What Financial Documents Do I Need To Sell My Dental Practice?
The daily life of a dentist can be hectic. Many dentists find their workdays filled with patient care, continuing education, and practice administration. Against this backdrop, dentists can struggle to make time for their personal lives. The difficulty of running a practice and providing excellent clinical care simultaneously often leads to many dentists looking to sell their practice to a dental support organization or dental partner organization. This can be a great move for many dentists.
However, if you’re already busy as a dentist, you likely don’t know the ins and outs of selling a dental practice. That’s understandable. You’re trying to take care of your patients and run a business. You don’t know the finer points of dental practice sales. The financial statements you need to sell your practice successfully are one such finer point.
Triumphant Transition Partners has facilitated many dental practice transitions over the years, and trust us when we say that getting your financial statements in order is of the utmost importance. This will help your broker at the negotiating table. Why? The value of your practice and its projected future earnings are integral bargaining chips when you’re negotiating with a DSO or DPO. Correctly supplying financial statements is the easiest way to increase the value of the final offer you receive from a DSO. Pay attention to the financial statements below as you consider selling your dental practice.
Good Financial Hygiene Helps The Sale
Before we run through the specific financial statements needed to sell, it is worth pointing out that good record-keeping is crucial to selling your practice. The better you keep up with the financial management of your practice, the easier it is to get your practice in order when you decide to sell. Clean records, good notes, up-to-date balance sheets, well-maintained payroll, detailed profit and loss statements for the past couple of years, and up-to-date dental practice management tools will help you in your quest to sell.
Relevant Contracts & Paperwork
Every practice’s specific situation is different, so your needs here may differ vastly from those of another dentist. If you want to sell your dental practice, know that the interested partner will want to see relevant contracts. Everything from staff contracts and procurement orders to real estate documents could be applicable.
While you work to gather this relevant information, pay close attention to all HR information about your employees as you sell to a dental support organization. While you’re passing over employment contracts and hiring information, remember to clarify the details of each employee’s employment. DSOs will want to know the start date, pay rate, role, benefits, and last raise date of every employee at the practice. This information will expedite and simplify the process for all parties.
EBITDA
The process of valuing a dental practice can be unwieldy. Different practices exist in various markets, each with unique business situations, patient bases, and company sizes. Measuring practices by collections or cash flow can be useful, but these methods smooth over many important contexts. For instance, a large practice might collect more than a smaller practice but have much higher operating costs. How, then, can dental practices be valued?
Earnings before interest, taxes, depreciation, and amortization – or EBITDA for short – is the simplest yet most accurate yardstick to judge dental practices. This approach lets you compare different practices across a single metric. Be sure to accurately assess your practice’s EBITDA before you sell. If you don’t know this information, consider a specific EBITDA evaluation to ensure you have the most accurate assessment possible as you sell.
Partner With Triumphant Transition Partners
Are you a dentist looking to retire or transition out of dentistry? Selling your dental practice to a dental support organization or another doctor may be your best decision, but you don’t need to go it alone. Selling a dental practice can be complicated, technical, and intensive – partner with a dental broker and dental advisor to represent your interests and receive the best possible terms.
By partnering with Triumphant Transition Partners, you’ll receive:
- A Dedicated & Trusted Advisor Who Only Represents Your Interests
- Access to Our National Private and Group Buyer’s Network for Quick Access to Interested Buyers
- Assistance with Qualifying & Screening Prospective Buyers
- Access To Our Dental-Specific CPAs For The Best Dental Accounting Expertise
- A Review Of Your Dental Ledger For The Past 3 Years To Ensure Accurate & Informative Information and the most value. Every dollar we uncover for you is worth $5-$15.00 dollars on the market
- A Custom and Tailor-Made Practice Evaluation
- Relevant Financial Information to Equip Your Advisor and Broker with Triumphant Transition Partners at the negotiating table
Contact your trusted Triumphant Advisor for a courtesy consultation today! (Please add info@triumphanttransition.com and our web address)