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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 60: Dave’s Top Ten List for Vendor’s

Download the PDF version now!

 As a dental practice appraiser and broker I am fortunate to be in a position where my daily activity is a window into what works and what does not work in terms of value creation in a dental practice.  As practice values continue to soar, buyers are being very careful (as they should be); therefore it is more important now than ever that you and your practice are ready when the time comes to sell. This article will take a page from Late Show Host David Letterman’s monologue and enlighten you about my “Top Ten List” for Dental Practice Vendor’s.

  10. Location/Premises - Dental offices are located in a multitude of different kinds of locations. Buyers want visibility and new patient flow. This means that the walk-up over a bank will be a tough sell. It also means a practice in a professional building with strong new patient flow due to excellent internal marketing is appealing. The inside should be attractive and well maintained but does not have to have all the latest hi-tech gadgets. There is no one size fits all.

  9. Be Educated - Most often, selling a dental practice will be a once in a lifetime experience. Take the time to understand the market and where your practice fits into it. Learn how to make it appealing to buyers. Be realistic in your expectations and have a plan for how the transition will go and what you’re going to do after you sell.

  8. Have balanced financial metrics – Many dentists only look at their financial performance once a year at tax time when they see their accountant. As you prepare to sell be aware of how the revenue comes in and where the expenses go out. Look at hygiene revenue – is it over 30 per cent? Is the rent expense 6.5 per cent or less? Are staff costs around 26 per cent of gross? All of these factors are very important as are many other financial metrics.

  7. Surround yourself with experts – Selling a dental practice is a complex undertaking. You will likely have shares of a Dentistry Professional Corporation (DPC) to sell, capital gains to consider, staff and a landlord to deal with, diligence to comply with. It is extremely important to consult with professionals that know what they are doing. Your accountant, lawyer, financial advisor and broker all play an integral role in a successful outcome.

  6. Time it Right – I do not mean to say that you should try and pick the top of the market. I mean you should be mentally prepared for the life change that selling a dental practice means and you should not wait until it is too late. Once your practice starts to decline, the new patient flow starts to dry up, and you start feeling tired, it is a slippery slope that is hard to reverse.

  5. Staff Considerations – Once you are gone, your staff becomes a very important link to the patients for the buyer. Have good people and deal with any bad apples before you sell. It is important that you have the right number of staff for your practice size (no “floaters”) and that they are paid market rates. If they are overpaid, you will have to deal with that before a sale is concluded.

4.  Have Contracts – The days of handshake deals with people are sadly over. It is imperative that if you have an associate, you have a good contract drafted by a dental lawyer. If you do not, the value that your associate brings to your practice will not only evaporate, it may actually be an impediment to you concluding a sale. Deal with this right away. Additionally, your practice value will be enhanced if you have written employment contracts with your hygienists and your other staff members.

3.  Focus on Hygiene – The hygiene revenue produced in your practice is a key value driver and a real focus for buyers. You should strive to keep it at 30 per cent of your gross or more. Hygienists should be paid at the market rate for your area and should be able to produce three times what they are paid per hour.

2. Have a good Premises Lease – Landlords have become increasingly difficult to deal with during transition periods. Your lease should have a term, including renewal options of 10 years or more, should not have a demolition or relocation clause, and should be assignable with the landlord’s consent which should not be unreasonably withheld for a fixed fee.

1.  Plan Ahead – As the previous nine bullets indicate, there is a lot to do in order to be prepared to sell your practice. Your goal should be to obtain a fair price and provide the buyer with an excellent opportunity for a successful transition. This will take time to orchestrate so I recommend you begin discussions with the experts about five years prior to your ideal sale date.

The sale of your practice, while a complex undertaking, can and should be a very rewarding process. It will allow you to receive value for what you have created and leave a legacy that has benefits for your staff, your patients, and the buyer.

David Lind is a Principal and Broker of Record in Professional Practice Sales Ltd. (www.ppsales.com), which specializes in the valuation and sale of dental practices.  He can be reached at (905) 472-6000 or 1-888-777-8825 or e-mail at: david.lind@ppsales.com

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