Selling Your Dental Practice

January 24, 2023

Selling your dental practice? We’ll guide you through the whole process so that you can get the best deal possible. As experienced accountants for the dental industry we’re well versed in how to handle a potential sale.

Whether you’re approaching retirement or just looking for a change of scenery, there may come a time you decide to sell up. This can be a stressful experience, especially if a buyer isn’t readily available.

Let’s through the do’s and don’ts of selling a dental practice before you proceed.

When do I want to sell my dental practice?

The first thing to consider is your timeframe for selling the practice. Ideally, you’ll give yourself months or even years to complete the process. A longer timeframe lets you prepare thoroughly, and ensures you make the most of the sale.

How to sell a dental practice quickly

It’s possible to sell your practice quickly, but this may put you at a disadvantage when it comes to negotiating a price. Bear in mind that, even after a buyer has expressed interest, the sale of a dental practice takes on average over five months.

How much is my dental practice worth?

Before you start looking for a buyer, it helps to have an idea of how much your practice is worth. Previously, dentists would simply use their revenue to calculate the value of their practice.

However, as dentistry has become more complicated, this approach has fallen out of favour.

It’s now standard practice in the industry to calculate the value of a dental surgery using EBITDA (earnings before interest, taxes, depreciation and amortisation).

This takes into account both revenue and expenses to work out if a business is actually profitable.

A practice can make a lot of money but still have a low EBITDA figure if its income is outweighed by excessive spending.

Calculating your EBITDA can be complicated, so we recommend getting an independent valuation. An outsider may be able to spot things that you’ve missed, leading to a more accurate figure in the end.

How can I increase the value of my practice?

You may find that your EBITDA is lower than you expected, but there’s no need to panic. There are steps you can consider to increase the value of your practice before you put it on the market, if you think they are worth taking:

  • Fix any structural issues with the building
  • Repair or replace any broken equipment
  • Redecorate the interior of the surgery
  • Look for unnecessary expenses that could be eliminated

How can I find a buyer?

There are two main ways to sell a dental practice: selling to an associate or selling to an outsider.

Selling to an associate has several advantages. They will already be familiar with the surgery, allowing them to take over with minimal disruption. Patients will also prefer this as it allows many of them to keep their old dentist.

Selling to an associate is not always possible. A recent survey found just 11% of dental associates want to own a practice, with most preferring to remain in an associate position. So what if you don’t have willing associates waiting in the wings?

Outside buyers come in several forms:

  • Corporate groups who want to expand their portfolio
  • Local surgeries looking to open another branch
  • Associates from other surgeries planning to start their own practices

What about my equipment?

It’s common for dentists to lease their equipment, rather than buying it outright. This creates a problem when selling a surgery. You can transfer the lease to the new owner, but this is often more trouble than it’s worth. You may find it easier to buy out the rest of the lease, and then sell the equipment to the new owner.

Don’t go it alone – JCS can help

Whether you’re selling to an associate or a stranger, it pays to have someone in your corner.

We’ve helped numerous dentists to sell their practices, and we know the process inside out. From increasing the value of your surgery to negotiating the best deal with your buyer, we can help you to leave on the best possible terms.

Give us a call or send us a message to get started.

Other ways we can help you with your accounting:

Ready to talk?

Dick Haffenden JCS

Then we’re ready to listen.

Tell us about yourself, your goals and what you need to achieve them and one of our team of friendly accountants will be in touch to begin the conversation.

020 8643 1166

jcs Accountants

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