A common question our dental transition specialists are asked is “how long will it take for you to sell my dental practice?”
There are so many factors that make it so hard to answer that question.
Is your dental practice located in a rural area or a metro area? What is the size of your dental practice? What does your cash flow look like?
While that question can’t always be so easily answered, our team at PMA Practice Transitions will make the process of selling your dental practice a lot easier.
Matt Scherer: Hello. My name is Matt Scherer with PMA Practice Transitions. I assist dental professionals in selling and buying practices in the state of Ohio and Western PA. My colleague is-
Joe Gordon: I’m Joe Gordon. I do the same thing, but I do it in the fantastic state of Indiana, and in Northern Kentucky.
Matt Scherer: Ah, that Northern Kentucky has got to be great.
Joe Gordon: Northern Kentucky is wonderful, as long as the Churchill Downs is open.
Matt Scherer: That’s right. So, we’re going to talk a little bit about a topic that you and I think they probably get asked 99% of the time.
Joe Gordon: Yes. And I’m going to ask Matt the question, so he can answer it, and we can all learn from his knowledge.
Matt Scherer: Okay. Ask away, Joe.
Joe Gordon: Matt.
Matt Scherer: Yes Joe.
Joe Gordon: How long is it going to take you to transition my dental practice?
Matt Scherer: That’s a great question, Joe. God, I wish I had the answer to that question.
Joe Gordon: I mean, what’s it going to be a month or two?
Matt Scherer: Sure.
Joe Gordon: Is it?
Matt Scherer: Yeah. It’s going to be all of that. But, in all seriousness, we get asked this question-
Joe Gordon: Every time.
Matt Scherer: … Quite often, right? Quite often. And honestly, my simple answer is, “I don’t know. We don’t know. Nobody knows.” We have an idea sometimes on how fast we think a practice will sell, based on what type of practice it is, where it’s located, whether it’s in a major metropolitan area versus a rural area. What type of dentistry is being done in the practice, the size of the practice, a lot of times.
Joe Gordon: The size of the practice is a huge factor. Huge factor.
Matt Scherer: So, whether you’re doing $300,000 in revenue or a million dollars in revenue. It’s interesting, because smaller practices are tougher to sell, and larger practices are tougher to sell.
Joe Gordon: There’s a sweet spot in there.
Matt Scherer: There is a sweet spot in there.
Joe Gordon: And, once you get over a certain size and I was telling my clients when I was in the accounting world, that if you exceed a certain amount, it’s going to be harder to sell your practice. And, the percentage of sales price, compared to your gross revenue, is going to be a lower percentage.
Matt Scherer: Correct.
Joe Gordon: Like anything else, we have a shorter sell cycle with the more population of bu we have. Obviously in rural areas, that can be a challenge some days, depending upon where it’s at. Or, conversely, it can be easy if you have someone who wants to come back to their own town.
Matt Scherer: Right. Absolutely.
Joe Gordon: It may happen tomorrow, but it may happen in three years. The same thing in urban practices. We can have practice A and B across the street from each other, and one of them may sell quickly, and one of them may not. It depends on, again, a lot of the factors Matt talked about is, what kind of dentistry does it do? What’s their patient population like? What is our situation with our physical facility?
Joe Gordon: I had a practice that needed to sell, and they were very optimistic when they started this practice. And they signed a lease that was per square foot one of the highest lease rates I’ve ever seen. Well, unfortunately, to get the practice, you inherited the lease. And, it took a special person to come in to want to pay that kind of rent.
Matt Scherer: Sure.
Joe Gordon: That kind of rent. So, it all depends. It can also depend on the seller. We’ve had situations where sellers are particular about who buys their practice. They’re very protective of their patients, they’ve spent all these years with them, and they want a particular type of person to come in and service them-
Matt Scherer: Yeah.
Joe Gordon: … Like they did. On the other hand, if we have a seller who says, “I want to toss the keys on the counter, walk out the door, and I’m moving to-
Matt Scherer: Timbuktu.
Joe Gordon: … Timbuktu,” let’s go.”
Matt Scherer: Right.
Joe Gordon: Let’s go. And, then we have a lot more options on who to sell it to, than we would have practice with that needs something different.
Matt Scherer: Yeah, and I think we touched on keeping options open in who you could sell to. So, if you say, “There’s no way I’m selling to a group practice or an organization,” then that’s fine, that’s okay. Maybe it takes a little bit longer, maybe it doesn’t.
Joe Gordon: Right.
Matt Scherer: Right.
Joe Gordon: Exactly.
Matt Scherer: I think the key is that if you’re working with a transition company, and they tell you a specific timeframe that they’ll be able to sell your practice in, truly, truly, truly I think that they are selling you a bag of goods because-
Joe Gordon: Why?
Matt Scherer: … There’s just no telling. I had a practice in rural Ohio that I listed. I thought it was going to take a fairly long time to sell no technology in the practice. It didn’t even have computers. They were still so antiquated. And, it sold in two months, because I found the right buyer who wanted a practice that they can make into their own, and kind of evolve that practice into theirs, and update it and do what they wanted with it. And now they’re doing wonderful.
Joe Gordon: One of the last ones I helped transition, I told her that it was going to take 18 months, and we sold it 17 1/2. And it just seemed to be the number it’s going to take.
Matt Scherer: Yeah.
Joe Gordon: So, don’t think you can sell it tomorrow, don’t don’t think it’s going to take forever. But it may take a considerable period of time.
Matt Scherer: I do tell all my selling dentists that, “Your practice will sell, the thing we don’t know as when.”
Joe Gordon: Right.
Matt Scherer: So just keep that in mind when you’re thinking and contemplating about potentially selling your practice, especially if you have an health issue and you need to sell quickly. Or, you’ve got some health issues and you don’t know if they’re going to be prolonged. Definitely do it sooner than later.
Joe Gordon: Right.
Matt Scherer: So, with that, we’ll wrap up and we appreciate you joining our segment. And, if you liked it, please give us the thumbs up, and certainly share it with your colleagues and friends.
Published by Matthew Scherer on June 18, 2020