You’ve prepared for years, and now is the moment of truth. What will be the sweet spot for a successful practice transition? Do you already have a trusted accountant, attorney and buyer? Selling your practice is likely one of the most important transactions of your career. In the past, most owner dentists chose to work with consultants to oversee a sale – the ins and outs of transitioning a dental practice in the state of Wisconsin can be a bit overwhelming. That said, selling your practice on your own is an achievable (and money-saving!) goal if you prepare yourself and trust the process. The WDA is committed to providing resources that can help.
Get in touch with your CVA/CPA to identify a fair, realistic sale price. If you do not have a contact, refer to our toolbox for resources. Be prepared to provide this information and more:
- The practice’s federal income tax returns for the past five years
- Financial statements
- A copy of the current lease and any renewal amendments
- A floor plan of the practice facility
- A listing of all dental equipment by room, plus darkroom, utility room, sterilization area, x-ray area and laboratory
- A listing of all office equipment and technology
- Maintenance records for all dental and office equipment for the last five calendar years and the year to date
- An accurate description of treatment procedures performed and those referred out
- A current fee schedule and a summary of fee increases over the last five years, as well as the corresponding amounts
- The number of active patients (patients treated in the last 18 months), as well as inactive patients;
- A summary of the number of new patients per month over the last five years and the year to date
- A list of all employees, hours worked, compensation levels and dates of hire, including former employees, over the last five years and the year to date.
Quick Tip: It is important to work with a reputable firm to complete a realistic practice valuation. The buyer will benefit by having accurate numbers in making the decision to purchase, as well as when seeking financing.
Market your practice
Write (or work with your marketing team to write) a catchy, honest classified ad to get the word out about your practice. Striking the right chord by learning how to make your ad sing. After that, consider purchasing a WDA classified ad or using other avenues of advertising such as local journal ads, LinkedIn Marketing Solutions, marketing mailers, etc.
Connect with your colleagues. Go to your local dental society meetings and events, and consider joining the WDA/MUSoD/Pierre Fauchard Mentor Program. Inform your local Chamber of Commerce and vendors. Think outside the box to make strategic, professional connections.
Work with a trusted attorney to determine and/or create documents and contracts that will protect you (for example, a Confidentiality Agreement or Non-Disclosure Agreement to protect confidential and proprietary information shared between you and the buyer.) Don’t have an attorney? Check out our toolbox to find attorneys familiar with the dental field or refer to this helpful guide to select your own lawyer.
Practice showings & interviews
You are halfway to your destination! You have successfully marketed your practice and have begun to line up a prospective buyer or two – or three! Schedule appointments to show your office, discuss philosophy of care and exchange all pertinent information. Follow-up meetings and phone calls will be necessary.
Quick Tip: Be prepared to provide tax-related documents, at least three years worth of Year End Statements and balance sheets, as well as specific reports pulled directly from dental software.
In order to reach a fair agreement, be prepared to field a series of discussions. This is a good time to discuss future plans. More often than not, the buyer and seller agree to an associate arrangement leading to a future buy-in or buy-out. Be open so the buyer knows what they should expect, and have your exit plan set in stone.
It’s all in the details
Keep your attorney nearby as further details are ironed out. A Letter of Intent is appropriate as the dust continues to settle – something an attorney will prepare for you. Keep in mind that restrictive covenants are to be considered as well among many other details that your attorney can discuss with you.
Closing price and date
Your attorney will assist you in preparing for closing procedures and the documents you will need to make it official (Asset Purchase Agreement, Bill of Sale, Non-compete, Lease transfer, Employment contract, etc.). Every deal is different, but with careful selection of legal counsel and accountants, you can be confident in your future.
Here are some action items that should be completed prior to closing:
- List all excluded assets and liabilities that you intend to remove from the office at closing (art work, soap pumps, decor, office items, books, etc.)
- Don’t forget to make copies of contracts to execute: Asset Purchase Agreement, Bill of Sale, Non-compete, lease transfer, employment contract, if necessary. Consult with your attorney.
- Discontinue your vendor relationships with date of completed transition (i.e., marketing subscriptions, supply companies, waste removal, etc.) Give list to buyer for point of reference.
- Discontinue your utilities with date of completed transition (i.e., gas, electric, water, sewer, internet/cable/phone provider, etc.) Give list to buyer for point of reference.
- Request current software vendor to transfer license over to new owner. Give this info to new owner.
- Request bank to disable credit card machine used in-office. Note: may need to keep open to collect outstanding accounts before making this request.
- Terminate staff employment. This is a requirement to close with the buyer. Settle outstanding wages (PTO, benefits, etc.). Strongly encourage buyer to re-employ staff.
- If transition requires funds to be wired electronically, ensure that your bank information is completed properly to give to buyer.
- An informative letter about the closing of the practice should be sent to existing patients no less than two weeks prior to completed transition.
- Complete End of Year reports and do necessary backups on day of closing. Print an Accounts Receivable detailed report for record keeping.
- Remove all excluded assets you’ve provided in list – no more, no less.
This webpage is not intended to provide specific legal or tax advice. For specific solutions to legal and tax matters, please consult with your legal counsel and CPA.