Frequently Asked Questions

Do you own a dental practice and are considering selling it (or buying another dental practice)? These frequently asked questions could change your life.

Frequently Asked Questions

FAQFind Answers Here
Should I sell my practice in 2023?

Depending on who you talk to we are either approaching or in the middle of a recession. I’m not here to debate economics, but I can give you some clarity about the current state of the market and how what’s happening now impacts buyers and sellers alike.

With interest rates on the rise, people thinking about selling their practices are understandably wondering if buyers are even still buying. Meanwhile, buyers are wondering if valuations are holding because of the same interest rates. And to that, I answer yes and yes.

There are currently three types of buyers I’m seeing:

Group One: This is the group that has indeed stopped buying because of rising interest rates or because private equity is on hold, etc.
Group Two: This group is still buying but is more selective in the assets they’re purchasing and a bit more conservative when it comes to purchasing price and deal value.
Group Three: The opportunistic buyer. These buyers see things slowing down and either have the available private equity or excess dry powder to be opportunistic with little competition.

What exactly does this mean for sellers? In my opinion, it means now is the time to carefully consider the person or team you choose to represent you through the selling process.

For example, while group one may not be ready to buy they certainly won’t be advertising that and may very well still be exploring future options. So while a seller might think they have an interested party they could very well find themselves 6-12 months down the road, frustrated and waiting for a sale that is never going to happen.

Or take a recent client that had a potential buyer give them an estimate of $7.5M, take it or leave it. Thankfully they decided to leave it because, by the time we closed, they had a $15M offer.

The right broker will know how to create a truly competitive marketplace with multiple offers and no final ultimatums.

Should I hire a practice transition officer, e.g. broker?

Are you willing to risk losing tens of thousands of dollars or even significantly more by trying to sell your practice yourself?

Or do you want to retire wealthy, healthy, and happy?

You’ve spent decades investing in and honing your skills and nurturing your business to sell and retire the way you want to.

Here’s why:

  • Your practice may not be operating optimally (well managed with all its systems functioning well, no reduced fee dentistry, high gross and net incomes, state-of-the-art equipment, etc.)
  • More sellers in the marketplace as Boomers plan on retiring around the same age
  • There wasn’t enough time or money to bring in key dental technology tools to make your practice more attractive to buyers
  • You invested your time in practicing dentistry and running a small business, not in understanding selling and buying practices on the marketplace
  • You care about how your practice transitions to the new owner and how your legacy will be left and the impact on your patients and staff
  • You were ready to retire yesterday and are struggling to establish a clear plan forward while still practicing and managing your business

See the below subsections, What is a Practice Transition Officer? What do they do? and How do I find the right one? to learn more.

Ultimately, you need a guide like myself and the team here at JW Practice Advisory.

What is a Practice Transition Officer and what do they do?

In general, a skilled practice transition officer is worth their weight in gold. Though yes, they charge fees, they specialize in assessing practice values, the dynamics of the current market, and selling and negotiating businesses. In the end, they will not only get more money for your practice, they’ll help you survive the selling and buying process. Remember when you bought and sold your house? Multiply this emotional guidance by 1,000.

A practice transition officer’s main role is to guide you through the selling and buying process for your dental practice. In addition, they often help ensure a successful transition of your practice to the new owner keeping your patients and staff in mind.

They offer many benefits including extensive knowledge of the dental practice marketplace, ways to improve your business operations to increase the “attractiveness” of your business to buyers, expert sales and buying negotiation skills to get your practice’s full worth, and establishing a transition plan to protect your legacy when the practice switches owners.

How do I find the right transition broker?

Before you look for the right fit with a transition officer, it’s best to do these three things:

  • Get your financials together. Understanding your financials and being prepared to share a financial sketch will help you while interviewing officers to hire.
  • Make a list of your retirement goals, concerns, and expectations. This will ensure that you communicate this clearly and accurately to the officer.
  • Ask your dental friends, associations, and groups for officer referrals.

When you’re ready to reach out to your referrals, once you’ve completed the three steps above, use the following list while interviewing officer candidates and your decision will be easy to make:

Q: Are they full time? Do they only work on dental practice transitions?

Ideally, yes. This demonstrates their skill level, they’re able to succeed full time, and that they have a strong relationship with buyers, essential when selling your practice.

Q: Will they keep your information confidential while marketing your practice and vetting buyer interest?

Ideally, yes. This saves you time as you’ll only be included once serious and able buyers are identified.

Q: How long does the average sales process take?

On average, the process takes around 6-9 months.

Q: Are they using a known and accepted methodology to determine the valuation of a practice?

Absolutely, yes. You want to make sure that the valuation methodology of your practice is accurate and will be accepted by the buyer.

Q: Do they assess the operations of your practice and suggest short-term, attainable ways to increase its value before taking it to market?

Absolutely, yes. While some practices have already invested in running their operations optimally, others have not. For those that have not, there are multiple short term changes that will increase the practice value in the marketplace.

Q: What is their fee? Are there additional fees that you’d be responsible for?

Ask for clarity on what and how you’ll be charged. It’s a good sign if they take the time to explain their cost structure. And yes, there are other fees, such as a lawyer or an accountant, that you will need to cover in addition to their fee. Again, clear communication is key here.

Q: How do they market to and vet practice buyers?

This is where transition officers should take cues from you, the seller, as to what your preferences are. If you don’t have any, ask the officers what works best for other dental practice owners to get the conversation going.

Q: How are transitions typically structured? Is there anything you need to know up front?

As a successful transition will set up your legacy, and the next owner, to continue in success, it’s important to be aware of how this works and your role so that you know what to expect.

Q: How common is seller financing in your area?

Financing is common though it does differ by state. See if they have thoughts or resources to share regarding your state.

Q: Are they single or dual representation (e.g. do they serve both sellers and buyers)?

Dual agency is what allows a broker to represent both the selling and buying parties.

However, in our experience, what we’ve seen is doctors not receiving the best deal due to biases within their dual agency broker.

At JW Practice Advisory, there are no biases. Our top priority is ensuring you’re getting the best valuation for your practice, and are able to enter your ideal situation — whether you are buying or selling.

Q: Are they affiliated or have professional arrangements with any Dental Service Organization (DSO)?

Some brokers get kickbacks from some DSO’s which can cause a conflict of interest. Instead of finding a buyer that is truly the right cultural and financial fit, the broker may only steer their client to certain DSO’s so they can receive that kickback. At JW, we pride ourselves as being ethical brokers by doing what is right for the client.

What’s the difference between a value and an appraisal?

Generally, dental practice appraisals are only necessary during business partnership dissolutions and divorces. Any asset that goes to court over its value must have an appraisal.

However, when selling a practice, the valuation is more important. This includes, not only assessing the value of the practice but the current supply and demand in the dental practice marketplace among other factors.

Just because a practice was appraised at a certain price, doesn’t mean the market won’t pay more than that. This is where the value of practice transition experts truly come in since their knowledge and experience with practices and the dental industry helps them drive that value.

Secondly, don’t pay $30,000 to get a valuation. It’s completely unnecessary (unless the circumstances described above apply). Neither the bank nor the buyer will ask for that. What they’ll ask for instead are one tax return, one profit and loss statement, and some data reports from your accounting software.

After looking at these numbers, they’ll have a good idea of the value of your practice. Of course, some unknowns could pop up and a good broker will help bring those to light and see if there are ways to mitigate any issues pre-sale.

How can I save money on expenses and overhead?

Maximizing ROI on your existing equipment
Though this can tie into offsetting your PPE costs by repurposing some of your existing equipment inventory, there are a few major differences that deserve some additional consideration. I often hear clients talk about the expensive equipment they purchased for services that their clients don’t know they offer. Other times, the dentists themselves don’t know the full limits to which they can use their technology investments. Depending on your equipment, you might be able to increase your ROI by using it to its fullest potential.

Technology is a part of dentistry today and will only grow more complex in the future. It’s important to make sure you’re maximizing your tech by finding ways to expand its service capacities (via advanced training or creative, innovative applications) and then to stop referring out for services that your training and practice innovations enable you to now do in-house. This is definitely worth the investment as it will pay off by increasing your equipment ROI.

By renegotiating your lease
Every landlord knows that dentists need space to operate their practice. Sure, this seems obvious, but it means that dentists’ have bargaining power. You might be paying higher than market price for rent or paying for fees and space updates that your landlord should be covering. Let’s put an end to that.

Even if your lease isn’t up for renewal in the next 5 years, it’s best to start renegotiating your lease now so that you make sure you save money the next time you renew your lease.

Merchant credit card processing service creativity
It’s highly unusual to find a practice that doesn’t accept credit cards. However, every time a credit card transaction is completed, the dentist is hit with a fee to offer convenient payment options to their patients.

What many practices don’t know is that there are creative ways to lower these fees, saving you money that you could be investing in your practice to get a higher value instead.

Creative lending refinance opportunities
Here’s another instance where dentists could get stuck with long term recurring fees. I should know, I worked for one of the largest banks for many years. However, what every practice needs to know is that there are creative ways to lower these financing fees While there are a few key players in the dental financing space, they all offer different interests rates, pre-payment penalties and other terms. Your decision will ultimately be determined by what’s best for your practice.

How can I make more money now and when I sell?

Here’s the question that all my clients want to know. The short, but by no means simple answer is this: by increasing the value of your practice over time by investing in practice transition consultants, more in-house procedures training, and digital marketing.

Here’s why investing money in these three areas now will wind up making you more money in the end.

Hire consultants that specialize in selling and buying practices to review your practice 10-15 years before when you’d like to sell and retire frequently

If you invest the time and money in running your practice as efficiently as possible, you’ll save and make more money along the way and bring in a higher value when you’re looking to sell.

Invest in training on, and bringing in-house, dental procedures with high ROI
The more procedures you can offer in-house, the more money you’ll keep in your practice. However, be judicious in deciding which procedures are a worthwhile investment to offer in-house and which should forever remain ones to refer out. This is where it is necessary to hire skilled dental consultants who offer specialized training and consulting on new procedures.

Increase your digital marketing prowess
More and more patients are relying on the internet when looking for a dentist. That’s great news since digital marketing can be more cost-effective and success rates are easier to measure.

You also have more flexibility in keeping your copy and images fresh and changing them up if you’re not seeing much response for your efforts. Though remember that generating and consistently sharing quality content is the most important of any online marketing strategy. If you’re new to digital marketing, not getting the results you want, or unable to consistently create compelling content, then it’s time to consider outsourcing your marketing to an expert.

As you can see, if you’re planning on retiring in the next couple of years, you have some life-changing decisions to make as soon as possible.

Here’s my promise to you: not only will I save you money, I’ll make you money and help you retire the right way.

There’s a Lot More to Cover

We know there are many questions and things to consider when you are thinking about selling, buying, or growing the market value of your practice. We are happy to answer any questions you may have or to discuss what services you feel you need.

There’s a Lot More to Cover

We know there are many questions and things to consider when you are thinking about selling, buying, or growing the market value of your practice. We are happy to answer any questions you may have or to discuss what services you feel you need.

There’s a Lot More to Cover

We know there are many questions and things to consider when you are considering selling, buying, or growing the market value of your practice. We are happy to answer any questions you may have or to discuss what services you feel you need.

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