The duration of time required for a practice transition varies depending significantly on several factors. A dental practice transition can happen in as early as six months or may require over five years. When selling a dental practice, three significant factors to consider are the practice’s location, the annual gross revenue, and representation by a dental consulting firm. You can plan your future dental practice transition by understanding how these factors can affect the timing of practice transition.
The practice’s location is perhaps the most relevant factor affecting the timing of dental practice transition. In most cases, sellers of practices from metropolitan areas can expect their dental consulting firm to require about six to 12 months to locate dental professionals interested in buying a dental practice. The timeline extends to one to three years to find qualified buyers in rural areas.
After the seller accepts the buyer’s price, both parties require an additional two months to prepare for the transfer. The timing is essential for finalizing any negotiations and drafting the purchase agreement. If real estate transactions are included in the sale, lenders will need another month.
Dental professionals starting their transition planning early enable themselves to evaluate whether relocating their practice will improve patient flow, buyer demand, and profitability. They might consider whether they are moving closer to their core patients, reducing lease rate, or improving the practice’s visibility. Some of the factors considered by most buyers when choosing a dental practice include proximity to airports, community amenities, demographics, and public schools’ reputation.
Buyers of your practice consider the criteria of annual gross revenue significant. Most buyers are attracted by gross yearly revenues of $ 600,000 or $ 1.2 million. Practices with a gross income of below $ 500,000 or $ 1.2 million attract a smaller pool of dentists trying to enter the practice acquisition market. Smaller practices don’t provide sufficient revenue for young dentists with student debt. Practices with higher annual gross income are attractive and desirable. However, buyers confront another challenge when qualifying for financing.
Buyers and lenders look at the trends of the annual gross revenue over the last three years. Both are looking for a steady increase which they consider ideal. However, if the practice does not show an annual raise, the minimum buyers prefer to notice the revenue figures remaining stable without declining. Practices whose owners are nearing retirement often reduce working hours and marketing budget resulting in a decline in annual revenue. The decline impacts the desirability of the practice and the time required to sell it.
The practices overheads are also considered by buyers and lenders. Greater profits are realized by practices with low overheads to impact the overall profitability of the practice.
Dentists selling a dental practice often consider whether they should sell their practice by themselves or hire a dental consulting firm when they contemplate a transition. Hiring a broker they can trust is another challenge sellers must overcome.
Dental practices are no over-the-counter products you display on a shelf and expect buyers to pick it up. The consulting firm hired by the seller must have extensive experience and knowledge besides being prepared for the specific job. Not every practice is similar to the other, and the consulting firm must have a particular transition strategy for every practice, buyer, and seller.
Every dental practice transition varies and requires the consultant to guide the client through the entire process to avoid adverse consequences or setbacks. The consultant must qualify the buyer for financing while negotiating on behalf of the seller and simultaneously protect the goodwill between all parties.
The task assigned to the consultant is to represent the seller during negotiations while protecting goodwill. An experienced consultant understands how to close deals while representing their client’s interests in a timely fashion.
Experienced consultants from the consulting firm Aftco are often hired by dentists selling their practices because they are competent to understand how to minimize the time required to complete the transition process, maximize the likelihood of achieving a transition successfully, and secure the best price for the seller.
Dentists trying to transition and failing can lose a qualified buyer and add months or years to complete the transition. The better alternative for them would be to hire an experienced dental consulting firm Like Aftco to represent them during the transition.