice is thriving rather than trying to sell a dental practice that is slowly dying out.
How Much Can You Charge for a Dental Practice?
The amount you can charge for a dental practice depends greatly on several factors. Before you attempt to sell your dental practice, it is important to have an appraisal done to determine the current market value. During this process, your dental broker will be able to suggest things that will improve your dental practice to make it even more valuable.
There are many opinions and formulas that are used to determine the fair market value of a dental practice. These vary depending on the dental broker you talk to. There are two main categories of thought that are followed in the valuation process. These are typically referred to as academic and real-world value.
The academic approach to valuations is what is usually used when a dental practice is appraised. This approach is based largely on formulas and data from past years of the practice. The real-world value is assigned by figuring out what a buyer is likely to pay for the practice based on the current economy of the practice. Dental brokers typically combine both of these numbers when assigning the sales price to a particular dental practice.
As a general rule of thumb, most dental practices sell for around 65% of their annual gross collection. However, this is not always the case. The location of your practice as well as the equipment you own will also play into the sales price. Because of this, it is important to consult an experienced dental broker before you attempt to sell your dental practice.
When to Sell a Dental Practice
There are many instances that may encourage you to sell your dental practice. The most common situation that causes people to think about selling their practice is an impending retirement. If you are considering retirement, it is important to sell your practice properly to provide yourself with both peace of mind and financial gain.
You may also just be considering a change of career, a cross country move, or simply wanting to continue as an employed dentist in your practice and not an owner. Whatever your reasoning for selling your dental practice, it is important to plan to sell the practice at the correct time.
For the best sales value, it is important to sell your dental practice when it is doing well. Attempting to sell a dying dental practice will result in a possible financial loss as well as a longer sales process. A thoroughly planned exit strategy will enable you to sell your practice at the best possible time.
When you sell a dental practice, the previous three years will be reviewed. Because of this, it is important to plan this transition early enough to allow the practice time to grow before the appraisal. Having a few busy months in your practice doesn’t mean that the dental practice will have great value.
What is a Dental Broker?
An experienced dental broker is an essential part of the sale of your dental practice. Hiring a dental broker will allow you to have the most successful and stress-free transition of the practice. A dental broker is experienced in selling dental practices. They are trained to oversee the transition of your practice as well as the small details which may be overlooked.
A dental broker will provide you with a fair value of your practice, also known as a market value appraisal. After the appraisal, they will offer suggestions on ways to improve your practice in ways to promote it’s sale successfully. Dental brokers are also responsible for locating potential buyers and facilitating all the meetings required before the sale is finalized.
As you begin to consider selling your dental practice, you may think that you simply need an attorney and an accountant. These professionals are great at their respective jobs. However, they are not accustomed to the inner workings of a dental practice. Hiring a dental broker will provide you with a knowledgeable advocate that is fully aware of everything that is involved in running a dental practice. This will only work to your advantage by taking more of the stress of this important transition off your plate.
Jaquay Enterprises would love to discuss the sale of your dental practice. By planning an exit strategy, they can ensure that the sale of your dental practice is both successful and profitable. You can find more information about their services here.
What should I look for when buying a dental practice? There are several things to consider when looking to buy a dental practice. The primary point to consider is the annual income of the practice. The location of the practice and the condition of the dental equipment that is included in the sale are also important factors.
Is it better to purchase an existing dental practice or start one from scratch? Although many new dentists aspire to start their own dental practice from scratch, this is usually not the best option. If you are able to purchase an existing dental practice, it is always wise to do so. By purchasing an existing dental practice, you are guaranteed an immediate patient base as well as income for your practice.
Do I need to be a dentist to purchase a dental practice? In many states, you do not need to be a dentist to purchase a dental practice. As long as you are not involved in providing dental care, you are able to own the dental practice. However, there are some states that require the owner of the dental practice to be a licensed dentist. You can find more information on the laws of your particular state through the American Dental Association.