“When is the right time to sell my dental practice?” is a common question, often responded with a simple, “Sell it when you want to retire.” However, more truthfully, the question is “when is the right time to sell my practice for the highest price that also enables flexibility to commence the next stage of my career?”
The response to that question is much more complex and must take into consideration many factors, including net worth, health, family, economics, demographics, the future, and many practice performance factors.
The most important consideration is your personal situation. Surprisingly, most decisions are more about lifestyle factors than financial considerations. Selling your practice doesn’t necessarily mean retiring from dentistry. When we are helping a dentist decide what direction to take, we ask many questions about their personal situation, dentistry, and their practice. When a dentist responds that they love dentistry, their patients, and staff, then it’s clearly not time to sell! If the response is that they love dentistry, their patients and staff, but don’t want the management headaches and want the flexibility to slow down, then options arise. These options may include selling to a corporate group and associating back or managing with reduced responsibilities and increased support, adding an associate, merging their practice, hiring a manager, or simply reducing hours, with the understanding that the value of the practice will decline. When dentists respond that they don’t like practicing anymore, the staff and patients are a hassle, that they are tired, etc. – then do yourself and your patients a favour and sell!
Irrespective of when you decide to sell your practice, it is extremely important to ensure that you prepare your practice for sale well in advance of the listing. The factors that create value include; a consistent revenue stream, good profit margin, solid long term premises lease, good hygiene program, good recall patient base, a decent asset base, etc. The preparation for sale and your retirement planning can commence as much as 5-10 years before you actually sell.
To maximize the value of your practice, start focusing on your practice well in advance of the selling decision. The start of this planning phase may involve performing a comprehensive valuation of your practice and working with your financial advisors to create a long term plan.
In a typical valuation, there will be enough information for you to identify issues and opportunities to work on to improve value. Simple updates can be completed every 12-18 months to measure the results of the changes you have made.
In summary, the decision to sell should be based on your own personal situation however it is well worth being aware of the market conditions, especially if you have a larger type practice. The most important part of this process is to take the necessary steps to maintain a strong healthy practice. That way, irrespective of market forces and competitive pressures, your practice will be ready to be marketed and its value will be maximised.
Dental Prac Sales take the stress out of selling your dental practice, whilst gaining maximum sale price and ease of transition for you. Contact Alex or Matt for a confidential discussion by calling 1300 880 243.