How long does it take to sell a dental practice? ADA notes

The question “how long does it take to sell a dental practice” has one published answer from the American Dental Association (ADA), and it comes with limits. This post reports what the ADA says, explains what drives a timeline, and lists what an owner can prepare. It is general education, not legal, tax or financial advice.

What does the ADA say about the timeline?

The ADA’s tip sheet states: “The general rule of thumb is that the ideal timeframe from listing the practice for sale to closing is between four and six weeks.” The wording matters. It calls this a rule of thumb and the ideal, not an average or a promise. It also measures from listing to closing, so it leaves out the time a seller spends getting ready before listing.

The ADA ties the short window to patient retention: “Key benefits to a short time frame are that it could reduce the number of patients who search for a new dentist and keep more of them as patients of record for the incoming dentist, thereby protecting the practice’s revenue stream.”

How should a seller think about speed versus price?

The ADA advises owners to decide how much they want speed: “Determine how motivated you are to sell and whether you prefer to accept a lower price for a faster sale or if you’re able to allow more time in order to reach a broader market of potential buyers.”

That is a trade-off, and only the owner can weigh it. A faster sale may narrow the pool of buyers. A slower sale may reach more buyers, but patients may drift away. Ask a broker, a CPA and an attorney how each choice affects price and terms in your market.

What steps fill the timeline?

The ADA page does not give a day-by-day schedule. The table groups its guidance into stages, in the order an owner might meet them.

Terms in these stages are explained in the glossary: practice transition, practice broker, due diligence, letter of intent and asset sale.

What can slow a sale down?

The ADA says due diligence “may seem time-consuming and tedious while you’re doing it,” but it “can minimize delays in finalizing the transaction.” It tells sellers to “be thorough and honest in your assessments.” Documents the ADA lists include practice accounts and balance sheets, staff contracts and expense reports, an inventory of equipment, inspection records and permits, lease and facility documents, and patient demographic data.

The ADA also names contract terms that need attention: patient records and access to them, lease terms, which equipment is owned or leased, whether employees will be retained, and provisions for continued patient care and retreatment. Each of these is a point where buyer and seller may disagree, and an attorney should review them. The dental practice due diligence checklist post goes through this in more detail.

Other items can affect timing, such as buyer financing, lease transfer and payer credentialing. The ADA suggests notifying “representatives of any dental benefit plans with which you hold contracts.” Ask your attorney and broker which items in your case have waiting periods. The financing a dental practice purchase post covers the buyer’s side.

Why do so many owners plan a sale?

The ADA Health Policy Institute reports that practice ownership is still the usual end point of a dentist’s career: “In a nutshell, most roads still, eventually, lead to practice ownership.” Owners who reach that end point will one day face the exit. Planning the exit early gives time to prepare records, review the lease and talk to advisers before a listing starts. The dental practice ownership trends post shows the data.

What happens to patients and staff during a sale?

The ADA page asks sellers to decide who to notify and when. Its list includes representatives of dental benefit plans, dentists who refer patients, and others tied to the practice. It also points to contract language on whether current employees will be retained and for how long. Plan the message for patients and the team early, and have an attorney check what you may say and when, because the sale terms may limit early disclosure. A calm, accurate message helps keep the schedule full, which supports the patient retention goal the ADA describes.

What can an owner prepare before listing?

1. Pull together the due diligence documents the ADA lists.
2. Ask a CPA to review financial statements and the likely tax effects.
3. Ask an attorney to review the lease, staff agreements and payer contracts.
4. Get a valuation from a qualified valuator. See the dental practice valuation methods post for the common approaches.
5. Decide who will speak to patients and staff, and when.
6. Contact your professional liability carrier. The ADA suggests asking whether the company has recommendations.

Next step

Read the selling a dental practice guide for the full process, then involve a broker, an attorney and a CPA before you list. To discuss practice transitions with Dr. Jon Copeland, DDS, a general dentist in Wildwood, Missouri, contact Dr. Copeland about consulting.