If you’re asking yourself how long it takes to sell a dental practice, it’s a safe guess that you are either considering doing so as part of a transition plan, or you’ve already put your practice on the market but are disappointed in the time it is taking to find a serious buyer.
Everyone agrees that there is no “typical” timeframe for selling a practice. Some practices are in prime locations and get snapped up quickly, while others languish for years. But here’s the more important point: One does not simply sell a practice. “Selling” is just one small slice of a much longer transition.
So, if you’re considering a future transition and trying to plan, this is great—you are doing the right thing by planning ahead. Skip down to the section with our sample timeline for dental practice transition.
On the other hand, if you’re currently trying to sell your practice and are disappointed because it’s taking such a long time, read on. The problem might not be in the market or the sales process, but more so a flaw in your transition plan itself.
There’s Little Consensus as to How Quickly Dental Practices Sell
Do a search on how long it takes to sell a dental practice and you’ll quickly find that advice on the internet varies wildly when it comes to the timeframe for selling a practice. Although everyone agrees that the process can take years, it almost sounds as if there is a competition to see how quickly a practice can sell. Here are just three quotes from different sources:
“The length of time it takes to sell a dental practice varies greatly depending on several factors. A dental practice can sell as quickly as six months or it could take five years.”
“In a good area, the transaction can happen in as few as 6-12 weeks after the valuation is completed. In a rural or an area with less demand, it could realistically take 2-5 years. The length of time on the market depends not only on the practice location but also on several other variables.”
“Some transitions will sell as quickly as one month, and some can take years.”
Why is there such a broad range? Partly because sales have to do with location, practice size, and the economy. But a large part also has to do with what is considered sale. Does “selling the practice” involve merely advertising and closing a deal? Or does it include all the steps involved from the moment a dentist decides to pursue the next step?
This is one of the main reasons we here at Heartland Dental prefer to talk about “transitions” rather than merely “selling” a dental practice.
Don’t Think About Selling, Think About Transition
It makes sense that dentists would, at some stage in their career, want to take a step away from the daily activities involved in running a practice. Selling the practice is an immediate way to do that, though not the only way (or even the best way).
So, before you make the decision to sell, it’s best to think through what transition you are wanting to make, and the best way to go about that transition. For example:
Consider the next step. Is it full retirement? A phased retirement where you consult and work part-time? A teaching and/or research gig? Think about how much you want to be involved with your practice in 3 to 5 years, and what you want to do with your time when not focusing on day-to-day operations and patient appointments.
Explore partnership and affiliation. Most people understand what it means to sell a practice but are unaware of the options surrounding things like partnership and affiliation. Both routes are much easier than an outright sale, and can often be stepping-stones in a more long-term transition.
Set a timeframe. This need not be a deadline set in stone; just have a timeframe in mind so you can continue to move forward with your plans and do things in the correct order.
Get advice. Transitions in dentistry happen all the time. Why go it alone? Get advice from other dentists who have gone through the same process. Or, talk to a dental support organization that has a specialization in transitions. (We’re one of them, and we’d love to have one of our dental transition experts connect with you to learn more about your practice and your plan.)
Turn the dream into a plan. Many dentists only dream of retiring or transitioning…some day. You’ll need to turn that dream into a concrete plan. The plan might need several years to unfold, but if you stay on track, you will realize that dream!
A Sample Timeline for Dental Practice Transition
Once you’ve decided on the outlines of a transition, what next? The following are the typical steps in transitioning from full-time dental practice to another arrangement (including, but not limited to, a sale).
1 to 5 years out: Decide on your transition plan, if you have not done so already. Find a mentor or consultant to help with the details of that plan. Part of your plan might involve upgrades or improvements to your practice. This is normal; just as you might make upgrades to your house before selling to help it move faster, it is common for dental practices to make upgrades to support growth before a sale, partnership, or affiliation.
12 to 18 months out: At this point, start to organize all of the relevant paperwork that might be required for a sale, partnership, or affiliation. Much of this paperwork will be the same no matter what route you choose—for example, you will need to compile financial statements, growth projections, personnel records, pricing, and HMO/Medicaid statements.
12 months out: At this stage, you should be working with a partner to make the transition happen. In the case of a sale, this would be to market your practice. In all other cases, your support partner should be finding new dentists to join the practice, suggesting improvements, and generally putting processes in place so the practice can run with minimal input from you.
3 to 4 months out. If you haven’t informed your staff of the transition yet, now is the time to do so. At this point they should already be aware of some of the changes occurring, and should have decided to stay committed to the practice. But you will want to make sure they also understand your new role in the changing practice.
A graded transition? These steps might look a little different if you choose a more “graded” transition. For example, it is not uncommon for a dentist to choose to sell or affiliate, but then stay on with the practice for a period of a few years as a part-time manager and consultant. If this sounds like the right approach to you, make it part of your plan, and then work with your partner to make this happen.
Factors Affecting the Sale of a Dental Practice
If you are still set on selling your practice, or just frustrated that your current sale is not going through, it helps to know what factors can affect a sale. Here are five factors with the largest influence:
- Location. Location matters! Most buyers want to see a practice in a well-populated area, with lots of potential traffic. More out-of-the-way locations might have a harder time selling.
- Marketing. Marketing your practice is tricky, and even brokers can find it challenging. A practice that is not well advertised, or advertised in the wrong places, will see tepid interest.
- Annual Gross Collections/Profit Margin. It’s simple math: The higher your collections, the more attractive it will be to potential buyers. Overhead expenses also factor into how fast or slow your practice may go.
- Scheduling Appraisal and Showings. If you drag your feet in scheduling the appraisal, this can hold up the process. The same is true if you are inflexible when it comes to appointments for showings. Make room in your schedule for these activities, lest they hold up the process.
- Compiling Financial Statements. Likewise, not having the appropriate numbers and paperwork in order can stall the process before it even officially starts. Take the time to get everything in order and ensure the accuracy of all numbers and estimates provided.
Interested in a free assessment of your practice? Fill out our assessment request form and a Heartland Dental affiliation team member will reach out to you to discuss your options.