You’re a dentist getting ready to sell your dental practice. Congratulations! You must have something exciting planned for the future. At this important turning point, you may be wondering how best to attract appealing offers with the least stress on yourself. You want to get the leg work started and do it right. There are a lot of moving parts in place, and you want to make sure it all goes smoothly.
At Dental ClaimSupport, we’ve advised many dental practices on how to move through the selling process smoothly. Many of the dental offices we work with will come to us when business changes happen to ask how they should move forward to be profitable. It’s important to stay organized and move through your checklist with precision as you sell your practice.
In this article, you will learn 3 key steps that will help you successfully sell your practice without any question of, “Am I covering all of my bases?” This means taking care of legal and financial matters, getting your practice ready to be on the market, and preparing your dental team for the big change.
1. Contact your lawyer and accountant to get your dental practice ready legally and financially
First thing’s first: Make sure you are following legal and financial protocol. Your dental practice is your business, presumably one of your biggest assets and sources of revenue. You need professionals who understand the ins and outs of the laws of selling businesses to make sure every step is correct and lawful. You also need to make sure your money is, for lack of better words, where it needs to be.
You need a lawyer and an accountant.
Your lawyer will make sure every part of your contract with your buyer is fair and correct
Your lawyer is going to draw up all of the paperwork needed to get the selling process started. You will need an M&A lawyer, who has experience with mergers and acquisitions. They will help you get your practice accurately priced, and also make sure selling prices are fairly negotiated.
They’re also going to advise you if you’re still interested in practicing at that practice. It’s common for dentists to sell the equity of their practice but work on retainer. A lawyer will help you negotiate and figure out the specific terms of your sale, as every sale is different.
Your lawyer is also there to protect you from missing nitty-gritty details in your contract. They help you understand every part of selling your practice. For example, they will not only help negotiate the price of your dental practice but also what will be included in the sale.
Are you going to include all of your equipment in the sale? Do you lease equipment, such as a panoramic x-ray machine, or own it outright? Are you including other assets in the purchase, such as computers? This is all taken into account when negotiating a sale.
Your accountant will help you figure out what your financial situation is before and after the sale
If you’re getting ready to sell your dental practice, you are hopefully in a great financial position already! This means you probably already have an accountant. This sale should only improve your financial situation. Like a lawyer or banker, your accountant is also going to help in the valuation of your business, and let you know what is and is not helping the price go up.
Is your practice profitable? What is the gross revenue, yearly? Is it a desirable business for someone to buy? An accountant can help you figure out this information.
Your accountant can also advise you on the tax implications of the sale of your practice. As with any capital gains, here comes the government and IRS! Does this sale kickstart your retirement? Or are you looking to start a different practice in a new place? An accountant is your best friend when knowing what to expect from the sale of your practice, so you are financially conscious of what to do next.
2. Get your office & accounts receivable in order
There are several things to prepare when getting your dental practice physically ready to sell. You need to make your place of business as desirable as possible for a buyer. This means a tidy financial situation, as shown in reports that put your production and collection rates in a positive light.
Are your insurance and patient A/R all cleaned up?
Do you have an overwhelming amount of outstanding insurance claims? Do you have several patients who owe you payments? Time to get on top of collecting those. An extensive aging report is not a desirable problem to inherit. Make cleaning up your accounts receivable a priority to avoid having to rush under time pressure before you put your practice on the market.
Move through your insurance aging report with ease by reading this article in our Learning Center.
Operating every day to maintain a clean aging report should already be a priority at every dental practice, but unfortunately, that’s not often the case. Because insurance companies have expert stall tactics, very few in-house billers can stay on top of denials, downgrades, and requests for information, which means the long list of uncollected money keeps getting longer.
Have one person responsible for working that aging report regularly in order to get all outstanding insurance claims paid. That need not be a high-stress job if you’re working with a team of expert billers, like Dental ClaimSupport, who know how to avoid stall tactics and clean up claims.
All of the numbers at your practice need to be in good shape to prepare for a sale. Not only does your aging report need to look low, but ask yourself: how does your collection percentage look? What does your net production look like? Has it decreased over the last three years, stayed steady, or increased? Run these numbers to make sure you’re in a healthy place for a seller to look at you and go, “Wow! Your business is so successful, I definitely want in on that.”
Is your dental office clean and organized?
When you get ready to sell your car, you have it detailed, washed, and you fix anything that might be broken, right? It’s no different with a dental practice. You want your buyer to walk in and be impressed with how move-in ready it is. It should be tidy, clean and all equipment should be running smoothly.
The way your actual practice runs should be organized as well. Do you have clear processes and systems? From scheduling appointments, checking in patients, walking them back, and completing appointments, clean systems are attractive to buyers.
If your way of doing things has gotten disorganized, it’s going to be less appealing to prospective buyers. Nobody wants to have to come in and create a brand new system for your team to follow. Speaking of your administrative team, what happens to them?
3. Be transparent about the sale of the dental practice with your team
If you’ve developed close working relationships with your dental team, telling them about your plans may be one of the hardest things to do during this process. You need to let them know you are getting ready to sell the practice. Unfortunately, we’ve seen what happens when dentists are not transparent with their team.
When the sale happens by surprise, everyone is caught off guard and often people leave without any effort toward a smooth transition. Then the buyer is left with the task of hiring a brand new staff.
This will probably be something you would discuss with your buyer, but you need to inform your staff of what’s going on. This is not only a courtesy to them, but prepares them for the inevitable change. The more transparent you are with them, the more aware they are of the entire situation. This allows for potentially meeting the new dentist or owner, and gives you time to make adjustments to lower the stress on yourself and your patients.
You may find that some of your people want to stay and build a good rapport with the new team. You may also have one or more employees who decide to leave. Either way, you and the buyer have less uncertainty about the personnel at the practice. By being proactive and open, you and the buyer will know ahead of time if anyone needs to be hired.
With this transparency, your team can also let any outsourced services you have hired know of the changes so they can prepare accordingly.
Are you prepared for the smooth sale of your dental practice?
Most dentists who sell their practice do so after several years of working with the same people. It’s a big life change and can feel stressful. However, with the proper guidance and support - especially with the stress of insurance collection - you can move through the selling process with ease.
Have your lawyer and accountant on deck, get your practice in tip-top shape, and let your team know what’s happening.
Though we are a dental billing company, Dental ClaimSupport has also helped dental practices with business decisions such as buying and selling practices. You don’t have to be a client to chat with one of our experts and get some advice on how to make your dental practice more profitable. To get more advice on how to move through this transition smoothly, schedule a free consultation.
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