NAPB: Providing Smooth Dental Practice Transitions

Are you thinking about selling your dental practice? For most doctors, a dental practice transition is something that will only happen once in your lifetime; and characteristically, your dental practice is one of your most appreciated and valuable assets.

Many doctors are accustomed to the DIY approach. When I was first starting my practice, I tried to do everything on my own. For example, I designed mailers, managed the mail-out, oversaw the layout, and approved copy for the ads in Texas Monthly. However, I found that I wasn’t cultivating new clientele, and I was completely stressed out. Fortunately, I consulted with a dentist who had been in practice for over twenty years. When I heeded one of his suggestions and hired an advertising expert, my practice began to grow (and I was much more efficient and effective because I could turn my focus to my patients).

Investing time, energy, and money into dental school, developing an office culture, serving patients, and ultimately arriving at a point where you are ready to sell your dental practice and move on to the next chapter is a huge transition. In my experience, at this point, an NAPB dental broker is exactly like the veteran dentist who helped me in the early years—a trusted, capable resource—ready to help you with a smooth dental practice transition. In other words, in the case of selling a dental practice, the DIY approach is not only ill-advised, but it can also cost you a great deal of money.

An NAPB dental practice broker is truly instrumental in four primary ways:

NAPB dental practice valuation appraisals

  1. Provides a comprehensive dental practice valuation. The entire sale rests on a thorough and accurate dental practice appraisal. Through years of familiarity and understanding, the NAPB broker conducts a cash flow analysis and determines a fair market value for the practice, providing careful research and compiling data to support the valuation, clearly outlining the dental practice appraisal details to prospective buyers, and ultimately maximizing the value the seller receives at closing.
  2. Formulates a dental practice transition strategy tailored to the seller’s needs. This is critical. NAPB dental practice brokers listen to the seller, gaining a sense of their current circumstances and intentions moving forward. Then, the dental practice broker can market to and gain interest from a buyer that’s exactly the right fit.
  3. Advertises the dental practice to qualified buyers. As you know, when you put your practice on the market, getting the word out requires diplomacy because the maximum value is in a healthy, high-functioning dental practice. So, your NAPB broker strategically advertises the practice both locally and nationally, taking care of NDA agreements prior to sharing any information, drafting contracts, anticipating and being proactive about the details within the deal (again, another benefit of working with an NAPB dental practice broker).
  4. Serves as a liaison between the buyer and seller throughout the entire process. This is especially helpful during difficult conversations such as discussing particulars within the terms of the contract and the practice valuation so the integrity and reputation of the practice is upheld, and there is a positive relationship fostered between the seller and the buyer

There are so many variables to consider when selling a dental practice. Entrusting an expert dental broker—a member of the National Association of Practice Brokers with the both the still and finesse to negotiate a successful dental practice transition—is the best course of action.

Please contact us for a free dental practice transition consultation today.

NAPB | National Association of Practice BrokersDENTAL PRACTICE BROKERS

Dental Practice Transitions Selling a Dental Practice
Dental Practice Valuation Dental Practices For Sale


A Seller’s Market – Tips on Transitioning Your Dental Practice

By Katie Hines, Katie Hines Office Transitions

It appears we are currently experiencing a seller’s market in the business of dental practice sales. This means elevated values and better overall conditions for those entering the market of dental practice transitions. Why now? Several circumstances are contributing to the current market trends, including limited supply, increased demand, and low interest rates.

Supply vs. Demand

Following the 2006 recession, doctors nearing retirement age were forced to continue working as a result of lost retirement savings and fear of the stock market’s future. There was also an increase of available dental practices due to many “short sales” of failing practices further contributing to decreases in overall practice values. Many potential buyers experienced difficulty obtaining financing due to tighter lending requirements during this time forcing them to wait until the market rebounded to be eligible to purchase a dental practice. Additionally, the number of graduating dentists has increased in subsequent years. These combined factors have contributed to a low supply/high demand of available dental practices, which has started to create a “seller’s market.”

How long will this trend continue? In the near future the market will shift, and there will inevitably be an increase in the percentage of sellers, as the Baby Boomers face retirement. With that in mind, don’t wait to transition your practice when the increased supply will drop practice values.

Below is a list of things you will need to consider when preparing your practice for transition.

  • Increasing numbers of qualified buyers and new graduates resulting in an increased demand for dental practices.
  • Doctors near or at retirement age holding onto practices due to the recession has resulted in a decrease in available practices. There will likely be an influx of practices on the market within the next couple of years.
  • The high cost of start-ups and the increased debt of new grads makes purchasing an existing practice desirable.
  • Currently, interest rates remain low and are anticipated to increase within the next five years.

Most doctors invest countless hours and valuable resources developing their dental practices. They cultivate strong relationships with patients and staff, and inevitably, they want to ensure their patients and business will be properly cared for when they are no longer doing it themselves. By recruiting a dental practice broker, you can identify the best buyer for your practice and ensure a smooth and prosperous transition.

Establishing Your Sales Team

Dental practice brokers are networkers with deep-dental community, as well as the professional environment. Their solid network allows for strong connections between buyers and sellers, and provides access to a skilled team of professionals who aid in a dental transition, including attorneys, lenders, business consultants, and accountants. Most dental practice brokers possess thorough understanding of the local market, which allows them to properly position your practice, advertise the sale, and obtain the best value for your practice.

Determining the market value of the practice, finding the right buyer, negotiating the purchase price, formulating the transition plan, assisting the buyer in negotiating the lease assignment, and obtaining practice financing are a few of the areas a practice broker can prove invaluable.

Expect a dental practice broker to help you:

  • Identify goals and formulate strategies based upon the seller’s unique needs, wants and desires.
  • Construct a detailed marketing profile and cash flow analysis.
  • Create unique and individual marketing strategies that meet the needs of the seller and target specific buyers.
  • Strategically and confidentially market the practice on a local, state, and national level using a variety of methods including print advertising, web advertising, seminars, and trade shows.
  • Determine best strategies to manage unexpected occurrences which lead to the need for immediate dental practice sale.

By contacting a practice broker, and planning in advance, you can choose a dental transition strategy that best meets your individual situation, make necessary modifications to enhance your overall practice value, and avoid mistakes that can reduce the practice value and marketability.

Positioning Your Practice

Two ways to effectively position your dental practice for a successful sale:

  1. Keep your practice profitable and current. Confirmation of profitability is key, so start minimizing expenses, increasing revenue, and whatever you do… don’t slow down too soon! If you are in a position where you must reduce your work load, consider hiring an associate.
  2. An expressed earning potential is also desirable. It can be based on several factors, including practice location, demographics, existing internal and external marketing strategies, possibility for expansion/ additional operatories, and the ability to offer more in-office procedures/treatments. 

Be realistic when evaluating your practice. Would you want to buy it? Evaluate the equipment, the décor, the condition of the building, and the location. Often times small improvements can be made cosmetically to enhance curb appeal. Peer through the lens of your potential buyer and consider what they will be looking for:

Katie Hines Office Transitions Dental Practice Brokers Arizona

  • Increases in revenue and production in recent years.
  • Low overhead that reflects industry standards.
  • Increase in new patients and steady active patient flow.
  • Effective internal and external marketing strategies.
  • Updated equipment and décor.
  • Fees that are usual and customary for the location.
  • Clean accounts receivable.
Katie Hines Office Transitions (KHOT)has transitioned dental practices in Phoenix for over 15 years. KHOT provides a personalized approach to practice sales by getting to know each client’s specific needs and desires.


NAPB | National Association of Practice BrokersDENTAL PRACTICE BROKERS

Dental Practice Transitions Selling a Dental Practice
Dental Practice Valuation Dental Practices For Sale