Find out if you have liens or debts on your practice first
Before you get the ball rolling on retiring and selling your dental practice, it is imperative to ensure there are no liens or debts against your practice. Believe it or not, this is often overlooked, and many dentists are surprised to find out that a debt or old lien is still on their practice. It can be easy to forget during the transition process, but your transition consultant won’t! Regardless, it must be addressed. The following steps will help you if you find yourself in this situation prior to selling your practice:
- First thing’s first: Be aware and prepared that your practice may have old liens or debt that will need to be paid off at closing. Many doctors would rather use the proceeds to pay off the debt instead of paying it off before the sale. While that may be fine, you need to let your transition consultant know your situation in order to prepare for a seamless transition.
- To start preparing for your transition, do a UCC search to look through financial records and find any loans you owe or liens you may have on your practice. Each state has its own portal on the secretary of state’s website. Do this well in advance of closing, and your attorney or CPA can help Your advisors can perform any follow-up and take the needed steps to ensure anything is paid off at closing or obtain payoff or lien-termination letters.
- If you have debt with a company, it can be paid off directly from the bank financing the sale. The bank will send the check directly to the company you owe. When you sell your practice all loans must be paid off and all liens released.
- Once the debt is paid off or the lien termination letters have been requested, be sure to follow up with the lender or lien holder to make sure they filed a lien termination. Don’t forget this step – it is important to keep track of all aspects of your business, including debt payoff and follow-up.
In most cases, our clients already know about their debts, and the need to have them resolved. However, most clients don’t realize that they may have old liens that need to be taken care of as well. If a seller is aware of the debt or lien situation and has a professional to help them resolve any issues, that results for a much more efficient, easy transition. Don’t worry, having some debt or an old lien is completely normal, it is just essential to handle it properly.
Overall, don’t get blindsided. This will help to keep your stress at a minimum, and the process from getting sidetracked. While every situation is different, we will do everything we can to make the transition as smooth as possible for you.