As many dentists have found, there has been a dramatic increase in the value of dental practices over the last few years, prompting a number of dentists to seriously consider selling their practices earlier than planned.
In recent times practice values have been driven upwards by unprecedented demand from both ‘Body Corporates’ and individual dentists. However, we have now seen values stabilise in the market, with Practices generally commanding less of a premium price.
One key factor influencing dental practice sales is the availability of finance for potential purchasers. Media attention applies a broad brush to this issue, claiming that banks are failing to lending money to businesses. However in our own experience this is not the case for the ‘Healthcare’ sector. Indeed the most frequently asked question during an acquisition meeting is “Can someone raise the finance to buy my practice?” Dentists should be encouraged that Banks view Healthcare as relatively a ‘low risk’ sector. Despite this they will look very carefully at each proposition and we are often called upon to provide our (second) opinion on a practice value.
This highlights the need for anyone considering a sale to be fully prepared. Preparation should begin well before marketing of the practice. Some values that have been bantered around are just unrealistic and give false hope, whilst some dentists believe their practice to be worth significantly less than the market value. In a minority of cases some dentists even feel their practice is not saleable.
I suggest seeking professional advice from people who know and understand the market. Although we have seen a general increase in values in recent times this can vary significantly dependent upon on the practice type and location. Having a professional valuation is vital in correctly pricing your practice and achieving a sale within acceptable timescales.
In selling your practice a professional agent will take a significant burden from you, dealing with marketing, enquiries, negotiations and ensuring a smooth legal process. Although there is a cost involved in instructing an agent, there is a two-fold benefit to this: Firstly you save time, which can be better utilised treating patients and keeping gross fees up. Secondly where an experienced agent handles negotiations with multiple purchasers, the price paid is inevitably driven higher.
A practice sale is always a complex process and one most dentists choose to undertake only once in their career. With the emotional strain of finding a suitable buyer, the financial impact on the negotiations and the time involved, I believe that instructing an agent can pay dividends.
Author – Martyn Bradshaw of PFM