Private Dental Practice Sale Marketing Tips
Dental.Law.Pro™ and its associated attorneys do not offer practice sale listings or brokerage services. In general, dentists
should use an experienced and state-licensed dental practice broker to help sell their practices. Brokers are able to provide
many key services that help sell your practice quickly at a fair price: preparing your practice for sale, determining the practice's
fair market value, reviewing the practice to create summary and detailed practice profiles for buyers and lenders, locating and
showing the practice to qualified buyers while maintaining confidentiality, answering questions, providing the parties a process and
timeline for the transaction, and identifying other practice transition professionals (possibly for a referral fee) required to
complete the sale.
However, if the dentist has already located a qualified buyer (for a full sale or partnership), hiring a practice sale broker is
prohibitively expensive and unnecessary. This page offers these dentists advise on how to (1) prepare their practice for sale, (2)
determine the practice's fair market value, and (3) use Dental.Law.Pro™ attorneys to provide contracts, answer legal questions,
provide process and timeline information, and identify other practice transition professionals (without referral fees), all at a much
lower overall cost. For dentists who are up to the significant challenge of finding and screening their own buyers, this page offers
advice on that aspect as well.
Preparation for Sale
1. Plan Early. If possible, I suggest giving yourself at least two years' lead time
before your anticipated retirement date. You need that time to prepare your practice for sale, negotiate and close the purchase,
and permit a sufficient transition period. You should also inform your professional advisors (such as your practice transition
attorney, estate planning attorney, CPA, investment advisor, and insurance agents) of your intention to sell the practice - there may
be some special planning issues to be completed ahead of time.
2. Prepare Your Practice For Sale. There are a number of steps you can take to increase the value of
your practice to potential buyers, in the year before you start marketing your practice for sale. Here is an excellent summary
provided by one of my recommended California brokers: Seller Pre-Sale To-Do Checklist. These
suggestions should be followed whether or not you hire a broker to sell your practice.
3. Maintain Confidentiality. Once your staff, patients and/or referral sources become aware of a
potential sale, they may start looking for another dentist and tell others of your impending sale. Losing staff, patient base and/or
referral sources before sale will severely harm your practice's value. As a general rule, you should not tell anyone other than
your spouse and professional advisors about the proposed sale until the sale has actually closed.
4. Pre-Qualify Your Practice for Fair Market Value Financing. Once your practice is ready for
sale (see 2. above), contact at least two approved dental lenders to determine the maximum amount those
lenders would lend to a well-qualified borrower to buy your practice. The lender will say it is not providing a practice
appraisal, only that "the anticipated post-closing cash flow of the practice to a well-qualified buyer would support lending that
amount to purchase the practice." However, that loan amount effectively IS the fair market value of the practice!
You could choose to back up the lender's valuation with a (relatively inexpensive) appraisal from a dental practice broker. In many
cases, the lender's valuation will not equal the amount you thought your practice is worth, or even the amount of the broker's
appraisal - but getting the lender's viewpoint is a third party reality check on your own price estimate, and a reality check you may
not get from the broker who wants to list your practice. Remember, too, that the price you receive on a non-brokered sale will not
be reduced by a broker's commission, so you can sell your practice privately at a somewhat lower price and still come out ahead financially.
Find Your Own Buyer
5. Prepare a Confidential Summary Practice Profile. Prepare a confidential summary practice profile
for potential buyers (limit to one page). That profile should be brief but provide sufficient detail to inform them of the important
aspects of the practice: location (by city and/or region only), specialization (if any), source of income by type (fee-for-service,
PPO, HMO), number of operatories (plumbed and unplumbed), special equipment, days/week worked, 2 calendar years' gross and adjusted
net, availability of transition assistance or seller financing, other special factors, and (most importantly) the offering price.
A few interior photos should also be included.
6. Hire a Practice Transition Attorney Before Providing Practice Details. Hire your practice
transition attorney to prepare a confidentiality agreement that the potential buyer must sign before being shown the office
itself for a cursory review of the premises, patient records, equipment, and computer software.
7. Advertise Your Practice - Confidentially. Ask your pre-qualifying lenders if they have any
pre-qualified buyers that might be interested in your practice, and provide that lender with your confidential summary practice
profile. Buy ad space in online dental marketplaces and your dental society, state dental or other professional association
publication. There may be some regional or local publications, or specialized professional publications, that may also be good
places to buy ad space. If you are computer literate, you could advertise a "CITY Dental Practice for Sale" pay-per-click ad on
Google and/or Bing. Placement offices at local dental schools will also provide associate-to-partnership opportunities (dental
lenders generally will not lend to buyers with less than one year of dental experience). The military is another good source of
Your advertising should not allow specific identification of your practice, since knowledge of an impending sale can cause staff,
patients and referral sources to abandon the practice. To do so, obtain a confidential e-mail address to receive inquiries and pay
for ads anonymously with PayPal or anonymous money orders. Your ad text should be much briefer than your summary practice profile -
include the general location, specialization (if any), 1 year gross, one special factor, offering price, and confidential contact
method. Be prepared to receive inquiries from commission based brokers wanting to market your practice.
8. Screen Potential Buyers. Don't waste time showing the practice to unqualified and unprepared
buyers. Before providing potential buyers with further information, require them to provide a pre-qualification letter from at least
one of the lenders from which you received your practice's pre-qualification review. That letter should show that the buyer is
qualified to borrow the asking price set by your own pre-qualification letter. Also, inquire whether their training and experience
will allow them to perform or quickly develop the dentistry skills required in your practice (type, quality, speed); a buyer that
fails in a practice is more likely to sue you later.
NOTE: federal and state non-discrimination laws prohibit you from considering protected classifications (e.g., sex, age, race,
religion, national origin, sexual orientation, marital/child/pregnancy status) when determining whether a potential buyer is a good match for your practice, so do
not ask these kinds of questions or include them in your consideration of a "good match."
9. Show Your Practice - Confidentially. Before providing potential buyers with your specific
location, require them to sign the confidentiality agreement prepared by your practice transition attorney. Showings should take
place on non-workdays only - no staff or patients should be present. The buyer should review the building exterior (including
parking), office layout, air/ water/ cabling/ electrical layout, equipment (including computers and compressor location), front
office setup, computer software, and (if not already provided) a copy of your confidential summary practice profile the buyer can
take after the showing. Follow up with each potential buyer within a week to see if they have further questions.
If the potential buyer wants to proceed, have your practice transition attorney prepare the proposed letter of intent for signature.
Once signed, access to more detailed financial/ business/ clinical information by the buyer and its lender and third party consultants
can be provided. You also need to notify the landlord of the prospective sale, but do not identify the potential buyer until that
buyer has received preliminary loan approval for your practice, and has completed and approved its due diligence review.
Selling your practice without a broker is workable if you
are willing to put in the time and effort required, but it is much easier to do it yourself if you already have a qualified buyer, a dental lender's pre-qualification of your practice to set the price, and a solid practice transition team including a Dental.Law.Pro™ attorney. Good luck!