By Kenneth A. Mogell, DMD, DABDSM
In 2009, I attended my first dental sleep medicine class, never imagining I would one day transition from a restorative dental practice to one exclusively focused on dental sleep. With the guidance of incredible mentors, I was able to build a thriving dental sleep practice—one that I recently sold. Here’s how it all unfolded and what I learned during the process.
Finding a Buyer
- How I Found a Buyer: I announced the sale on a dental sleep forum and a dental sleep Facebook page. The practice ultimately attracted seven formal bids. Surprisingly, finding a buyer was easier than expected.
- Other Dentists’ Experiences: A colleague found his buyer after a speaker/friend mentioned the sale during a session at a dental conference.
- Evaluation: Traditional dental practice evaluators may not understand the unique model of a dental sleep medicine practice. I recommend using a business evaluator with experience in dental sleep.
- Broker’s Role: Even if you don’t need a broker to find buyers, having one helps coordination between buyers, attorneys, and banks. My broker, Greg Jones of Doctor’s Choice Practice Transitions, was essential in navigating the complexities of selling a dental sleep practice.
Even Jones, who has extensive experience selling dental practices, conceded that selling a dental sleep practice was unlike any sale he had previously brokered. Jones told me that he did not anticipate its high degree of difficulty. For example, with few “comps” (comparable recently sold practices), banks did not understand the dental sleep practice business model. My broker had to educate the bankers on how a dentist could have a practice that doesn’t deal with dental insurance or doesn’t “drill and fill.”
Tip: Prepare a clear, easy-to-understand description of the dental sleep practice model for banks.
Ensuring Continuity Post-Sale
- Continuity Concerns: Banks were worried about whether the buyer could maintain the same level of success. To ease concerns, I agreed to stay on with the practice for a transitional period.
Tip: A resume highlighting the buyer’s credentials in dental sleep medicine can be helpful.
- Standard Transition Period: I interviewed other dentists who sold their practices, and I learned that most agreed to a six-month commitment post-sale to ensure a smooth transition.
Tip: Ensure the contract spells out the transition period, seller’s role, compensation, and an exit clause.
- Staff Retention: Buyers and financiers often worry about staff leaving after the sale. To address this, I was transparent with my team from the start, which makes it more likely that 100% of the staff will stay on.
- Medical Billing: My practice relied heavily on treating patients with Medicare, Tricare, and commercial insurance. The buyer would need to be able to bill these insurers also.
Tip: Start your buyer’s process of becoming a Medicare provider and getting insurance certification early—this can take over six months.
Organizing for the Sale
Selling a practice requires extensive organization and transparency.
Before this experience, I had not realized all the responsibilities performed by my team, the practice manager, and my wife, Annette (the practice’s business manager). I had to compile lists of all these tasks for the buyer.
Buyers will need:
- A list of referrers, vendors, appliance manufacturers, website management personnel, and internet technology providers.
- Information about your payroll services, alarm system, HVAC maintenance, and practice management software.
- A list of personal items. Document what personal items you’ll take with you upon closing.
Record Keeping and Financials
- Separate the Practices: Years ago, I separated my dental sleep practice from my restorative practice—different corporations, phone numbers, websites, and software. This helped keep financials clean for the sale.
- Financial Documentation: Banks typically require five years of bank records, three to five years of accounting records—including profit and loss statements—and an accounts receivable report.
- Lease Transfer: If you’re renting the space, ensure the lease is transferable to the buyer.
Tip: Be prepared if the bank asks you to “hold paper” or finance part of the sale.
Final Thoughts on the Sale Process
Selling a dental sleep practice comes with its own set of challenges, frustrations, and emotional moments. However, it’s important to remember that it’s a business transaction and not to take things personally (as difficult as that was).
Gratitude: Many people were involved in building a viable and thriving dental sleep practice. I am deeply thankful for my incredible team, supportive colleagues, and family, especially my wife, Annette, who helped me achieve this success. The sale was completed with the help of a fantastic broker, attorney, and buyer, and I believe the legacy of my dental sleep practice will continue to thrive.
Photography by Briggitte Pascual
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