If you’ve been asking yourself how to sell a dental practice, this article explains basic but necessary steps to maximise the sale price of your business.
As is always the case with selling a business, there are a number of options you can choose to sell your dental practice. Let’s look at some factors you should take into account in order to successfully accomplish your goal.
What to Consider When Selling a Dental Practice
The first question you need to ask yourself before selling a dental practice is whether you want to sell it completely or whether you want to stay involved in the business in some way or another.
Both options are possible.
However, you should consider the Australian Dental Association’s Policy Statement (Policy Statement 5.3 – Practice Ownership, point 3.1) before making up your mind.
The Policy states that “dental practices should be owned and, or at least, effectively controlled by dentists.”
If you want to sell your practice and have no business interest in it, you will only be able to sell it to another dentist.
Best Time to Sell a Dental Practice
Once you decide what option is best for you – sell it completely or stay involved in the business– don’t rush and look for a potential buyer immediately. You need to sell your practice at the right time.
Firstly, make sure your dental practice is visually attractive – first impressions do count.
If you’ve been planning to renovate your practice in the past, now would be a good time to do it. Even though it is not the decisive factor, a well-maintained establishment is more appealing to potential buyers than a run-down one.
As with any other business, the best time to sell is when the business performs well. Nobody will want to buy your practice if you haven’t purchased quality equipment for years or if you don’t have enough customers to grow the business.
If the business is struggling, then it will not be the best time to sell. A declining business is a sure turn-off for potential buyers. Instead, consider taking some measures to improve the business before placing it on the market.
For example, invest some money into print advertising to attract new patients or launch an advertising campaign on social media. Facebook is one such network where you can advertise locally with a modest ad budget.
Google Ads is another advertising medium worth looking into to attract new clientele although the cost will be higher than what you would spend using social networks.
How Long Does it Take to Sell a Dental Practice?
Time frame needed to complete the sale of a dental practice is another question you are probably asking yourself. Unfortunately, there is no definitive answer to this one and the process can take from several months up to several years and will depend on a number of issues.
The successful and fast sale of a dental practice without a hassle will depend on the following factors:
- professional legal advice
- professional financial advice
- experienced business broker
You will need a lawyer to advise you about what documents you’ll need as well as prepare or review the business sale contract.
Engaging a financial expert is also important. You’ll have to demonstrate to potential buyers how well your dental practice is doing. Without duly prepared financial statements, you won’t be able to sell your dental practice at the best price.
If you decide to do all of the above by yourself, you are likely to spend months before all the paperwork is done. Let the professionals complete this complex and time consuming process for you in reasonable time.
Once the paperwork is in order, you will need to find a potential buyer to sell your dental practice. Again, you can do it on your own or you can engage a business broker to find potential buyers for you through their network connections.
Even if you hire a business broker to sell your dental practice, don’t forget to obtain legal advice before you engage one. If you neglect to do so, you may end up agreeing to unfavourable terms, pay high commission and other related fees you don’t have to pay.
Selling Dental Equipment
When someone decides to purchase your dental practice, they might want to purchase what is inside your dental office as well.
If you own your dental equipment, you can sell it to anyone you want.
However, if you are leasing it or bought it on credit and still paying for it, you may not be able to sell it along with your dental practice.
To make sure you don’t make any costly mistakes, engage a legal professional to review your equipment leases or financing contracts to establish possible options to sell it together with your dental practice.
Dental Records
Privacy is another important thing you should consider since patients’ dental records will be transferred to the new owner once you sell your dental practice.
ADA Policy Statement 5.17 – Dental Records (point 2.1) provides explicit list of such information and includes:
- notes made by clinicians and staff
- completed written medical history
- consent documents
- copies of correspondence about and with the patient
- radiographs, tracings, measurements
- digital records including CAD/CAM records
- diagnostic images, reports and casts
- special test findings
- photographs
- records of financial transactions
- appointment books
The same policy sets out certain guidelines that must be complied with when dental practice is sold.
As a dentist, you must (point 4.11):
- take reasonable steps to notify patients in advance and facilitate the transfer of care for current patients to other practitioners (including the secure and consensual transfer of dental records of those patients); and
- make appropriate arrangements for the retention and storage of other patient records, including where possible provision to the patient or secure and consensual transfer to another dental practice.
Keep in mind that privacy laws differ from state to state. Legal advice will ensure the sale of your dental practice complies with specific legal requirements when dental records transfer from one owner to another.
Dental Practice’s Employees
You will also have to consider your employees and what will happen to them once you sell the practice.
The employees will have one of the following options:
- transfer to the new owner
- end employment
In order for your employees to be transferred to the new owner, there should be a “transfer of business” under the meaning of the Fair Work Act 2009, namely:
- employment of your current employee must terminate
- employee must become employed by the new owner within 3 months
- employee’s work duties must be the same, or substantially the same
- there must be a connection between you and the new owner
If an employee decides to transfer to the new owner, you will have to negotiate with the new owner to ensure the employee is employed within 3 months and their duties under the new employment agreement do not differ substantially.
If you need to terminate an employment contract with one or some of your employees, certain legal requirements will have to be complied with in order to avoid legal consequences. And once again, you will need proper legal advice for this area from experienced employment lawyer.