The Practice is Priority One: Multi-Partner Dental Practice Transitions

There are many factors to consider when thinking about the possibility of a dental practice transition, especially when selling the practice involves multiple partners. Each partner will likely have different priorities. For example, the exiting partner may be concerned with the maximum gain on their investment while the remaining partner may be thinking about the additional financial responsibility and shift in office dynamics.

Consulting with an NAPB dental practice broker is advisable because, especially in the case of a dental practice sale involving multiple partners, the interests of the practice must be the top priority.

One way to ensure a smooth dental practice transition is to observe some of the following suggestions:

  1. Gain a clear snapshot of the current cash flow for the practice, and work together to arrive at agreed-upon projections for the future. This will assist in the dental practice valuation and determining the exact buyout amount for the exiting partner.
  2. When deciding on a buyout amount, build in some flexibility with the payment schedule. Usually a buyout schedule is for a fixed term (5 to 7 years is standard). As you progress, it is sometimes necessary to extend the term for a year or two. The remaining dentist(s) may encounter unforeseeable challenges, and the exiting doctor will know with certainty the entire amount they are owed, but building in some fluidity preserves your dental practice transition.
  3. Cap the amount paid to the exiting dentist each year. For instance, base the annual payment off of a percentage of the practice’s income for that year.
  4. Set a minimum for the remaining partners’ salaries each year so they can depend on consistent income during the dental practice transition.

Occasionally, within the buyout period, it makes sense to add an additional partner to the practice. Flexibility of terms is crucial at this point. It provides a landscape where the exiting partner is guaranteed a repayment on their venture, and the remaining partners have room to make decisions that grow and improve their business. It’s a win-win.

Making the dental practice the #1 priority is the best way to ensure a streamlined dental practice transition for a multi-partner dental practice.

Please contact an NAPB dental practice broker to consider your options for selling your multi-partner dental practice.

NAPB | National Association of Practice BrokersDENTAL PRACTICE BROKERS

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


Sales Prep: Ready to Sell your Dental Practice?

When most dentists contemplate a dental practice transition, the following is a list of frequently asked questions (FAQ):

1) What do I need to do in order to put my practice on the market?

This is where a skilled NAPB dental practice broker is a great help. The more effort you exert up front, then the easier the dental practice transition is in the long run. You’ll need to collect a great deal of information (including but not limited to) complete financials, tax returns, and land and building leases/deeds. A complete record of the physical site is also helpful for the dental practice valuation. A broker will often visit the office, taking photographs, evaluating the state of the equipment, reviewing the schedule and staffing to assemble the details needed for an accurate dental practice appraisal.

2) Are there specific parameters/measurements when it comes to dental practice valuations?

This is where an expert in dental practice transitions can really illuminate your current circumstances. A general guide is practices are worth seventy percent of gross collections. However, sometimes buyers examine cash flow and don’t look as closely at collections. A dental practice valuation is the best way to get a sense of your practice’s worth, and a dental practice broker can guide you through that process.

3) What is the timeframe from listing the practice to closing the sale?

This answer can be as varied as the practice. Location of the practice certainly plays a part. In a more populated city, a practice can sell in as quickly as six to twelve weeks from the listing date. In a rural area, there is typically a much longer sales cycle, sometimes it takes as long as two to five years to sell your dental practice. The state of the financials is a big indicator here so any steps that reduce overhead and creates a cash-positive position will help with your dental practice appraisal. Obviously, a buyer will be more interested in a visibly profitable practice.

4) How does the dental practice broker market my practice when I list it for sale?

As you know, marketing a dental practice requires some diplomacy. Most NAPB dental practice brokers will engage multiple avenues including the following:

  • Strategic emails sent to the dental practice broker’s client mailing list and additional prospective buyer lists
  • Listings on websites such as; dental practice broker member sites, NAPB site, and regional/local dental associate sites
  • Print advertising to precise prospects

5) How can I increase the value of my dental practice?

There are some simple, cosmetic things that you can do from the get-go. Make sure the paint is fresh and the office is well-organized and free of unnecessary clutter. Repair any cabinet/door hardware. Replace old carpet, flooring, and furniture. Look at the lighting and cleanliness. You might be surprised what a deep cleaning and brighter light bulbs can do for the look-and-feel of an office.

Some of the more involved initiatives include making sure your equipment is up-to-date. If the equipment is older, make sure it’s all working properly. Have it repaired and in working condition, reupholster the patient chairs if necessary, or replace antiquated equipment.

On the human interaction side: cultivate referrals, boost local advertising of services, customize treatment plans, and consistently follow up with patients.

Please get in touch with a dental practice transition specialist and we’ll discuss next steps to get ready to sell your dental practice.

NAPB | National Association of Practice BrokersDENTAL PRACTICE BROKERS

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