1. Engage a dental practice broker & other advisors

The first step is to hire a dental practice broker. At that time, the selling dentist will be asked to execute an exclusive listing agreement whereby the seller agrees, for a fixed period, to work with the dental broker to market and sell the dental practice. If the selling dentist does not already have advisors, the dental transitions consultant should provide recommendations for dental focused CPAs and attorneys.

During your dental practice transition, try to keep the dental practice business running as usual--continue to market, schedule hygiene, treatment plan, and perform your typical suite of procedures. Put simply, buyers want to purchase a thriving, turn key dental practice

2. Diligence: Collect financial statements

The key documents necessary in any dental practice sale start with the dental practice’s financial statements and the dental practice owner’s tax returns. The seller will want to show to the buyer healthy cash flow, and just as importantly, the buyer’s lender will want to review these statements to make sure the dental practice can support the buyer, including his or her dental school loans, and pay the dental practice loan.

3. More Diligence: Collect other documents

In addition to your financial statements, a buyer will want to better understand the selling dentist’s procedures, nature of the patient base, new patient volume, and other dental-specific information.  This generally requires a few reports to be run on the seller’s dental software.

4. Marketing development & valuation

Unlike when you sell a house, there is not a single database where all dental practices that are for sale are listed. Your dental practice broker will need to create a marketing plan and advertise the dental practice. Your dental broker should effectively be creating a prospectus that includes key financial information about your dental practice and a narrative that highlights why your dental practice is unique in the marketplace. Concurrently with this marketing plan development, a selling dentist should have the dental practice valued, preferably by a Certified Valuation Analyst.

If the selling dentist owns the real estate that the dental practice sits on, the selling dentist will need to also evaluate whether he or she would like to sell the real estate along with the practice or become a landlord (and retain the real estate).

5. Marketing

Your dental practice marketing plan will be tailored to your specific practice.  As a general matter, your dental practice should be listed at dental schools, dental society publications, dental organizations, and the dental broker’s rolodex of dental specific professionals.

6. Enlist other advisors

If the seller hasn’t already, at this point, the seller should at least onboard a dental CPA and attorney. The details of the engagements should be worked out as well as costs associated with each engagement.

7. Vetting buyers & showing the practice

Vetting buyers is among a dental broker’s key gatekeeping responsibilities. Many buyers will be just window shopping. A dental broker should ensure only qualified buyers are permitted to move forward in the process. Before a buyer may obtain information on your dental practice, the buyer must execute a non-disclosure agreement, which protects the confidentiality of your information.

During this time, absent extenuating circumstances, selling dentists should not tell others, including patients, staff, and friends, about their upcoming retirement or sale of their dental practice. Keeping the dental sale confidential is paramount in obtaining the highest and best value for a dental practice. If people begin to hear that you are selling, your patients may start looking for a new dental provider and your staff might start looking for a new dental employer.

8. Letter of intent & further diligence

Once a qualified buyer is identified and demonstrates real interest, a letter of intent is negotiated. This letter, which is non-binding, sets forth the material terms of the purchase, including, among other things, the purchase price and will be the template used to draft the asset purchase agreement ("APA").

9. Asset purchase agreement

The APA is the operative document that sets forth the terms of your dental practice sale. Once the APA is executed and the effective date passes (i.e., all conditions to the sale have occurred), the dental practice is officially sold! Of course, there are other items you’ll need to address post-closing with your accountant, but you are 95% there.