3 Tips! To Maximise The success of Your Dental Practice Sale.

– Okay, so I am with Simon Palmer, here, at Practice Sale Search. So, today, we’re probably going to talk about, what are some of the tips that you might have that you’ve learned over the years, right? To help a Practice owner who’s ready to exit. You know, they’re subletting their brownfield, ready to retire, what are some of the tips you can give them?

– Sure, look, the top tip that I would give someone who is thinking about retiring in a year or two is that you’re gonna be judged most harshly on your final year, right? I think the mistake that a lot of people make is that they’ll sell after they’ve taken the most holidays that they’ve ever taken. They’ve clinically restricted themselves in the last years to stuff that they like doing, or stuff that isn’t as physically demanding. Or they’ve simply just started taking off more time during the week. And I’m not saying, you know, work seven days a week, you know, 52 weeks of the year, the year beforehand. But certainly, don’t work less, you know? Give it a good final year. I think it would be, I think a lot of people who are selling are very disappointed to learn that, really, it’s only the last year or two that actually counts when a buyer is looking at your Practice. So, that would be my top tip.

– And my understanding is that, you know, in accounting, they talk about the 2.5 times the profit, and so, what you said about, imagine if it eased up a little bit, then, which that means the production goes down, the profit goes down, whatever that number is in the last two years, times by 2.5, is not a number they would want, then.

– Look, certainly, the two things that will influence your sale most is production and profit, okay? So, look, there is no secret handshake formula that I could give you, that works in all scenarios, whether it’s in Alice Springs or Melbourne, right? To say it’s 2.5 times or something like that. But, it certainly will have more to do with revenue or production and profit than anything else. So yeah, you wanna make sure that those are looking strong when you come to sell. I think another mistake that people make, and here’s another tip that I’ll give, is that you know, people seem to reinvest in their Practice in the last couple years in ways that don’t add to the sale price. So they’ll buy an expensive toy, right? Like a CEREC machine or something like that, to reinvigorate their passion for the Practice.

– It’s almost like a mid-life crisis. Exactly! Just before they sell. “The reason why I am not jumping out of bed “to go to work, and I’m sluggish, and I don’t have “my passion for dentistry, is I don’t have the latest toys. “I’m gonna buy the latest toys, and that will reinvigorate.” Then they buy the latest toys, like a CEREC machine, or a laser, or something like that, and they find out that, you know, their lack of passion for dentistry, or their lack of passion for coming into work had nothing to do with their lack of toys, right? And now, they’ve gotta recoup more money from their actual sale, because they’ve just spent all this money buying extra stuff. So, the tip I would give is, whatever you’re gonna be reinvesting in the Practice, you have to get a benefit from, in the exit timeline. So, it has to add to your revenue and profit in that exit timeline, in order for it to help your sale.

You should actually rebrand the business so that it be a bit more generic or a bit more, not tied to a person or name. Do you have any comments on that?

– Absolutely, I find that happens a lot. There are still a lot of Practices out there that are named, you know Dr. Simon Palmer, Palmer Family Dental or something like that. The problem with that is that a vendor doesn’t usually wanna sell their name, right? But it forms part of the goodwill.

So, a buyer, who’s wanting to buy the Practice and make sure that the goodwill stays and the patient base stays, will want that Practice name to be there after they buy it. There’s a couple of ways you can solve it. You can certainly license the name to a buyer for a couple of years, in which time they have to rebrand it. But, if you actually sell your name.

I’ve seen a Practice where the vendor sold the name to a buyer, the buyer then sold the Practice to someone else, so, all of a sudden, you’ve got a Practice that is being run by someone that the original owner had never met and he was doing very substandard work in the area under his name. You know, so you don’t wanna lose control of your name. And that’s the real problem.

If you’ve got a couple of years left to go, I would consider rebranding, I would consider making it a more generic name. I’ve seen, you know, just change it to the initials of the original owner. Or I’ve seen it go to something like The Suburb Name Dental or The Suburb Name Smiles. Something like that that is very easily translatable.

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