Australasian Dentist Issue 92

CATEGORY 112 AUSTRALASIAN DENTIST AQUISITIONS Planning to sell? By Ian Donnelley, Director, Dental Acquisitions H aving sold dental practices for over 10 years every sale is different and they all come with their own individual challenges. The one thing that is consistent is the questions vendors have when selling. For that reason I have put together a frequently asked questions list below that should help any prospective principal that’s considering selling their practice. How is a practice valued? This is probably the hardest question to answer to let’s get it out the way early. Basically, there’s no set formula to value a practice. The most important aspect of any valuation is the profitability of the business or what we call EBITDA. Earnings Before Interest Tax and Depreciation. Put simply the higher the profit margin the higher the price. Next is your equipment. How old is it? How many surgeries do you have and are there any big tick items such as a Cerec or CBCT scanner? If you have new equipment that will have a positive impact on buyers and the offers they put forward; if your equipment needs replacing that will likely impact on the value negatively. After that, it comes down to the commitment of the principal post settle­ ment, potential for growth, location, number of surgeries and competition in the market. Like selling a house, if you have multiple buyers and strong interest you’ll receive more offers which will drive the price up. How long does the process take? How long is a piece of string? You should allow six months from when you decide to sell the practice until settlement. It can take less or more depending on your individual situation. Regardless of whether it’s a corporate sale or a dentist the timeline is similar. It’s not just about finding the buyers and agreeing to a deal, there’s due diligence / finance and also lawyers which can not only be a difficult process but also time consuming. Is my information confidential and who knows that I’m selling? Yes your information is confidential. Any buyer would need to sign a Non-Disclosure Agreement prior to receiving any information. Here at Dental Acquisitions we donot advertise any of our practices. You will not see a listings page on our website. We rely on our large database of dentists as well as our excellent relationships with investors, private equity and corporates. All of the practices we sell are full time practices with multiple staff and most likely clinicians. You don’t want anyone to know you’re selling until absolutely necessary which is usually a fewweeks until settlement. Alerting staff prior can only cause disruption in the practice and further stress to any principal. Regardless of whether you sell through Dental Acquisitions I advise keeping the sale confidential as imperative. What happens to my staff? It’s a case by case basis however usually all staff are retained. If you’re selling to an investor/corporate buyer they’ll keep all staff member. If it’s to a dentist they appreciate your staff are imperative to the practice and retain some of the goodwill themselves. Usually buyers want as little change post settlement outside of trying to integrate themselves into the practice as seamlessly as possible. Do I have to pay anything if the deal doesn’t go through? No. We are paid on the successful completion on the transaction. Do I have to continue post settlement? That decision is yours to make, however if you’re selling to a dentist a minimum of six months is preferred. A large portion of the goodwill is with the principal and transferring that to another dentist can take at least six months. You want to make sure you maximize the value of your asset which in this instance is your practice. Giving the buyer that timeframe allows you to do that. If your practice is larger in size and more suitable to a corporate buyer then a minimum of three years is suggested. At Dental Acquisitions we have an enormous list of dentists looking to purchase as well as excellent relationships with private equity, corporates, international buyers and health funds. If you’re interested in selling or have further questions then don’t hesitate to give us a call or send through an email. We offer a free valuation for your practice with no obligation. I look forward to hearing from you. u