By Wendy Hirai
1. Don't quit before you're done - Tapering off will give your back a rest and give you some much needed free time, and you may feel that's a good tradeoff. However, if your practice appears to be in decline, potential buyers and lenders will worry that you cut back because the work wasn't there, not due to your choice.
2. Overhead - Long before it's time to sell, make sure your overhead is in line and personal expenses are not commingled with business expenses. If you have a satellite office, be sure to track income and expenses separately, and preferably have them on separate tax schedules. You'll be glad you did if you decide to sell your satellite separately. If you can't verify the income and expense of each entity, the buyer won't get financing.
3. Tidy up - Routinely review adjustments to make sure they are not excessive and can be explained. Review accounts receivable and clean up all credits and old accounts. It might be a great time to offer a one-time incentive if old accounts can be brought current within a short, stated period of time.
4. New patient flow - Even a mature practice needs a steady flow of new patients. Track where new patients are coming from so you can be sure that you're spending your marketing dollars wisely. If collections are up but new patients are down, that is a red flag to buyers who will worry that you have a mined-out practice. In addition, a well-run hygiene department will help to maintain a strong new patient flow, while keeping both your patients and your bottom line healthy.
5. Stay up-to-date - Keep your office and equipment up-to-date. It will make a big difference to buyers later and your patients now. (However, this does not mean spend $300,000 today and hope to recover it tomorrow.) True story - I spoke with a patient who had a dental emergency when his regular dentist was out of town. He went to another dentist who had recently opened a new office. The patient was blown away by the technology. He worried that if his regular dentist hadn't kept up with technology, maybe he hadn't kept up his skills either, and the patient transferred to the new office.
6. Overhead/wages - Staff wages are one of the biggest contributors to practice overhead. The good news with a loyal staff that has been with you forever is that they know the patients and the systems. The bad news may be that they are so highly paid a buyer can't afford them, given the buyer's personal and acquisition debt. The key word is "profitability." All too many offices grant automatic annual raises, even when collections are down.
7. Office policies and systems - Do you have job descriptions and an office manual? Do you have solid financial policies in place, and are they followed? Is your fee schedule current? It is tempting in times of economic stress to "hold the line" on fees or implement extended payment plans, but these are things that impact the time it takes to sell, as well as the selling price.
8. Identify the opportunities - If you refer out a lot of treatment, track what and how much is referred. A buyer will see this as an opportunity to build your practice, as long as it can be quantified.
9. Miscellaneous - Make sure that your lease is renewable and competitive with the current market. Don't change or eliminate any PPOs within a few months of a sale. This can backfire if you see fewer patients and your collections go down.
10. Hire good advisors - A properly valued, properly allocated, and properly handled sale will make your life easier and your net profit from the sale higher.
Wendy Hirai is regional manager for Idaho and Montana and senior practice broker with ADS Northwest. Wendy lives in Boise, Idaho, and can be reached at [email protected] or (888) 419-5590 ext. 208.