Selling Your Practice: Part 1
By the time any of us place the phone call to sell, we are more than ready to proceed. We are ready to move on to the next phase of our lives. In fact, as my broker explained, most dentists should have placed that call 6-10 years earlier. Any broker will tell you that dentists are notorious for waiting too long to sell. By the time they’re ready, their practice’s value has diminished from its peak. Owners may be too ill, tired or burnt out to maintain the practice numbers at their all-time high. Thus, their practice is worth a lot less. We see this in sports all the time: Do you retire after winning a world championship, or do you wait until you are a shadow of your former self? The answer to that question will determine how much you receive when you sell.
When I began to contemplate selling my practice, I started talking about it with some dentist friends. Every friend I spoke with surprised me. Not a single one tried to talk me out of selling. Not a single one thought I was making a mistake. I was shocked that they were all having similar thoughts. Each, for their own reasons, was also thinking of selling their dental practices. Some mentioned health; others mentioned burnout; others mentioned that the business of dentistry is no longer what it once was.
When I began my adventure I failed to realize how emotionally, physically and mentally taxing the whole process would become. I learned that it is best to undergo this process when you are at a fairly stable place in your life. Once you make the decision to proceed, your life will revolve around selling your practice. It will only be for a few months, but everything else in life will take a back seat.
I cannot overemphasize the importance of you personally making the sale. You will have a difficult time with some aspects of the process, but, should something ever happen to you, your grieving spouse will find it almost impossible to sell your practice. At the very least, they will receive a lot less than you would have. If the process is left to your children, matters are even worse. Only you, the practice owner, has the ability to fully navigate the very complex course on which you are about to embark.
Most dentists have had the experience of buying a practice. They may have even bought more than one during their careers. But far fewer of your colleagues have sold a practice.
The closest thing dentists come to selling a practice is selling a home. Although there are some similarities, it is a whole different process. It is much more complicated, slower and stressful. Additionally, unlike selling a house, you will definitely care who ends up purchasing your practice.
Remember these two points, and the process will be a little easier.
First, you are selling a profit-making machine. It's all about the numbers and only the numbers. As dentists, we are not used to this. We talk about things like patient relationships and the latest technology, but, in the business world you are about to enter, it is only about the numbers. Nothing else matters. As an example, my practice uses paper charts, analog X-rays and conventional impression techniques. To be honest, I was a little wary that all this would reduce the value of my practice. I was wrong. No one cared.
Many dentists are told that in order to make their practice attractive to future buyers, they must have the latest technology. This is just not true. It does not add any value to the purchase price of your practice. It does not impress patients, and it does not impress potential buyers. Dentists are told that if you have the latest technology, it adds value since the new dentist will not have to purchase and incorporate it. This is simply not true.
Only your ability to make a profit matters. The buyer is purchasing the future ability to pay off the loan and make a living. No one cares how that is accomplished. If you are doing crown preps using a hammer and chisel, no one cares — as long as you are profitable.
The second lesson is to always remember that you have not sold your practice until the money is in your account. It does not matter what contracts have been signed or what promises have been made. Every morning that you wake up, you will still be a practice owner until the money has arrived. Should anyone break a promise or contract, you could spend years in legal battles trying to set things right. It is better to realize that nothing is final until you have received your funds.
Well, it's time to get down to business. Hold on tight. If all goes as planned, it will be a long, wild and tumultuous ride. If it doesn't, well, let's just say it will be even rougher.