There’s a lot to consider when you’re selling your dental practice or dental service organization (DSO.) The many things you need to do to make your business attractive to potential buyers can be overwhelming.
Don’t overlook the pitfalls that could sabotage your efforts. Here are three common mistakes that many people make when preparing their dental practices and DSOs for sale.
Mistake #1: Cutting Tenured Staff
Many dental practices try to make their balance sheet look good by reducing headcount. And they make the mistake of cutting tenured staff members who earn a higher salary.
However, doing so can impact morale, affect the organization’s operations, and lower the quality of your services. Not to mention, the relationships these employees have built with other staff members across the organization can have a significant influence on change management.
Instead of letting go of these valuable employees, you should invest in retaining them. Their knowledge and experiences are the most valuable asset to your practice.
Involve these employees in the transition process with clear and open communications. Work with the new owner to draw up employment contracts that entice key employees to stay on after the sale. You can also assist the new owner in honoring accrued paid time off, benefits, and seniority.
Mistake #2: Not Understand Your Numbers
Not understanding your numbers — the money coming into and out of your practice — before you negotiate a sale can decrease the valuation of your business and prevent you from getting a fair price. Many owners struggle to grasp the nuances in adjusting their balance sheet to increase their earnings before interest, taxes, depreciation, and amortization (EBITDA.)
Get your financial ducks in a row by hiring an accounting firm to generate financial reports that are compliant with the generally accepted accounting principles (GAAP). But even the best accountant can’t give you an accurate statement if you don’t provide the right information. Therefore, you must collect and compile all the financial data your accountant needs to do his job.
Many dental offices are still using on-premise solutions that don’t have the capabilities to track production and collection at the line item level. This is particularly problematic for multi-location practices or DSOs because you have to compile data from different offices that may not follow the same formats.
Use cloud dental practice management software that tracks production and collection at all office locations and makes the data available in real-time via a central dashboard. You see everything all in one place to get a complete picture of the financial health of your practice while minimizing errors and delays caused by transferring data from one system to another.
Mistake #3: Using Outdated Technologies
Potential buyers not only look at your financial reports, but they also consider how your business is set up for future success. For example, if they have to invest a lot of money and effort into modernizing your practice, they’d be less willing to pay a higher price.
Savvy buyers evaluate the technology stack a dental practice uses to determine its potential to generate future revenue. Why? The right solution can help deliver an outstanding patient experience to support practice growth.
Not to mention, many of these applications also enable you to automate various patient-facing workflows (e.g., online booking, automated reminders, revenue discovery) so you can improve operational cost-efficiency and improve your balance sheet right away.
Choose an all-in-one cloud dental software that can help you streamline internal workflows while delivering a patient-first experience. Thanks to the subscription model, you don’t need to make a substantial upfront investment before reaping the benefits — another plus for your balance sheet!
Make Your Dental Practice Attractive to Potential Buyers
A dental practice or DSO that has the right people and processes in place is more profitable in the long run. When you retain your most valuable staff and implement a modern IT infrastructure, you can command a higher price while attracting more potential buyers.
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