Timing the Sale of Your Practice
When is the right time to sell your practice? Can you time the market? These are arguably two of the questions I get asked most frequently.
The answer is you cannot time the market. There are just too many variables to take into consideration, and the reality is there will always be something happening right around the corner. Sometimes, in retrospect, today was a more attractive time to sell, or unfortunately sometimes, less attractive.
As an example, lots of owners planned on selling in 2020, then COVID hit. So, they postponed thinking a few years later would be better. However, interest rates dropped like a stone immediately following the COVID shutdown and so it actually became a great time to sell as buyers’ budgets went so much further, and good appraisals excluded the COVID timeframe from value determinations. Then, some owners thought they would time their sale to be at the “peak” of the selling/buying frenzy. The problem is, with a sales process that averages 5-8 months, many owners started the process while the lowest interest rates were still in play, but deals fell apart at the finish line with bank financing stage, as interest rates had climbed dramatically.
Similar situations occurred just before public health requirements changed dramatically, and before that when federal requirements from the department of labour changed as well. Unfortunately, there are no guarantees. Currently many owners and potential purchasers are wondering how the introduction of the CDCP is going to effect practice values in the long-term. The reality is, we just cannot predict that yet.
Bottom-line, the right time for you to sell your practice is when you have made the decision to make a lifestyle change. The best benefit of selling your practice is the gift of time, and the reduction of responsibilities, not just the proceeds involved.
You have options if you still love dentistry and want to continue treating patients. You may be able to become an associate in your own practice post-sale, arriving at 9 and leaving at 5 each day, staying for as little as 6 months or for many, many years. Maybe you want to travel and becoming a part-time flexible locum would work for you. May you want to spend time teaching. How does 6, 8 or 10 weeks of vacation each year sound to you? Can you imagine the freedom you can gain letting someone else take over the staffing and management responsibilities? You can choose to concentrate on what you really love.
The best time to sell your practice is when you want that gift of time and when you are ready to embrace a lifestyle change. If you are not sure, then the best first step is getting an appraisal done. If you do not already know what percentage of your retirement your practice represents then now is time to get a base valuation completed. You may be able to pull the trigger earlier than you were expecting, and at the very least, you will know what your practice is worth. A good appraisal will include at least a handful of practical and actionable recommendations that will allow you to improve your ownership experience. There may be multiple simple changes you can introduce to reduce any possible post-sale liability, continue to improve the value, and to ensure greater marketability when you choose the time to sell.
If you want to discuss your unique situation and your plans for ongoing ownership or transition please reach out and we can have a conversation.
