Essential Considerations Before Listing Your Practice for Sale

Deciding to retire is a significant milestone—one that not only reshapes your daily routine but also impacts your long-term financial future. Retiring too soon may lead to boredom or financial strain, potentially compromising the lifestyle you envisioned. Since the sale of your practice plays a crucial role in your retirement plan, it’s essential to ensure that both you and your practice are well-prepared. Below are key factors to consider before listing your practice to maximize its value and secure a successful sale.

Assess Your Financial Readiness for Retirement

Before making any commitments, ask yourself:

• Can I comfortably afford the lifestyle I desire?

• Am I relying on the sale of my practice to fund my retirement?

• Do I need to reach a specific sale price to retire securely?

• Will I need to continue working part-time post-sale?

Consulting with a financial advisor can help you determine if you are truly ready to retire or if additional planning is necessary before moving forward with the sale.

Maintain Productivity and Office Appeal

Once you decide to sell, it’s important to continue operating your practice as if it’s your first day in business. Reducing productivity before the sale may lead buyers to question the value of your practice, potentially resulting in lower offers. To maintain appeal:

• Keep production levels steady. A decline in revenue may deter buyers.

• Ensure all equipment remains in good working condition—repair or replace any malfunctioning tools.

• Maintain a clean, modern, and inviting office environment with neutral décor, fresh paint, and clean carpets. A well-maintained practice is far more attractive to buyers.

Avoid Major Equipment Purchases

While keeping equipment operational is essential, investing in significant upgrades (e.g., a new digital X-ray system or CEREC machine) shortly before selling is unlikely to yield a return on investment. Instead, allow the buyer to make those decisions. However, if critical equipment breaks, replace it with a comparable model to maintain workflow efficiency.

Clean Up Financial Records

A well-organized financial history enhances buyer confidence. Take the following steps:

• Review and adjust accounts receivable. Write off uncollectible debts to present a more accurate financial picture. High levels of overdue payments may raise concerns about poor collection practices or potential fraud.

• Resolve patient credit balances. Excessive patient credits can be a red flag, suggesting improper fund management or potential future liabilities for the buyer. Address these balances before listing your practice to avoid complications.

Hire a Reputable Broker

A knowledgeable broker can provide an accurate valuation of your practice, helping set realistic expectations for pricing and marketability. When selecting a broker:

• Avoid those who simply promise the highest price without conducting a thorough valuation.

• Choose someone who assesses all aspects of your practice, including revenue, profitability, staff, location, and growth potential.

• Understand that buyers today are financially savvy and work with advisors to ensure they’re making sound investments. Even if a buyer is willing to overpay, their lender must approve financing based on the practice’s true market value.

Establish Realistic Timeline Expectations

Selling a practice is a complex process that takes time. Even if you’re ready to sell, buyers won’t immediately be lined up—especially if your practice isn’t in a high-demand area. The process typically includes:

1. Multiple visits from prospective buyers.

2. Financial review and due diligence by the buyer’s accountant.

3. Negotiation of terms for a letter of intent.

4. Securing financing for the buyer.

5. Finalizing the purchase agreement and closing the deal.

Working with a trusted broker can streamline this process, making it as smooth and profitable as possible so you can confidently transition into retirement.

By carefully preparing for the sale, maintaining a strong financial position, and working with experienced professionals, you can ensure that you receive the best possible return on your practice—allowing you to retire with confidence and peace of mind.