Whether you're two years, five years, or more away from exiting your business, it is important to prepare your dental practice for sale early. Checking these 12 items off your list helps ensure you minimize headaches when transitioning out of your practice. You have enjoyed many years of success, and now it is time to exit at the top.
Review your contracts.
Ryan Mingus.
Make sure all of your contracts, including employment agreements, are up to date and valid. Consider the compensation structure of your employees and yourself compared to market value.
Contracts with unclear terms or outdated provisions can create delays or lower buyer confidence during due diligence. Buyers want to see agreements that reflect fair market compensation and clearly outline roles and responsibilities. If you have associate dentists or key team members, aligning their contracts now can ensure continuity and reassure potential buyers. Strong agreements reduce risk, protect practice value, and streamline the sale process.
Review your lease.
If you lease your office space, review your lease to ensure it allows for the transfer of ownership. Many leases have assignment clauses that require landlord approval, which can complicate or delay a sale if not addressed early.
A long-term lease with favorable terms can enhance your practice’s value by providing stability for the buyer. If renewal is approaching, negotiating terms that align with a future sale can strengthen your position. Be proactive with your landlord, as their cooperation will be critical to a smooth transition.
Determine your practice's value.
Before putting your practice on the market, you need to have a realistic understanding of what it's worth. A professional appraisal can help you determine this. Many owners underestimate or overestimate their value, which can lead to missed opportunities or unrealistic expectations.
A valuation from a trusted adviser arms you with leverage when engaging buyers. Even if you don’t sell immediately, it gives you clarity on where to improve and how to maximize your eventual exit.
Get your books in order.
Make sure your financial records are organized and up to date. This includes your profit and loss statements, balance sheets, tax returns, and accounts receivable. Clean books not only help you run your business more effectively, but they also send a signal to buyers that your practice is well managed.
Inconsistencies, comingled expenses, or outdated reporting will raise red flags and could reduce offers. Consider working with your accountant to prepare a seller-ready package that demonstrates accurate, defensible financials. Solid records help prevent retrades and protect your valuation during diligence.
Consider the timing of a sale.
Evaluate whether it is truly the right time to sell based on the state of the economy, the local market, and the health of your practice. Timing can have a significant impact on valuation -- markets move in cycles, and waiting too long can mean missing the peak.
A practice that sells in a favorable buyer climate can command multiple offers and premium terms. Conversely, waiting until you’re burned out or until the market cools can limit your leverage. Strategic timing is about selling from a position of strength, not necessity.
Consider your staff.
Retaining experienced staff is often one of the buyer’s top concerns, as it impacts continuity of care and operational efficiency. Consider offering retention bonuses or incentives to key employees who are critical to the practice’s success.
Open conversations with your team, timed appropriately, can build trust and reduce uncertainty. Buyers often pay more for a practice where the team is motivated to stay and support the transition
Review your insurance policy.
Make sure all of your insurance policies, including malpractice insurance, are up to date and valid. Buyers want peace of mind that there are no coverage gaps or liabilities that could create post-sale issues. This includes general liability, property, and business interruption policies in addition to malpractice coverage.
Review coverage limits to ensure they align with current practice size and revenue. Having complete documentation available demonstrates professionalism and reduces surprises in diligence.
Identify your preferred sale terms.
Determine whether you prefer to sell your practice outright or gradually transition ownership to the buyer. How long would you like to work post-transition?
The structure of your deal, whether it’s cash at close, earnouts, or equity rollovers, will shape your financial future. Buyers often prefer seller involvement for a period of time, but the length and scope of that commitment should align with your lifestyle and goals. Being clear about your preferences upfront allows you to negotiate from a position of confidence.
Get legal advice.
Consult an attorney who has experience in dental practice sales to ensure the sale is legal and properly documented. A general business attorney may not understand the nuances of healthcare regulations, employment law, or payer contracts. The right legal partner can protect your interests, negotiate terms, and identify risks before they become costly mistakes.
Consider the tax implications of a sale.
Consult with a tax professional to understand the tax implications of the sale and how to minimize your tax liability. The way a deal is structured can have a major impact on what you take home.
Planning ahead with a tax adviser can uncover opportunities for deferrals, retirement contributions, or charitable strategies that reduce your liability. Without tax planning, owners risk leaving a significant portion of their hard-earned value on the table. Buyers structure deals with their tax benefit in mind; make sure you do the same.
Determine your retirement goals.
Understand your retirement goals, and make sure the sale of your practice aligns with those goals. For some, this means complete retirement; for others, it may mean stepping back into a part-time clinical role.
Clarifying your financial needs, lifestyle expectations, and long-term vision can help you select the right buyer and deal structure. A misaligned sale can lead to frustration or the need to re-enter the workforce. Selling should be a launchpad into the next phase of life, not a compromise.
Consider a dental adviser.
Consider hiring a dental practice broker who can help you find potential buyers and negotiate the sale. Dental-specific brokers are very familiar with the due diligence process and can negotiate terms in your favor when obstacles arise. Going it alone can lead to undervaluation and weaker deal terms.
We truly hope this serves as both an educational tool and provides the knowledge necessary for you to prepare your life's work for a sale.
Ryan Mingus is managing director of Tusk Practice Sales and has more than 12 years of sales and leadership experience in the dental and healthcare industry, most recently as the business development director for strategy and optimization at Align Technology Inc. Mingus earned his bachelor's degree in economics and business from the Virginia Military Institute and his Master of Business Administration from the University of San Diego. He also held the rank of captain in the U.S. Army National Guard.
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.
