If you want to sell your practice for more than you ever imagined, it’s easy, just focus on the following transition planning checklist. Remember it is never too early to start. As the Chinese proverb says, “The best time to plant a tree was 20 years ago. The second-best time is now”.
- Improve the conversion rate of phone inquiries into appointments.
- Increase the number of active patients who are scheduled for their next appointment.
- Reduce the practice’s patient attrition rate.
- Reactivate your inactive patient base.
- Hire an office manager whose responsibility it is to ensure you are meeting your practice revenue targets.
- Retain a CPA experienced in working with dental practices.
- Retain a lawyer who works with dental practices.
- Bring onboard a quarterback (i.e., a transition specialist or broker).
- Do the numbers; discover how much money you really need to retire comfortably.
- Talk to your financial planner and your CPA about setting up a worry-free retirement portfolio.
- Think about your legacy and your reputation. You worked hard to build a thriving career on your integrity. For a few more dollars, don’t let a stranger destroy it.
- Sell to a compatible person whose values you share, and who aligns with your practice philosophy.
- Have a buy/sell agreement to ensure you get a fair value for your practice when you leave.
- Ensure your team is a strong asset in the sale of your practice. If necessary, remove the “bad apples” well in advance of looking for a purchaser.
- Build a trusting relationship with the prospective buyer, without getting involved directly with the negotiations.
- Don’t be greedy. Leave some juice on the table for the buyer, it will benefit you in the long run.
- If your clinic is a little worn, consider enhancing its “curb appeal” by investing in a facelift. Hip practices sell for more.
- Consult with your lawyer before finalizing the purchase and sale agreement. Ask yourself:
- Is there a listing of dental equipment, furnishings, and other equipment?
- Is there a list of assets that are excluded from the purchase?
- Does the purchase price allocation help me to minimize the tax liability?
- If patients need re-treatment, do I have the option to either do the work without charge, or negotiate a discounted fee if the buyer does the rework?
- Is the amount and period of time for any rework restricted?
- Have we outlined how accounts receivable are dealt with?
- Are accounts receivable part of the purchase price?
- Does the agreement require the buyer to collect the receivables and remit to me promptly?
- Have we negotiated a lower fee with the buyer for collecting the receivables?
- Did we pay any outstanding credit balances to patients?
- Did we ensure that there is only a minimum restrictive covenant in place, both as to geographical scope and duration?
- Did we obtain confirmation on the lease assignment that states that I am no longer responsible in any way for the lease?
- What is the post-closing financial and legal exposure for my “statements and warranties” in the agreement?
- Schedule an appointment with a transition expert to make sure your transaction is stress-free and structured to allow the maximum financial benefit for your retirement.
