Selling Your Dental Practice: What Every Dentist Should Know
TL;DR
Selling a dental practice involves careful planning, understanding your practice’s value, avoiding common deal pitfalls, and negotiating smart contracts. Key tips: start early, get professional guidance, vet buyers carefully, and make employment agreements clear.
1. Know Your Practice’s True Value
Before listing your practice, you need a clear picture of what it’s worth. Buyers will look at revenue, profitability, patient base, location, equipment, and staff. Don’t rely on a rough estimate, consider hiring a valuation expert to get a realistic number.
There are three main ways practices are typically valued:
1. Market Approach: Compares your practice to similar dental practices that have recently sold. Think of it like “what are others paying for similar practices?”
2. Asset Approach: Looks at the value of your tangible and intangible assets—equipment, supplies, and even goodwill.
3. Income Approach: Focuses on the practice’s ability to generate future income, often using a multiple of EBITDA (earnings before interest, taxes, depreciation, and amortization).
Tip: Understanding these approaches early helps you set realistic expectations and gives you leverage in negotiations.
2. Start Planning Early
Selling a practice is rarely a quick process. Ideally, start preparing 12–18 months in advance. That gives you time to:
Organize financials and tax records
Clean up patient records, patient credits, and compliance issues
Address any operational inefficiencies
Pro Tip: Buyers favor practices that are well-organized, financially transparent, and running smoothly. A clean practice often fetches a higher price.
3. Watch Out for Common Pitfalls
Several issues can derail a sale or reduce your sale price:
Overvaluing your practice: Setting a price too high can scare off buyers.
Ignoring employment agreements: Make sure any staff contracts are clear and transferable if needed.
Hidden liabilities: Outstanding debts, pending lawsuits, or unresolved compliance issues can kill a deal.
Not vetting buyers: Ensure they are financially capable and aligned with your practice’s values.
Poor transition planning: Buyers want a smooth handoff. Be ready to outline your role post-sale, if any.
4. Understand the Deal Structure
Dental practice sales often involve a combination of:
Asset Purchase: Buying specific assets of the practice, common for dentists.
Share/Entity Purchase: Buying the entire legal entity, less common in dentistry.
Your attorney and accountant will guide you on which structure minimizes taxes and liability.
5. Employment Agreements Matter
If you’re staying on temporarily after the sale, or if you have associates, employment agreements are key. They outline:
Duties and responsibilities
Compensation and bonuses
Non-compete or non-solicitation terms
Length of transition period
A clear agreement protects both you and the buyer.
6. Communicate With Staff and Patients Thoughtfully
Your team and patients will feel the impact of a sale. Transparent, professional communication can help retain staff and patient trust during the transition.
Tip: Avoid surprises. Consider a joint announcement with the buyer to reassure everyone.
7. Professional Guidance Is Crucial
Selling a dental practice is complex. Surround yourself with a team that knows the dental M&A landscape:
Dental M&A attorney – negotiates contracts, ensures legal compliance
CPA/accountant – handles taxes, financial due diligence
Dental broker – connects you to qualified buyers and helps maximize value
Even if you’re a savvy businessperson, having experts can save time, money, and stress.
Final Thoughts
Selling your dental practice doesn’t have to be stressful if you plan carefully, understand your practice’s value, and watch for common pitfalls. Start early, get professional guidance, and structure the deal smartly to protect your legacy and financial future.