Preparing your dental practice for sale? Get your accounts in order
Christie & Co’s dental team regularly works alongside leading dentist accountants, Hive Business, helping practice owners achieve a smooth and efficient sale. As a guest feature, Connor Smith from Hive Business shares his tips for getting your accounts in order ahead of your dental practice hitting the marketplace.
People often benchmark their life/career trajectory on significant milestones. Personally, it could be buying your first home, getting married, your first child, retirement etc. Professionally, many dentists follow a similar path in their career lifetime. Qualification, buying your first practice, expanding your practice and eventually, selling your practice.
These are all pivotal moments in your life and, of course, having poured blood, sweat and tears (hopefully low amounts of blood and tears!) into your business over the years, you naturally want to feel fairly rewarded for your efforts on exit.
In order to achieve the best outcome as you approach sale, there are a number of key financial things that you should consider. A word of advice as well – the best sales often begin their preparation years before the actual event takes place!
Make sure your financials are up-to-date and accurate
Nothing stalls a sale more than outdated or inaccurate financial information. Like it or not, for as beautiful as you have made the practice look over the years and for how much your patients absolutely adore coming to see you, inevitably the first thing a potential buyer will want to see are the numbers.
It is, therefore, vital that you keep on top of the company financials on a regular, real-time basis so information is readily available to provide to both the broker and the buyer.
You also need to ensure that your numbers are accurate and any questions from a buyer can be easily explained. Corporate buyers, in particular, will consider inaccuracies in your data as additional risk, however small you may consider them to be. This can then, in real terms, erode your practice value by additional percentage points. If you put this into context of a £1 million deal, a 5% reduction in value would wipe £50,000 of your sale proceeds.
Ensure your tax structure is correct
We have had many practices join us over the years with ineffective tax structures that not only mean they are likely paying too much tax on an annual basis (that’s another conversation) but that their taxes on exit could be significant when some advance planning could save tens, if not hundreds, of thousands in tax.
Our specialist projects team has worked with many practices in the years leading up to sale, restructuring their business to ensure that you retain as much of your wealth as possible on exit.
Be sure you know what you want
A surprising amount of time, we discuss exit planning with practice owners and it’s clear they’re not exactly sure what they want to get out of a sale.
There are often many avenues open to you on exit. For example, are you happy to continue working in the practice as an associate for a period of time after you sell? This may mean you’re able to achieve a slightly higher sale price. Alternatively, if your main interest is simply walking away on completion date, you may need to accept a slightly lower asking price if you are still contributing a proportion of income to the practice.
Whatever your plans, if you know what you want from the start this will help with the necessary preparations and will make for an all-round smoother process.
If you’re considering selling your dental practice and would like to chat with Hive about your accounting needs, email: hello@hivebusiness.co.uk.
