By Steve Jordan
Before you try to sell your practice on your own, you need to take this test. Unless you are SURE of the answers, and why, you should rethink trying to sell without professional help.
- There will be lots of "tire kicker" prospects. Some you will know. T/F
- A classified ad in the dental society bulletin will reach all prospective buyers. T/F
- What documents and metrics will you need to provide to buyers and their lenders?
- Buyers will see and be willing to pay for the growth potential you know is in your practice. T/F
- What is EBITDA?
- Why is EBITDA important to a practice valuation?
- Revenue multiplier is the best way to value a practice. T/F
- What multiple should you use? ___%
- How did you determine it?
- Name the three approaches to valuation.
- Which one is typically used for dental practices?
- What is a "normalizing adjustment"?
- What is "implied salary"?
- How is a cap rate calculated?
- How is it used?
- Labor cost is usually about ____% of practice revenue.
- Facilities cost is usually about ____% of practice revenue.
- Offering price is the most important thing to buyers. T/F
- Dental schools are a great place to find buyers for your practice. T/F
- How would you answer a buyer's objection about not having digital radiography?
- How would you answer those questions about "older equipment"?
- For questions 20 & 21, would you reduce the offering price by the cost of the new equipment?
- For question 22, if your answer is no, what calculations would you present to the buyer?
- Smaller practices are easy to sell because the buyer can grow them. T/F
- Student loan debt makes it impossible for buyers to get financing. T/F
- The bank you have been using for years is the best place to take your buyer for financing. T/F
- What loan term and interest rate are currently "market"?
- What will lenders need in order to fund your sale?
- Letting a prospect "shadow" you for a few days is common. T/F
- Shadowing is a good way to show them why they should buy your practice. T/F
- What is involved with due diligence?
- How long should due diligence take?
- Should you sell your receivable accounts? If so, for how much?
- If you should not sell your receivable accounts, what happens to them?
- What happens to leased equipment in your office?
- Landlords are generally willing to create a new lease in your buyer's name. T/F
This test could have included hundreds of questions -- there are literally that many details to a successful practice transition. The goal of every seller is to look after your patients, maximize your sale price, and start your buyer on their way to a successful career.
Of course, I'm biased because I'm a practice broker. But if you can't score at least 90% on this test, chances are your sale by owner will be very stressful and will result in a lower sale price than need be.
An experienced, competent broker would ace the sale for you.
Send me your answers; I'll be happy to grade them.
Steve Jordan has been in the dental industry for over 35 years. For the last 17 he has been managing member at PMAgroup, LLC, an Ohio dental practice brokerage firm. He can be reached at 330-335-9042, 888-419-5590 ext. 330, and email@example.com.
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