What Do I Need to Know to Sell a Dental Practice?

Selling a dental practice can feel like an overwhelming task. You’ve spent years—perhaps even decades—building your practice, forging relationships with patients, and growing your business into a well-oiled machine. Now, it’s time to transition, and you find yourself asking: “What do I need to know to sell a dental practice?”

Over the years, I’ve guided many dentists through this process, and while every practice is unique, the core challenges are often similar. In this blog post, I’ll walk you through the key steps, share some lessons learned from my experience working with dentists, and show how Practice Orbit makes this journey significantly smoother.

1. Know the Value of Your Practice: It’s More Than Just Numbers

One of the first questions that comes up is, “What is my dental practice worth?” This is where things get tricky because, as a dentist, you’re emotionally tied to your practice. I remember working with Dr. Amy, a dentist who had grown her practice from a single chair in a small office to a thriving multi-dentist operation. She assumed her practice’s value was based solely on its revenue. But after a detailed valuation, we discovered that her patient demographics, community reputation, and staff retention added significant value.
Knowing your practice’s true worth requires a professional valuation, considering not just revenue and equipment but also intangible assets like goodwill, patient loyalty, and your standing in the community. Practice Orbit simplifies this process by offering tools that help dentists understand how to calculate the full value of their practice, ensuring you’re not leaving money on the table.

2. Timing is Everything: When is the Right Time to Sell?

Timing plays a significant role in selling a dental practice. This was a lesson I learned firsthand with Dr. Jeff, a long-time client who wanted to sell his practice to retire early. However, we quickly realized that market conditions weren’t ideal—there was low buyer interest due to uncertainty related to COVID. Postponing the sale for a year allowed Dr. Jeff to sell at a higher price once the market rebounded.
The right time to sell depends on various factors, including the economic environment, buyer demand, and even the financial health of your practice. Practice Orbit offers insights into current market conditions and trends, helping you time your sale for maximum profitability.

3. Prepare Financially: Understanding Tax and Legal Implications

One of the biggest surprises for many dentists is the tax burden associated with selling their practice. Dr. Sarah, a former client of mine, was unaware of how the allocation of the sale price could significantly impact her tax liability. When we reviewed the proposed allocation from the Buyer, we noticed that 70% of the sale price was allocated to equipment, which would have triggered a higher tax rate compared to the portion allocated to goodwill. That’s why it’s essential to work with a tax advisor or a platform like Practice Orbit to ensure the sale is structured to minimize taxes and maximize your financial outcome.
When selling your practice, it’s essential to understand the tax consequences. How will the proceeds be allocated? This will directly impact how much you actually take home. Working with a team that includes a tax advisor, or using Practice Orbit, can help you structure the sale in a way that minimizes your tax liability.

4. Find the Right Buyer: Not Just Anyone Will Do

One of the most stressful parts of selling a dental practice is finding the right buyer. Your patients, staff, and reputation are at stake. I once worked with Dr. Carla, who was so eager to sell that she nearly accepted an offer from a buyer who lacked the experience to maintain the practice’s high standards. After some careful reconsideration, we found a buyer who not only offered a better financial deal but was also a great fit for her patients and team.

Selling a practice is like finding a successor to your life’s work. You need someone who understands your vision and is capable of maintaining—and even growing—the practice. Practice Orbit helps connect sellers with a network of pre-qualified buyers, ensuring that you’re not just selling to anyone but to someone who will continue your legacy.

5. Plan for the Transition: It’s Not Over When the Contract is Signed

Once you’ve found a buyer, signed the contract, and closed the deal, many think that’s the end. But, in reality, it’s just the beginning of a new phase: transitioning the practice. This can be especially difficult if you plan to retire and step away completely. Dr. Tom, one of my clients, had a smooth sale but was itching to move to the east cost and retire. We ended up negotiating transition services post closing that allowed him to assist the buyer remotely, and he rode off into retirement.

A smooth transition is essential for maintaining patient loyalty and keeping staff happy. Many buyers will want the seller to stay on for a certain period to ensure a seamless handover. Practice Orbit offers guidance on setting clear expectations for the transition period, helping to prevent any misunderstandings between you and the buyer.

6. Don’t Forget About Your Staff: Protecting Your Team During the Sale

Your staff is the backbone of your practice, and selling can create uncertainty for them. It’s important to understand that the Buyer has no obligation to rehire your staff. If the long-term security of your team is important to you as a seller, it’s crucial to have these discussions early on with the Buyer to ensure they plan on rehiring your staff. Dr. Nina, a client of mine, made it a priority to have these conversations, ensuring her team’s future was secure before finalizing the sale.

Platforms like Practice Orbit can help you address these concerns early by facilitating conversations and helping you include terms that reflect your priorities, ensuring peace of mind for everyone involved.

Conclusion: How Practice Orbit Makes Selling a Dental Practice Easier

Selling your dental practice is a major life event, and it’s critical to get it right. From determining the value of your practice and timing the sale, to ensuring a smooth transition and minimizing tax impacts, there’s a lot to consider.

This process can be daunting, but with the right tools and guidance, it doesn’t have to be. Practice Orbit is designed to help dentists navigate these challenges, offering everything from valuation tools and buyer connections to post-sale transition support.

If you’re asking, “What do I need to know to sell a dental practice?”, the answer is that you need to know your options, your market, and your financial landscape. And with Practice Orbit by your side, you’ll have the confidence to make informed decisions, ensuring a successful sale and a smooth transition into the next chapter of your life.

Author: Matthew W. Odgers, Attorney at Law, specializing in dental practice transitions and legal support for dental professionals in California.