Most people believe that selling your dental practice is a pretty big task. If you are someone who owns a dental practice and has been thinking of selling it, you must be prepared for the process both mentally and financially.
To make a successful deal with the buyer, you must ensure to research it properly and have the appropriate information. In the write-up below, we have mentioned various things that you should do before selling your dental practice.
Meet Your Financial Advisor To Discuss The Selling Plan
Meeting and discussing your plan with the financial advisor is a compulsory step. You should be able to tell your financial advisor your entire plan and whether you can afford to sell your practice or not. There is a difference between wanting to sell the practice and affording to sell it.
Generally, some sellers are ready to sell their practice emotionally but cannot afford to do so financially as they have certain commitments, loans, and budgets to consider. For this purpose, you must also have a proper financial plan prepared to calculate your income and profit for the future.
Selling a practice when you are not financially ready will only lead you to instability in your finances. You will have to postpone your plan of selling to a few more years when you’ll feel confident in your sale proceedings and income. This will also let you have a better retirement plan and lifestyle. A financial advisor will guide you through all the procedures and possibilities in a much better and professional way.
Discuss Tax Outcomes Of The Revenue With The Accountant
The tax ramifications of a sale need to be discussed with your accountant before selling your dental practice to a buyer. Each tax consequence is a different one, which depends on the type of corporation or legal entity you have established.
With every corporation, some issues will need to be addressed before selling it. This also means working towards allocating goodwill between your corporation and yourself.
Discussing tax-related information with the accountant will also help you to determine how you will need to take care of tax-related stuff in future sales. This includes retainment after your sale.
Ensure You Receive A Comprehensive Practice Valuation On Your Assets
Before selling your practice, it is important to prepare and retain a certified valuation once you choose to use the services of a broker. Moreover, most brokers take credit known as valuation fees apart from the sales commission to prepare a formal valuation for the corporation.
On the other hand, some brokers offer free valuation but it is advised to not receive it as it does not serve your best interest. Often, it does not include the right details and analysis results.
Taking a certified valuation offers you the full authority of the physical attributes of your practice or corporation including the office equipment, staffing, location, and other items that require detailed analysis before selling. Moreover, a certified valuation also takes into account different assets of the place that make up a huge portion of your practice assets.
There are different ways through which people validate the value of assets and ensure that the analysis is accurate. They are also required to give a proper written report of the multiple valuation methods used to validate and analyze. Keep in mind that this is the kind of support you must get to get the details and information for practice valuation whether or not you want to sell your practice or lend it to someone.
Do Not Decrease Your Work Ratio
Even though you have planned to sell your practice, you should not stop accepting new entries of patients. This will decrease the standard of your established practice along with its value and patient reviews. Furthermore, not decreasing the work ratio will make the buyer more interested in buying a well-established practice.
Moreover, if you will stop accepting new patients, it will also harm your gross receipts including your income and sale price of the practice. And this does not sound like something you would want.
To protect your dental practice’s value, you will need to have an existing consideration that says Employment Agreement including a non-solicitation clause and a legitimate restrictive covenant. This protects your staff and employees. Know that a restrictive covenant can be extended and has a set of limits for the associate or employees. If you do not have an associate, then you might need to consult your attorney.
Be Realistic In Your Timings
To sell a dental practice to the right prospect, the broker must have 8 to 12 months to search. Giving less than 6 months to the broker to find the right prospect is almost an impossible task and will trigger a fire sale.
Also, taking the proper time to find and do your research is the best way to go. You will be able to get a good deal with planning which will result in getting your practice ready to be put in the market for sale.
But the question is, how to do proper planning and make a good deal?
The above-mentioned write-up is a complete guide for you to follow to prepare yourself completely to put up your dental practice for sale in Washington DC.
We have carefully mentioned all the ways to make yourself mentally as well as financially. Moreover, proper planning will not only give you the highest return in profit but will also increase your income along with your chances to get a great buy for the practice. You will also be able to make a better retirement plan after selling your practice.
To avoid failure, you must start planning and preparations to sell your practice a few years before you finalize any deal.