What type of financial documents do I need to finance a practice?
This depends on whether you want to do a practice start-up, practice acquisition, practice expansion or leasehold improvements. Most banks and lenders want to see three year’s tax returns, credit report, personal financial statements and debt schedules. But each case is individualized and unique. So please contact one of our loan specialists for a free consultation.
Should I always choose the highest offer for my practice?
Although the offering price is an important factor in the selling the practice, it should not be the most important one. We know that most sellers instinctively want the highest sale price. And buyers, due to the excitement of owning a practice, may give their highest offer. But as escrow progresses and due diligence is performed, the buyer’s excitement subsides and buyer’s remorse sets in. Sometimes this leads to cancellation of escrow, a costly process for both buyers and sellers.
The goal of the seller should be to sell at the best price, in the shortest amount of time, and with a reasonable buyer who can help the transition go smoothly. The highest sale price sometimes attracts the less qualified buyers, causes multiple escrows failures, and sometimes a poor buyer/seller match.
What is the value of my practice?
Unfortunately, no one can quantify the value of a practice on the dollar amount. The price for the practice is based on what buyers and sellers agree upon as a market price, after taking into consideration time of the transaction, revenue, expenses, potential earnings and etc…
How long does it take to sell my practice?
Most reasonably priced practice at a good location can sell within a couple of months. Some practices take longer to sell depending upon the asking price, parties involved and personality of buyer/seller.
How do I prepare my practice for sale?
Clean up the office and clutters. We recommend that you physically clean up the office, get rid of the old/broken equipments, dust the floors/windows, anything that would make the office more attractive for buyers when they come to view your office. Secondly, we recommend that you clean up and reorganize the documents at your office. Once buyers are interested in placing an offer for your practice, they will ask for financials, payrolls, patient records and etc… It is best to show them clear and organized documents at that time.
Should I let employees and staffs know that my practice is for sale?
We advice that you try to keep the sale of your practice reasonably confidential until the transaction is done. Some practices take longer than several months to sell. Informing employees early on that the practice is for sale may create a false expectation of when the practice will actually sell. Employees may then decide to seek employment elsewhere. Good timing of disclosure can avoid unnecessary employee stress and fallout.
Do I need advisors, accounts, attorneys, etc?
We recommend that you have qualified attorneys, accountants, consultants and “advisors” at each important phase of the sale. The major phases are Offer/Acceptance, Purchase Agreement, Lease Transfer, and etc… However, the cost of hiring these experts can be expensive. More importantly, some professionals (attorneys, accountants, consultants, and advisors) accept commissions for referrals known as “finder’s fee” if the deal does not close and they are able to refer the buyer or seller somewhere else. Be very careful when you see such a clause on their documents. Some “finder’s fee” can be many folds higher than the attorney’s or consultant’s fee, causing a conflict of interest when they recommend you to move forward with the sale or not. So be very careful when you decide to hire experts to help you. Ask questions about “finder’s fee”, read all documents and weigh the costs and benefits.
Should I list my own practice?
Every seller wonders if it is in their best interest to list their own practice for sale. In reality, only a very small number of sellers could list their own practices and have good sales. This is because selling a practice is a full time job, even for people who are professionals in the field.
Just like you don’t try to sew your own clothing, cut your own hair, or do surgeries on yourself, certain things are better off handled by professionals in the field. Selling your practice is one of them. For one thing, the amount of paper work is insurmountable. There is a strategy that must be employed for each transaction. And there are negotiations that need to be done among the numerous parties involved: buyers, sellers, landlords, attorneys, consultants, lenders, escrow and etc… As a seller, you need someone knowledgeable to help you navigate each of these transactions.
At LCF Practice Sales and Financing, we have the expertise and connections to handle your transactions smoothly. Our large database enables us to quickly connect you with qualified buyers. We can recommend attorneys, consultants and lenders to taylor your individual needs. Last but not least, we can feature your listings (anonymously) on major newspapers, websites, and etc… We will take the stress of out selling the practice so you can continue with practicing dentistry.
What are the steps involved in selling a practice?
There are many steps involved in selling a practice. Here are a few major ones.
– Be determined that you are going to sell your practice.
– Gather office documents: 3 years of business tax returns, last year’s profit and loss statement if last year’s tax return is not available, list of office equipments, lease and related documents, list of loans/liens against the practice, list of current insurance contracts and etc…
– Contact a LCF representative to come up with a plan to sell your practice.
– Allow a LCF representative to show your office to qualified buyers.
– Allow a LCF representative to help you negotiate the offer.
– Allow a LCF representative to help you transfer the lease agreement to the new tenant.
– Allow the buyer to do due diligence at your office (inspect equipments, patient files and etc…)
– Allow a LCF representative to work with escrow to transfer the funds.
– Closing and transfer of keys.