Exiting the business – what practice owners need to consider before deciding to move on
Peter Cummings explores the options for dental practice owners who are thinking about a fresh start
Deciding on the right time to exit your business is one of the most important decisions you will make in your life. For many practice owners, it is also a deeply personal choice. Running a practice is an emotional investment as well as a financial one. There are many factors to consider before taking steps to move on and the prospect can be daunting. However, it is a prospect which has been in the minds of many practice owners recently as they look to evaluate their assets and protect their futures. At MediEstates, we have been providing free tailored advice to dentists who are either looking to sell immediately or who simply want to consider their options and enhance the value of their practices.
Taking the initial decision to exit can be the most difficult step. The motivation to leave will be unique to each practice owner and some may find it easier to let go than others. Dentistry is not just a job; it is a profession that takes dedication and years of hard work, particularly in relation to building an established practice with regular patients and loyal staff. However, I have spoken to many dentists recently who are dissatisfied with the current industry landscape. Many would prefer to depart from increasing levels of bureaucracy which leaves less time for patients. The controversial COVID-19 protocols have exacerbated the situation and now a growing number of practice owners are weighing up their options. The prospects of part-time hours, fewer responsibilities and less stress are more attractive than ever. In addition, a currently strong buyer’s market makes conditions favourable for successful sales, but owners need to carefully consider their options.
Money in the bank or tied in to the practice?
The crucial considerations which will directly affect any practice owner’s immediate future are the retentions and guarantees within a post-sale agreement. A recent survey related to practice sales revealed the two most important considerations for practice owners were finding the right buyer and finding the right deal structure. Would you be comfortable with a practice offer that includes money up front and the rest tied in to guarantees over a defined period of up to three years? Some dentists miss their clinical roles and are happy to remain on as associates, whereas others wish to retire outright with the cash to fulfil their ambitions outside the industry.
Deciding which sales avenue to take
Your post-sale expectations will dictate to whom you wish to sell your practice. But it is important to take into account the size of your business and the type of buyer it will attract. Practices with four or more surgeries and an annual turnover of over £750,000 will more likely gain the interest of larger corporate buyers. Smaller practices with two or three surgeries will generally fall into the owner/occupier category and attract individual buyers. However, we are seeing a current trend within the UK market of small groups and mini consolidators gravitating towards smaller practices as part of wider growth ambitions. For sellers, awareness of these buyer categories is essential for understanding the consequences each one has for post-sale agreements. The bigger the buyer, the more likely there is to be a post-sale agreement whereby the previous owner stays on as clinician. This could be as long as five years under a corporate buyer. It is also important to remember that the transfer of ownership could take 6–12 months due to legal complexities, so planning your exit even before you are ready to sell can have real benefits and give you peace of mind.
Discover the true value of your practice with no pressure to sell
Planning your exit strategy can be done at any point in your business career and there is no pressure to sell when you plan it with MediEstates. With over 15 years’ experience specialising in dental practice brokerage and valuation, we provide practice owners with crucial market insights to help them make informed decisions about the future of their businesses. Our confidential bespoke service utilises detailed reports on such factors as day-to-day running costs, treatment types, property type and location, and compares these to benchmark figures from our extensive database to help you find the true value of your practice. MediEstates appraisals also include detailed financial forecasts and advice on maximising profitability to get the most value out of your business.
MediEstates fully understands the emotional and financial investments required to succeed, which is why we endeavour to find the best structured deal that meets the needs of individual practice owners. Whether you wish to sell without delay or you simply want to gather detailed information about your practice, MediEstates can offer free, expert advice.
Peter Cummings is a Practice Valuation Manager at MediEstates with over 25 years’ experience in the Dental industry. His extensive knowledge of all aspects of dentistry enables him to provide valuable market insight and advice which is tailored specifically to the dental practice owner and their business.