04 May Timing is Everything!
It is not uncommon for PARAGON to receive phone calls from doctors asking us to find a buyer and have a deal closed within the next 30 to 60 days. When we talk with many of these doctors, we find out that they have been thinking about selling their practice for quite some time.
This is not at all unlike the patient who calls the dental office and wants to get in right away because it’s an emergency. However, when the receptionist asks when the patient was first aware of the problem, the patient typically replies that they have had the problem for several days. The receptionist privately thinks, “If this is a real emergency, why didn’t you call sooner?”
The sale of a dental practice is a process…not an event. The practice must be thoroughly analyzed, equitable price and terms must be determined, a suitable buyer with comparable goals and objectives must be located, tax allocations must be carefully considered, transition issues must be meticulously worked out, contractual specifics must be discussed and reduced to writing, the draft contract must be reviewed, the final contract must be agreed to by all, third-party financing must be arranged, logistics of post-sale working arrangements must be scheduled, etc., etc. These events are all part of an overall process and each step of the process takes time to complete. Any short cut in this process typically means one thing… A FINANCIAL CONCESSION BY THE SELLER!
If your desire is to receive maximum value for your practice, be prepared for the sale of your practice to take some time. Is your practice in a rural area? How about a resort area? Is your practice located in a high-rise building? If so, what floor? Do you have a general or specialty practice? When was your last fee increase? Did an associate or hygienist leave your practice recently? What about an office manager or receptionist? Do you plan to continue working in the practice after the sale? If so, how long? Location characteristics, area demographics, your post-sale plans, area growth trends, area competition, type of practice, active FFS patient count, practice overhead percentages, your age, condition and age of equipment, office décor plus a multitude of other factors all significantly influence the time it takes to complete a practice sale. Some practices take only a few months to sell; others take years. What is the expected time frame in your area? First, you must determine if your practice is located in a “buyer’s market” or a “seller’s market” area? You also need to determine if the last few sellers in the area used a professional or were “do-it-yourself” sellers.
In some areas, where there is great demand for practices to purchase, buyers are just laying in waiting for a practice to come on the market. In other areas, you may find that the last three doctors who tried to sell their practices discovered it took more than a year to find a buyer. Some doctors in the area may still be looking for a buyer. Maybe it took a long time because of market conditions and maybe it took a long time because of the inexperience of the party attempting to sell the practice. What is the market really like in your area? You really cannot be sure without talking to an experienced professional.
If you are planning to sell your practice within the next 5 years, you need to be making your plans NOW! Waiting until the last minute will almost assuredly cost you tens of thousands of dollars… and, in some cases, hundreds of thousands of dollars.
You have valuable options that you probably have not even considered. Call PARAGON today for a complimentary consultation. You will be glad you did.
