How Long Will It Take to Sell My Dental Practice?
Most dental practice owners understand that they’ll eventually need or want to step back from their practice, which may mean selling. But how long does it actually take to sell a dental practice? Many factors influence the sales process of a dental practice, all of which should be considered as you transition ownership. These factors can include the broker and team helping you transition, the value of your practice and even its location. Creating a sales and transition plan with these factors in mind can help support a faster sale and smoother transition.
How Long Does It Take to Sell a Dental Practice?
There is no set time to sell a dental practice because there are so many variables influencing the sales and transition timeline. Some practices have modern equipment, low overhead costs and prime locations for a competitive appeal and, as such, are often purchased quickly, but similar practices may take years to sell for no clear reason.
Even after a sale, previous owners might find themselves still heavily involved while others cut ties immediately. In short, the definition of a sale is vague if previous owners are still active in the practice and the sales timeline can be broad and ambiguous.
The seller will choose a buyer that they feel will best suit their future goals. There is no right or wrong path — a seller ultimately sells to the buyer of their choice. Price is not necessarily the deciding factor for some sellers, and sometimes, other factors like terms of an employment agreement can be more critical than a few extra bucks.
Selling vs. Transition
Rather than trying to sell as quickly as possible, it may make more sense to create a transition plan based on the unique qualities of your practice and your individual sales goals. Think about what you want from the sale and the kind of partnership or affiliation you may be open to. Specifically, consider these aspects of dental practice transition:
- How much do you want to be involved? If you’re retiring, you may want to step back fully from the practice right away. You may also opt to stay active in the practice or slowly phase into retirement as you step away from daily activities. Look far ahead and imagine where you want to be in a few years.
- Where do you see yourself in three, five and 10 years? Identify what you see for yourself in the transition process and align your timeline around that.
- Will you create partnerships or affiliations? Partnering with another professional can create a smoother transition process, but you may prefer to work alone.
Why Should You Sell Your Practice?
Determining the right time to sell your practice can be difficult. Some reasons for selling might include:
- Career switch
- Simplifying and switching to an employee role
- Moving away from practice area
- Peak market conditions
In any case, selling your practice shouldn't be an impulsive decision. It's important to thoroughly analyze your own goals and vision for your career and practice and identify the market opportunities to optimize the sale of your practice.
Influencing Factors on the Sales Process
Even the most successful dental practice may struggle to sell within a given timeline if certain factors are in play. To understand some of the challenges or opportunities you might have to navigate during your sale and transition process, consider the following factors that can affect the sale.
Location is one of the main qualities that buyers look for in a prospective dental practice. Typically, dental practices in high-density and prime locations are more attractive to buyers because these locations are often correlated with high customer traffic and volume. Prime locations can also translate to higher resale values.
Less central locations can be just as successfully sold but may appeal to certain buyers, such as those who live nearby or prefer smaller or more consistent client bases. These locations can also provide the advantage of low competition saturation. Remotely located dental practices may just take longer to sell than prime location dental practices.
The team you select to help the sale and transition process can also greatly influence the speed and quality of your sale. Dental brokers are responsible for appraising your dental practice, assigning a sales price and overseeing the process. Less experienced dental brokers may not anticipate certain sales challenges as easily and may not fully understand the area of your sale. More experienced brokers can help navigate the process more smoothly.
You may also choose to hire an accountant to perform all the financial paperwork and organization. They can also advise you on tax opportunities and other important financial strategies. Hiring an attorney can provide you with legal representation and advice during the transition process, ensuring that you’re only signing contracts or other legal documents that represent your goals best.
Appraisals and Showings
Scheduling appraisals is an important factor in selling your dental practice that is largely within your control. It’s important to make room in your schedule for appraisals and showings because these are the most basic activities that inform buyers about the value and appeal of your practice. If you prefer to sell more quickly, you’ll need to prioritize showings and appraisals and be flexible in your scheduling.
Equipment and Facilities
When the broker appraises your dental practice, they’ll assess the value of the facility and the equipment to include in the overall appraisal. If your equipment isn’t as modern or high-end, it may affect your appraisal. Brokers can identify any equipment upgrade opportunities that you can slowly implement to improve your appraisal. Most buyers today demand computers and digital X-Rays be installed on day one. If you are not yet digital, consider installing a system — especially if you will not be selling in the very near future. Offices that are not computerized and digital do sell as-is, but may take longer to sell.
Compiling Paperwork and Financial Statements
Prospective buyers will want to see financial statements to get a better understanding of your practice’s financial health. This includes information like:
- Cash flow
- Profit margins
- Client base
- Income tax returns
- Balance sheets
- Operating expenses
You can task your accountant with ensuring the accuracy of these statements and keeping them organized and up to date. Other items like client base can be done by yourself or delegated to administrative associates. This should be done as soon as you decide to start the sale process so you can create your plan with a full scope and understanding of your practice’s operations.
Analyzing Annual Collection and Profit Margins
Practices with smaller annual collections and poorer profit margins may be harder to sell. This is because your buyers have their own financial obligations to account for, such as increasing student debt costs and high costs of living. Buyers may be concerned if your revenue appears to be declining without explanation. That said, the sale price of smaller practices may be more affordable for a new dentist looking to start small and slowly grow their practice.
Alternatively, dental practices with higher annual collections appear more attractive to buyers. If the overhead costs, operating expenses and profit margins are likewise competitive, the dental practice may sell more quickly.
If your dental practice is highly specialized or offers advanced services, it may be less accessible and attractive to buyers early in their careers because they may not be able to offer those services themselves. On the other hand, your dental practice may have special appeal to highly experienced dentists who possibly even share a specialty because your practice is a smoother transition opportunity for them.
None of these other factors matter if buyers aren’t seeing your dental practice listing to begin with. If your practice isn’t marketed to the right people or in the right locations, it’s unlikely to sell quickly or to attract competitive bidding. To get your listing in front of buyers and gain their interest in your practice, you’ll need a good marketing strategy.
Ready to Sell Your Practice?
Understanding the factors that affect the sale of your dental practice is important even if you’re a few years away from listing it for sale. If you need more information or are ready to list your dental practice, get in touch with us and start planning your transition process.
About the Author
William J Lossef DDS
Dr. Bill Lossef graduated from NYU Dental College in 1980. He worked as an associate in several different types of practices before starting his own Fee-For-Service practice in Greenpoint, Brooklyn in 1984. He eventually sold his interest in the practice in 2017, retiring completely from chairside dentistry in 2018. In 2011, Bill started as an associate with another dental practice broker. In 2014, Bill decided to leave that brokerage and move to US Dental, where he was given the opportunity to lead the sales team. Buyers and Sellers appreciate his hands-on approach that helps get deals from the starting line to closing. Bill is also a real estate salesperson licensed through the Oxford Property Group in Manhattan. Bill works with several agents at Oxford as well other agencies. Bill lives with his wife Deb on Long Island and enjoys traveling to meet dentists anywhere in the NY, NJ, and CT areas.