Three Questions to Ask Prior to Selling Your Dental Business
Running a dental practice is hard. The intensity only increases when you hear about private equity firms snapping up practices at sky-high valuations or when an unsolicited offer to acquire your practice lands in your lap one day.
On the one hand, you may feel a sense of urgency to take advantage of the current market environment and make a sale. On the other hand, it’s wise to maintain a cool head, as any potential transaction could have significant financial, personal and emotional consequences throughout your life.
In our experience, the smart thing to do is step back and conduct a detailed assessment so that you are in the strongest possible position to address the idea of selling your practice.
We think these are three key questions to ask:
1) Am I able to sell now?
Selling your practice could be a once-in-a-lifetime financial opportunity. In our view, it’s essential to have a solid understanding of what your business is worth and how much you need to realize from a sale in order to establish lifelong financial security.
Working with your wealth advisor, you can develop a market-based business valuation, personal balance sheet and cash flow analysis to determine if you are currently able to sell and retire comfortably or whether it might make sense to plan and prepare for a sale date further down the road.
2) Am I ready and willing to sell?
We find that most business owners are deeply attached to their businesses. After all, building your business has likely been the focus of your career for a long time. For a successful exit, we believe that you must be emotionally and psychologically prepared to hand the reins over to a new owner.
In our experience, if you enter the sale process with any misgivings, it has the potential to weaken your negotiating ability and complicate the transition phase. One of the things we help dentists do is think about what they will focus on next, so they can move forward with confidence and embrace the next phase of life.
3) Is my business optimally positioned for a sale?
In our view, it is never too early to start positioning your practice for a sale. Time is your ally when it comes to implementing operational efficiencies, enhancing financial performance and building your future vision—all of which can make the sale of your practice a more fruitful experience.
As part of your assessment, we can use tools such as whole balance sheet analysis, gap analysis, practice proforma and elements of life assessment to better understand where you stand today and set some practical goals that could help you optimize your business sale.
With well-funded private equity firms on the prowl for dental practices, many business owners are feeling FOMO—fear of missing out. However, we do not believe this is the right reason to do a deal. Instead, we advocate slowing down a bit and working with experienced professionals on an assessment process that will help you develop your personal financial plan, organize your thoughts, negotiate with maximum leverage and exit your practice on terms that you will not regret.
ABOUT THE AUTHOR
Brett Miller, CPA, CFP
Brett is Partner, Wealth Advisor, and Head of Mid-Atlantic Region in our Charlotte, NC, office. He joined from legacy firm Brightworth, where he led the Dental Services Practice Management group. Brett graduated from The Citadel with a degree in Business Administration (accounting concentration), obtained his Certified Public Accountant certificate in 2008 and became a CERTIFIED FINANCIAL PLANNER™ professional in 2010. He is a member of the American Institute of Certified Public Accountants and the North Carolina Association of Certified Public Accountants.
Brett is a native of Gastonia, NC. He and his wife, Sarah, have two children and live in Mint Hill. Outside of work, Brett enjoys running and golfing and is actively involved in his church and local Citadel alumni club.
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