CATEGORY 108 AUSTRALASIAN DENTIST Navigating the sale of your dental practice ACQUISITIONS Ian Donnelley By Ian Donnelley Founder, Dental Acquisitions As the Christmas holidays approach, many dental practice owners reflect on their professional journeys and consider selling their practice. After a year of hard work, it’s an opportune time to enjoy the nice weather and cherish moments spent with family and friends, perhaps even with grandchildren. These moments often prompt a shift in priorities, directing focus toward life beyond the daily grind of running a small business. For those contemplating the sale of their dental practice, it’s crucial to understand the key considerations that can influence the outcome of the transaction. Below are some frequently asked questions that outline important steps and insights regarding the selling process. Key considerations when selling your practice What is the initial step? The first step in this journey is obtaining a valuation. At Dental Acquisitions, we offer complimentary valuations as an entry point, allowing you to understand your practice’s worth and identify potential buyers interested in your practice profile. How is My Practice Valued? Determining the value of a practice can be complex. The core factor is profitability, typically expressed as EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization). A higher EBITDA results in a stronger multiple and a higher purchase price. Other influencing factors include the age of equipment, the number of surgeries, and high-value items (e.g., Cerec units or CBCT scanners). Additionally, aspects such as the principal’s post-sale commitment, potential for growth, location, and market competition all contribute to the value assessment. Engaging multiple interested buyers can further enhance the sale price. Should I employ a broker? Engaging a broker is highly advisable. Brokers possess specialized knowledge and extensive experience, which are invaluable for accurately valuing your practice and guiding you through the complex sale process. They have access to a wide network of buyers, from corporates, private equity, Investors, dentist consortiums and individual’s. A quality broker can help manage the qualification of buyers and maintain momentum throughout the transaction, ensuring you engage the most qualified and suitable buyers. The also increase the likelihood of settlement. Many sellers approach us after struggling to sell independently, often feeling overwhelmed and fatigued after months of negotiations without achieving a sale. A broker ensures you not only engage the most qualified and suitable buyers but importantly gets you to settlement. Will my staff retain their positions? In almost all instances buyers prefer to retain existing staff and clinicians to ensure continuity within the practice. It’s essential to manage the announcement of the sale to staff effectively – this is a sensitive time for all parties involved, and a thoughtful approach can minimize turnover. Some buyers may even require that a certain number of staff members sign agreements as a condition of finalizing the sale. Is my continued involvement necessary post-sale? To facilitate a smooth transition for staff and clinicians, a post-sale commitment is recommended. An ideal transition period ranges from six to twelve months; if you can offer a 12 month period post sale buyers will see that as a low risk purchase and therefore our offers will be at the top of the market. In many instances clients are preferring to stay on long term but are sick of the admin and 10-20 hours a week of additional work outside of seeing patients. In those examples you can commit for a period between 3-5 years. You might also consider maintaining some equity during this period, which allows for collaboration with the buyer while continuing to earn a percentage of the EBITDA. This financial strategy can be very rewarding. When is the optimal time to sell and what is the timeline? The optimal time to sell is when you, as the principal, feel ready and prepared. Popular periods for practice sales often coincide with the New Year and the end of the financial year. Expect a typical timeline of four to five months from your initial contact with Dental Acquisitions, where early preparations can lead to a smoother process. Is my information confidential, and who will know I am selling? Absolutely, your information will be kept strictly confidential. Any prospective buyer must sign a Non-Disclosure Agreement before receiving details about your practice. At Dental Acquisitions, we do not publicly advertise the practices we represent. Instead, we leverage our extensive database of dentists and strong relationships with investors to protect your privacy. Do I incur costs if the deal does not proceed? No, at Dental Acquisitions, we only receive payment upon the successful completion of the transaction. If the sale does not materialize, there are no charges incurred on your part. X If you’re interested in selling or have further questions, don’t hesitate to give us a call or send an email to ian@dentalacquisitions. com.au or call 0402 049 974.
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