North Texas Dentistry Volume 7 Issue 5 NTD 2017 ISSUE 5 DE | Page 17

4
Reinvigorate your recall
system. Hygiene income usu-
ally comprises 22 to 25 percent
of the total income in a typical
general practice. This percent-
age can climb to 30 percent or more in
practices aggressively utilizing soft-tissue
management procedures. Generally, the
higher the hygiene percentage, the bet-
ter – unless a situation occurs where
the doctor is under-producing, which
artificially raises the hygiene percentage.
5
Review the condition of the
patient records. During the due
diligence process, a buyer usu-
ally will review a representative
portion of the patient records.
The practice owner should maintain files
with complete treatment entries, current
patient information, and easily discern-
able treatment plans.
Clean up clutter and spruce
up the decor. First impressions
matter. Most prospective buyers
will be looking at multiple prac-
tices. Make every attempt to make your
office stand out in the crowd. Continually
invest in what it takes to maintain a
fresh, updated office appearance.
6
Tune up the dental office
equipment. Most buyers ex-
pect to see modern equipment
in the office. If your practice is
completely absent of modern equipment,
a buyer may adjust their offer to account
for the replacement of outdated equip-
ment. The practice owner should keep
equipment updated, both functionally
and esthetically. However, beware of
substantial replacement of the equip-
ment just for the purpose of selling the
practice. This rarely warrants the invest-
ment.
7
9
Do a cash-flow analysis.
A buyer (and their lender)
will require that the total
value of the practice not ex-
ceed the ability of the prac-
tice to generate enough cash flow to
make payments on the debt required to
obtain the practice as well as provide a
reasonable profit to the buying dentist.
The net income of the practice is ad-
justed to add back all income to the den-
tist/owner and benefits paid on his
or her behalf. Owner benefits include
deductions for expenses not necessarily
related to the operation of the practice,
but that were paid out on behalf of the
selling dentist.
10
Consult an advisor early
on. Engaging an experi-
enced practice transition
consultant three to five
years prior to the sale is an ideal time-
frame. Ask your advisor to complete a
prac tice valuation. Your advisor should
be able to identify any weak spots and
recommendations for improving the
marketability and value of the practice.
In 25 years, our firm has never had a doc-
tor complain that they started planning
for their practice transition too early.
Jeremy Brown, J.D.
Jeremy Brown earned his law degree from Texas
A&M University and completed his undergraduate
studies at Brigham Young University. Since 2008,
Mr. Brown has helped doctors value and transition
their practices successfully. Mr. Brown’s approach
to practice sales and appraisals is comprehen-
sive, and includes the components of tax, legal,
and financing.
In his personal life, he enjoys following college
football and backpacking. He and his wife, Audrey,
have four children. An Eagle Scout, Mr. Brown
serves as Scoutmaster and enjoys mentoring
young men in the Boy Scouts of America.
For more information, call
Watson Brown at [phone]
or visit ADStexas.com
Practice Owners:
Selling a practice for top dollar is achievable with proper planning and
consistency. Spend the last few years working on your practice so that
you go out on a high-note rather than in a slump. By doing so, your
practice will attract better quality buyers. Additionally, most buyers
are willing to pay more for a practice that is profitable, managed well,
and shows stability.
8
Do not let the lease lapse.
If you expect to sell your
practice using third-party
financing, be aware that
lenders will require the buyer
to acquire a lease (inclusive of renewal
options) for at least the length of the note
(typically 72 to 84 months). Talk with a
lease broker when renewing your lease to
help you negotiate terms allowing you to
transfer the lease without unreasonably
locking you in.
www.northtexasdentistry.com | NORTH TEXAS DENTISTRY
17