Selling Your Practice Someday? What To Fix Five Years Out

How to make your practice sellable: the moves buyers reward — and the ones they punish

There’s a difference between a practice that’s valuable and a practice that’s sellable, and plenty of owners discover it at the worst possible moment. A practice can collect $2 million a year and still find no buyer — because sellability isn’t about how much comes in. It’s about what a buyer, with a buyer’s debt, can take home.

Chris Webb, Founder and Broker of Harvest Transitions, the Michigan practice-transitions firm, after starting his career in commercial healthcare real estate — which is how our paths first crossed. When he joined Nick on the Dentelligentsia podcast, he laid out what actually moves a sale. Consider this the checklist, sorted into what buyers reward and what they punish.

Punished: overhead a buyer can’t live on

Webb’s starkest example: “You can have a $2 million practice in Grand Rapids that you’d think would sell in a week. But if the overhead is so high there’s not enough income to cover the debt service on the loan, you’re never going to sell that practice.” He’s seen overhead at 80 to 85 percent of collections — sometimes with long-tenured staff out-earning the late-career owner, who shrugs because he no longer needs the income. The buyer needs the income. A buyer carrying half a million in student debt who would lose money owning your practice is not a buyer, at any reasonable price.

The reward move isn’t slashing pay on your way out — that torches goodwill. It’s steady control over years: watch the numbers, renegotiate fees with the insurers who will negotiate, and deputize your trusted supply rep to hold supplies to a set percentage of collections.

Punished: deferred maintenance — in the practice, not just the building

Webb’s real estate background gave him the right term for what buyers see in a dated office: deferred maintenance. The current must-haves from his deals: digital X-rays (film — and for many buyers, even phosphor plates — reads as a project), computers in every operatory, digital charts. The principle behind the list: “Every item that a buyer sees that they want to replace, they’re mentally knocking down the price of the practice.”

The timing is the trap. Upgrade five to eight years out and you get years of production from the equipment plus a practice that shows well. Panic-spend six figures modernizing in the final year and the investment rarely comes back at closing. Time in service is what converts upgrades into value.

Rewarded: a practice that pays real rent

The most overlooked move on Webb’s list is one only building owners can make: “If you own the real estate, pay yourself market rent. I get pushback from CPAs because financially it doesn’t make a difference — but the optics make a huge difference when a buyer looks at the cash flow.” A practice that has been paying genuine market rent presents cash flow with the real estate cost already in it — no surprise hole when the buyer’s own rent or building debt service starts. Market rate cuts both ways: inflate it and the practice looks weaker than it is; underpay and the cash flow lies in your favor until diligence finds it.

Punished: a price the bank won’t finance

Know which pricing language your buyer speaks. EBITDA and multiples are corporate-DSO vocabulary; private-doctor sales run on a percentage of collections, and the ceiling is set by what a bank will finance. Push the price past what the lending envelope can hold — practice, working capital, and any real estate down payment — and, in Webb’s blunt phrase, past 100 percent of collections “you’ve made your practice unfinanceable.” An unfinanceable practice isn’t expensive. It’s unsellable.

Rewarded: a seller who doesn’t need the deal

The meta-move underneath everything: arrive at the sale ready, not required. “If you’re 100 percent reliant on selling the practice for your retirement, you’ve put yourself in a tough spot. It’s like car salesmen — you can feel desperation, and it’s very off-putting.” Decades of financial planning are what let you decline a weak offer — and buyers can tell.

Hear the full conversation with Chris Webb, Founder and Broker of Harvest Transitions, on the Dentelligentsia podcast — the staff handoff done right, the patient-letter disaster that became his best standard procedure, and the Northern Michigan sale that ended with the buyer becoming his family’s dentist.

And the building side of your exit — the lease a buyer can assume, the market-rent question, the real estate sold or kept as income — is the half we handle. Talk to us. Tenants and buyers only.

For more on our interview with Chris Webb, check out our article, “Selling Your Practice Someday? What To Fix Five Years Out — And What Buyers Actually Check.”

And follow Chris Webb on Linked In or check out the Harvest Transitions website.