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Articles

The Professional Advisory

  1. Is it Time to Move?
  2. Staging A Dental Practice
  3. The High Cost of Dying
  4. Deal-Busters
  5. Patients - Attract and Retain
  6. Should I Stay or Should I Go?
  7. Is There a Buyer for Every Practice?
  8. Good, Better, Best - The Market has Spoken
  9. Smooth-Sale-ing
  10. Buying Time
  11. Patients, Patience, Patients
  12. A Real Patient
  13. Why Do a Practice Valuation? I'm not Selling
  14. Irrational Exuberance or The New Normal?
  15. Do dental equipment and dental technology affect a practice value?
  16. Finding and Being a Mentor
  17. Bigger is Better
  18. Daves Top Ten List for Buyers (Vendors should read this too!)
  19. How Well Do You Know Your Practice?
  20. Dave
  21. What will happen to dental practice Values in the next 10 years?
  22. Your Premises Lease is an Important Asset
  23. What are Associates Thinking?
  24. There is Life Outside the GTA
  25. When Is the Right Time to Sell My Dental Practice?
  26. Mergers are a Viable Option
  27. Is Your Associate an Asset or a Liability?
  28. Has your Practice Facility Kept Up With Your Billings?
  29. The 100 per cent of Gross Myth
  30. The Past, The Present and The Future
  31. Caveat Emptor
  32. Overpaid Long Term Staff
  33. Selling your Practice in Stages
  34. A Potential Pitfall of Selling Shares
  35. Value in Your Practice Through Balance
  36. Only Trusted Staff Can Defraud You
  37. To Own or Not to Own Practice Real Estate? That is the Question.
  38. Coping With A Large Patient Base
  39. Successful Dental Practice Transitions
  40. Taking Care of Business
  41. The Investing Dentist Phenomenon
  42. Two areas to focus upon that could negatively impact the value of your practice
  43. Organize your Debt in Order to Sell your Practice
  44. Having a Better Team
  45. How Do I Prepare My Practice For Sale
  46. How Do I Prepare My Practice For Sale? Part 3
  47. How Do I Prepare My Practice For Sale? Part 2
  48. How Do I Prepare My Practice For Sale? Part 1
  49. Advice to My Son or Daughter Graduating from Dental School
  50. Transition - What to Expect
  51. Discussion on Digital X-Rays
  52. Partnerships and Shotguns
  53. Strategic Planning - How to Get Started
  54. Calling All Vendors - Practices have Gone Up in Value
  55. Purchasers: Expect to Pay More for a Practice because of Lower Professional Corporation Tax Rates
  56. Matrimonial Practice Valuations
  57. Purchaser's Guide to Affording a Practice
  58. Location Improvements Throughout Your Career
  59. Small Practice Valuations
  60. Partnerships – The Best and The Worst
  61. Changing Location When the Opportunity Comes Along
  62. Visual Presentation of Your Practice
  63. Presentation of Charts
  64. Your Premises Lease Can Be Your Worst Enemy
  65. How to Select an Appraiser for Your Practice
  66. How Are Your Billing Ratios?
  67. It Pays to Invest in Your Tangible Assets
  68. The Importance of Separate Financial Statements
  69. Five Time Frame Levels to Sell a Practice
  70. 12 Suggestions to Safeguard Computer Data
  71. How to Buy a Visible Practice
  72. Why is there a shortage of good practices today?
  73. The Importance of Equipment in the Purchase of a Practice
  74. The Balanced Practice
  75. Will My Practice Be Saleable in The Future?
  76. Buyer Be Aware
  77. Excess Profit - The Second Key
  78. Patients and Profits are the Keys
  79. Plan Ahead

Volume 1: Plan Ahead

Download the PDF version now!

Doctors often ask me, "When should I start to talk to someone like you regarding the sale of my practice down the road?"

I would generally indicate that you should start the planning 8 years before you wish to sell but remember, most transition periods are from 6 months to 5 years after the sale. So, from the start of the plan, to finally hanging up your handpiece, could be as far away as 13 years.

Why 8 years ahead of time?

This gives you three years to go through renovations, and/or replacement of equipment deemed necessary to have a visually attractive practice. Typically, you finance the renovations and new equipment with a 5 year lease, in the years 5,4,3,2,1, you pay off your lease as it is quite disconcerting to have to take proceeds of the sale of your practice to pay off the leases, which could be substantial. You get to do the last years of practicing with new equipment, fewer repairs and it makes you feel good. The leases are written off against income and typically the tax savings are 50% of the cost of the improvements. The practice looks more contemporary - a "turn key operation" - and the purchaser would not have to lay out big dollars to make the practice feel comfortable. Your excellent patient base with contemporary equipment is worth more and sells easier as purchasers seldom have the vision of "what could be."

What happens if I don’t have 8 years lead-time to the date that I see myself selling the practice?

If you do not have a clear 5 years, I would suggest you do either nothing or review the high points such as x-rays and sterilization or replace older equipment with good used equipment depending on what you have. Be aware that your current 22-year-old equipment will be 30 years old in 8 years and what does 30-year-old equipment look like now!

If I put too much value in new leasehold improvements and equipment won’t that reduce my goodwill value?

It is possible to have too much value in leaseholds and equipment. There is a balance between leaseholds, equipment and supplies as they relate to your patient base and your professional fees. The value of a practice is mainly driven by the normalized net income and the patient base. This however, is not a simple relationship and I would recommend a comprehensive practice valuation to start the planning of the sale, which may well be 5 to 8 years off. Our VIP Program (Valuation in Place) would update your valuation annually and you would not have to have another valuation done when it becomes time to sell your practice. That however, is a subject for future articles in this same publication.

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