20 Things To Know Before Selling Your Dental Practice

Before offering your practice for sale, or planning your future sale, you need to have certain basic knowledge about the dental practice market, and an adequate understanding of the practice sale and transition process.

Information Needed By All Practice Owners

Whether offering practices for sale on the open market, planning to sell to their practices themself, or planning their future sales, all practice owners should know the following.

1.   Practice Value

Your practice’s value, obtained via a Practice Appraisal (Valuation).

2.   Reasonable Price Range

The reasonable negotiating price range for your practice (maximum price reasonably possible, minimum price reasonably acceptable).

Dental Practice Sales, Dental chair

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    3.   Sale/Transition Structure

    The sale and transition structure option that best matches your practice and best achieves your career goals and financial objectives, and one that results in favorable tax treatment on your sale proceeds.

    4.   Dental Practice Specific Issues

    The specific issues that are unique to dental practice sales and transitions that you and your attorney should address in your negotiations and sale contracts. (This is in addition to issues that are addressed in all types of business asset sale negotiations and contracts.)

    5.   Sale Process Steps 

    The required steps in the sale process and the order in which to execute them.

    6.   Buyer Information Package Preparation

    The types of practice data and information that you should present to potential buyers for review because; 1) buyers and their advisors need to see this information, and 2) sellers need to make adequate full disclosure.

    7.   Income Potential Estimate

    A properly adjusted expense and pre-tax cash-flow income analysis for the potential buyer’s review and consideration. (Buyer’s income will be different from Seller’s income because Buyer’s expenses will be different, some potentially more, and some potentially less.  Therefore, each expense line item must be analyzed, and adjusted if indicated.)

    8.   Office Space Analysis 

    Office space purchase or lease factors to address and how they’ll affect your sale process.

    9.   Seller Employment Analysis

    The seller is considering working for the practice after the sale, seller’s post-sale work and income potential analysis.

    10.   Accounts Receivable Valuation

    Methods to value account receivable if they are to be added to the sale.

    11.   Purchaser Loan Sources

    The banks that are most likely to make the type of loan required by practice buyers and who to contact within those banks.

    12.   Closing Preparation Checklist

    Listing and organizing things that must be accomplished before your sale can close.

    Additional Information Needed By Owners Who Have Not Yet Found A Potential Buyer

    If no specific potential buyer has been found or identified, practice owners also need to know the following (applies when offering practices for sale on the open market or planning future sales and transitions).

    13.   Equipment/Facility Analysis

    Determines if equipment upgrades would increase your practice’s saleability, and, if so, would your practice’s value/sale price increase enough to cover their costs.

    14.    Buyer Profile 

    The type of buyer you’ll need for your specific practice.

    15.    Most Effective Advertising Methods  

    How and where to best advertise your practice for sale.

    16.    Prospect Screening Process

    Important questions required for initial screening of buyer prospects.

    17.    Saleability Analysis

    Rating of the saleability of your practice. How likely are you to find a buyer? Should you count on your sale actually occurring?

    18.    Value Impact Factors

    Factors that, if improved, could increase your practice’s value.

    19.    Value Preservation Factors

    Aspects of your practice that you must preserve or maintain to keep your practice value from declining between now and your future sale.

    20.    Associate Addition Feasibility & Income Impact Analysis

    Determines if your buyer could join your practice as an associate before the sale date and what impact might that have on your income.

    Whether you choose to list your practice for sale with our Company or prefer to conduct your own sale, we offer services that can provide you with all of the above analysis and information. If you’d like to know more about our services and the information and/or assistance that we can provide, please contact us.

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