KDA Today

KDA Today

For Immediate Release

Date: Dec 21st, 2021
Contact: Dr. Suzanna Ebert, Vice President, Dental Practice and Relationship Management for ADA Business Innovations Group
Phone: 800-292-1855
Email: kda@kyda.org

What Buyers Want: 5 Ways to Prepare for a Practice Sale

Through my role at ADA Practice Transitions™ (ADAPT), I’ve worked with hundreds of prospective buyers. Some are just out of dental school while others have been planning for years. They all want the same thing: a financially sound practice where they can do the type of dentistry that excites them and keeps them engaged throughout their career.

How does your practice stack up?

A Clear Transition Plan
Before putting your practice on the market, make sure you understand your own goals and timeline. No one wants to be promised ownership year after year or have you renege on the deal at the last minute because you decided you really weren’t ready to give up clinical dentistry.

Carefully consider your personal and professional situation. Think about your personality and how willing you are to watch YOUR patients being treated by a different doctor. Talk (and listen) to your family; they probably have strong opinions about what is best.

After doing some soul searching, answer some questions to map out your ideal plan:

⦁ Do you want to sell 100% and walk away, or prefer a gradual phase-out over a couple of years?
⦁ Are you willing to mentor a buyer who wants to learn certain skills or how to run a business?
⦁ If you own the building, do you want to sell it, or are you willing to become a landlord (with all that it entails)?

Next, think about the story that your practice tells a potential buyer. What does a buyer see or infer when they look at your practice, from the physical office to the financials? By looking through a buyer’s eyes, you can identify things that need a bit of sprucing up.

The Financials
This is arguably the largest purchase most buyers will ever make, and they will rely heavily on bank financing. Organized financials go a long way towards making them comfortable moving forward.

If you are looking to sell within a year, get a third-party valuation that allows you to understand your practice’s fair market value. Remember that the practice income needs to allow the buyer to support the practice expenses, pay back the loan within ten years, and afford a reasonable wage that supports the buyer’s lifestyle.

Your accountant can help you understand your numbers and how they stack up against industry standards. For example, your lab fees might be relatively high if you do a lot of prosthodontic work. Your overhead might be very low if you own your building and don’t pay yourself “market” rent. Be prepared to explain these discrepancies to your buyer.

Practice Stats
Buyers need to know that they can maintain, and preferably increase, the practice’s productivity — and that they can do all the procedures your patients expect. They also want to see strong policies that keep the office running smoothly and ensure prompt payment. Put together some documents that demonstrate this, including:

⦁ Average treatment wait time
⦁ Average hygiene wait time
⦁ Staff turnover rate and tenure
⦁ New patients per month
⦁ Production report, broken out by procedure
⦁ Referral patterns
⦁ Office procedure manuals
⦁ Collections policies

Don’t forget to share a few weeks’ schedules to help buyers assess the procedure mix and pace.

Practice Space
Today’s buyers seem to want a minimum of three operatories. Many prefer more. If your space is on the smaller side but you’ve considered adding an operatory — maybe you already plumbed that storage room — get a quote for the buildout to reassure buyers that the space can expand to fit their plans.

Buyers also need to be able to picture themselves in the practice. That’s easiest to do if the space is clean, organized, and somewhat depersonalized. Now is a great time to clean top to bottom and consider some inexpensive improvements. A fresh coat of paint and some decluttering can go a long way!

Take a good look at your equipment. If you can reasonably expect the compressor to function well for another five years, great! But if it’s held together with duct tape and chicken wire, replace it. You’ll get peace of mind that it won’t break down in the middle of a procedure and the prospective buyer will not have to address the replacement cost in their offer.

Location
While you can’t change your office’s location, you CAN help buyers see the area’s benefits, particularly if they’re considering relocating. Ask yourself:

What makes my office location great? Are you on a busy street with good signage and plenty of parking, near lots of other businesses? Are you one of just a few general dentists in town? Do you share a building with other medical professionals who send referrals? Tell buyers what makes your location especially successful.

What makes my area a good place to live? That could mean good schools, parks and recreation, a reasonable cost of living, and so on. Buyers also want to know that the area’s economy is stable — or better yet, growing. Mention any new developments, warehouses, factories, or other investments that show demand will increase.

Are there any loan repayment programs available? If you work in an area considered “underserved” by the government, your buyer may be eligible for federal or state loan repayment programs. Investigate a bit so you can inform potential buyers, as these programs can be very enticing.

Final Thoughts
Many of the sellers I work with are terribly concerned that younger doctors can’t take on practice ownership due to high debt loads and a perception that “younger doctors don’t want to be owners.” You may be surprised that 86% of graduating dental students aspire to practice ownership within ten years of graduation!

Don’t discount these younger docs. They have ambition and a strong work ethic. They want ownership. With banks willing to lend as soon as six months after graduation (under the right circumstances), the long-term success rate of dental practices, and licensure portability — this is a great time to purchase!

Remember: potential buyers want to know that they can build a successful career in your practice. Try to see your practice through a buyer’s eyes and make smart changes that can help your practice appear as attractive as possible.

Dr. Suzanne Ebert graduated from University of Louisville College of Dentistry in 1998. Following a one-year GPR, she entered private practice as an associate in St. Augustine, Florida. In 2000, Dr. Ebert started her solo private practice in Ponte Vedra Beach, Florida where she treated friends and family for 11 years.  Upon the sale of her practice, she elected to continue her career by providing dental care to indigent populations by becoming the Dental Director at a local Federally Qualified Health Center.  Under her tenure the clinics expanded and ran efficiently and profitably while addressing real needs in the community including eldercare, special needs care and ER diversion.  Dr. Ebert also became heavily involved in Florida Dental Association leadership, rising through the chairs of her local component and ultimately into the position of Trustee for the Florida Dental Association.  As Adjunct Faculty for the University of Florida, she had the privilege of working directly with senior dental students as they rotated through her clinics.  Dr. Ebert considers herself a clinical dentist first and is unwavering in her desire to protect private practice dentistry.  She is a vocal advocate of having a strong association to lead the dental profession through the issues facing it today.  Dr. Ebert is currently the Vice President, Dental Practice and Relationship Management for ADA Business Innovations Group.

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