Thinking About Selling Your Dental Practice?Make Sure It's Ready to Sell.
Before you put your practice on the market, find out what could affect your selling price, your taxes, your buyer's financing and your ability to complete the transaction.
You've spent years building your dental practice. When the time comes to sell, you want to obtain the best possible price, protect the value you've created and make the transition on your terms.
But a successful sale involves more than finding a buyer who is willing to pay your asking price.
At Meditax, I help dentists review their practice before selling, so they can understand what needs attention, identify opportunities to improve its attractiveness and prepare for a smoother transaction.
The objective is to put you in the strongest possible position before a buyer begins evaluating your practice.
Request a Pre-Sale Practice Review →Your corporate structure, tax position, commercial lease, financial performance, equipment, staffing and transition plans can all influence the outcome.
Some issues can reduce the price a buyer is prepared to offer. Others can make financing more difficult or delay the transaction. Certain problems may even prevent a sale from proceeding as planned.
The good news is that many of these issues can be identified—and sometimes addressed—before the selling process begins.
The Best Time to Address a Problem Is Before a Buyer Finds It.
When a dentist decides to sell, the natural instinct is to focus on the asking price and finding a purchaser.
But buyers and their lenders look beyond the practice's revenue. They examine the financial results, equipment, patient base, commercial lease, operating expenses, staffing and the risks involved in taking over the business. They also consider whether the practice can continue operating successfully after the selling dentist leaves.
If significant concerns emerge during the buyer's review, the consequences can include:
A pre-sale review allows you to identify potential obstacles while you still have time to consider your options.
The review helps you answer five important questions.
Is my practice ready to sell?
Are there legal, commercial or operational issues that should be addressed first?
Can I sell tax-free?
Does my current corporate and tax situation allow me to benefit from the available capital gains exemption, and is advance planning required?
What could improve my selling price?
Are there realistic opportunities to strengthen profitability, operations or buyer appeal?
Will a buyer be able to finance the purchase?
Could the lease, financial performance or other factors create concerns for lenders?
Am I ready for the transition?
What needs to happen before, during and after the sale to support continuity?
A pre-sale review isn't about finding reasons not to sell. It's about understanding what needs to be done before you do.
The Price You Sell For Matters.What You Keep Matters More.
One of the most important aspects of preparing a dental practice for sale is understanding the potential tax consequences.
In certain circumstances, a dentist selling shares of a professional corporation may qualify for the Lifetime Capital Gains Exemption, potentially reducing or eliminating the capital gains tax payable on an eligible share sale.
But eligibility is not automatic. It depends on the applicable tax rules, the corporation's assets and activities, its history, the ownership structure and other requirements. And the way your practice is currently structured may affect your options.
The exemption applies to a sale of shares by an individual, not to a sale of the practice's assets by the corporation.
The corporation's assets must meet tests set out in the Income Tax Act (section 110.6), not only on closing day but also during the two years before the sale:
For example, if the corporation has accumulated excess cash or investments, it may need to be "purified" well before the sale.
How is your dental practice owned? Do you operate through a professional corporation? Are other corporations, shareholders or trusts involved?
Does your situation appear to meet the relevant requirements, or are there issues that need further analysis?
Are there investments, excess cash or other assets that may affect the corporation's qualification for favourable tax treatment?
Could advance planning or a corporate reorganization be appropriate? Are there timing requirements that need to be considered?
How could a share sale or asset sale affect your tax position and the buyer's acquisition?
The objective is to understand your tax position early enough to consider the available planning opportunities—not to discover an avoidable problem when a buyer is ready to sign.
Selling tax-free is a potential outcome for eligible transactions, not a guarantee. Any planning must comply with the applicable tax rules and be assessed in light of your circumstances.
A Buyer Isn't Only Purchasing Your Past Performance.They're Evaluating the Business They'll Take Over.
A practice's historical revenue matters, but it doesn't tell the entire story. Buyers want to understand whether the practice is profitable, how efficiently it operates and whether its results can be maintained after the sale. They also look at the investment required to continue operating or develop the business.
The marketability of a dental practice also depends on more than its appraised value. Buyers consider whether the clinic fits their professional objectives, clinical skills, financial situation and plans for the future. Certain characteristics can make a practice attractive to a wider group of purchasers. Others may narrow the pool of interested buyers.
A pre-sale review can reveal opportunities to make the practice more attractive before it is presented to potential purchasers.
Profitability and operating expenses
Are expenses reasonable in relation to the practice's activity? Are there inefficiencies that could be addressed?
Clinical capacity and hygiene
Does the clinic have enough operatories for the type of practice buyers want to run? Are the available operatories and hygiene schedules being used effectively?
Staffing and continuity
Is the team stable? Are there staffing gaps or operational dependencies that could concern a purchaser? Can a buyer reasonably maintain the practice's activity with the existing team?
Equipment, premises and technology
Are there aging chairs, outdated systems, renovations or other investments a buyer would need to make soon after closing? Does the practice use digital radiography, electronic records and other systems buyers expect?
Patients, services and location
Do the patient population, language profile and treatment mix suit prospective purchasers? Could recall activity or the range of services improve? Does the location offer advantages for continuity, accessibility or growth?
Financial information and documentation
Are the records sufficiently organized and clear for an appraiser, buyer, accountant or lender to evaluate the business?
Not every improvement will justify its cost.
Replacing equipment, renovating the premises or changing operations shortly before selling may not produce a corresponding increase in the sale price.
The goal is to identify improvements that make commercial sense—not to spend money simply to make the practice look better.
Not every characteristic affects the sale the same way.
Some may influence price. Others may affect how many buyers are interested, how quickly the practice sells or how easily the acquisition can be financed.
Understanding the type of buyer your practice is likely to attract helps you prepare a more realistic selling strategy.
Your Lease Could Become Your Buyer's Financing Problem.
A dental practice can be profitable, well equipped and attractive to purchasers—and still face serious difficulties because of its commercial lease.
For a buyer, the ability to remain in the premises is often essential to the value of the acquisition. For a lender, uncertainty surrounding the lease can raise concerns about the security and continuity of the business being financed.
A buyer may be enthusiastic about your practice but unable to obtain satisfactory financing if the lease doesn't provide sufficient certainty of occupancy. And when lease problems are discovered late in the process, the seller may have limited negotiating leverage.
Reviewing the lease before selling creates an opportunity to identify concerns, explore solutions and avoid preventable delays.
Not every lease issue can be resolved in advance, particularly when landlord cooperation is required. But understanding the risks early is a significant advantage.
- How much time remains on the lease?
- Are there clear and enforceable renewal options?
- Can the lease be assigned to a purchaser, and is the landlord's consent required?
- Could the landlord impose new conditions or costs?
- Are there significant rent increases or additional occupancy expenses?
- Are there relocation, demolition or redevelopment provisions?
- Are there restrictions that could affect the purchaser's intended use of the premises?
The lease, covered above, is often the first thing a lender looks at.
Finding a Buyer Is One Thing.Getting the Transaction Financed Is Another.
A buyer's willingness to purchase your practice doesn't mean their financial institution will automatically approve the acquisition.
Lenders may examine the appraisal, financial statements, commercial lease, equipment, operational stability and the purchaser's financial position. Some of these factors are outside the seller's control. Others can be anticipated through advance preparation.
A pre-sale review helps identify these concerns before they become obstacles in negotiations. This may allow you to gather missing documents, consider appropriate changes or prepare a more realistic transaction strategy.
The objective is to present a practice that buyers can evaluate clearly and that lenders can assess with fewer avoidable uncertainties.
Financing approval remains subject to each lender's requirements and the purchaser's circumstances.
Selling Your Practice Doesn't End With Signing the Agreement.
For many dentists, selling a practice also means preparing for a major professional and personal transition. You may be planning to retire, reduce your clinical hours, continue working for a period after the sale or move into another professional arrangement.
Those decisions can influence the transaction itself. Buyers may want the selling dentist to remain temporarily to support continuity, introduce the new owner to patients or help with the transition of the team. But the arrangement must also make sense for you.
When would you ideally like to sell? Is there flexibility in your retirement or departure date?
Would you be willing to continue practising for a transition period? If so, for how long and under what conditions?
How will the change in ownership be communicated and managed?
Do you intend to retire completely, work elsewhere or continue practising on a reduced schedule?
How does the timing and structure of the sale fit into your broader financial plans?
A well-planned transition should protect the continuity of the practice without overlooking the seller's own objectives.
Ideally, Before You're Ready to Sell.
Some issues can be addressed relatively quickly. Others—particularly those involving corporate restructuring, tax eligibility, lease negotiations or operational changes—may require significant advance planning.
That's why the best time to review your practice is often before you've decided on a specific selling date.
Even if you're planning to sell soon, identifying the most important issues can help you decide what needs immediate attention.
The earlier you prepare, the more options you may have.
- You're considering retirement within the next few years.
- You want to know whether your practice is ready to sell.
- You're concerned about qualifying for the Lifetime Capital Gains Exemption.
- Your commercial lease is approaching renewal.
- You're considering renovations or equipment investments before selling.
- You want to improve profitability or buyer appeal.
- You already have a potential purchaser but haven't finalized the transaction.
Understand Where You Stand Before You Start Selling.
The Pre-Sale Practice Review is designed to give you a focused assessment of your practice's readiness for sale and identify the matters that deserve attention.
Request Your Review
Contact me and tell me a little about your practice, your anticipated selling timeline and what you would like to accomplish.
We'll discuss the appropriate scope of the review and the applicable professional fees before proceeding.
Scope confirmed firstSend Me the Available Documents
Depending on your situation, I may ask for your corporate structure, recent financial statements, commercial lease, existing appraisal report and other relevant information.
You don't need to have every document prepared before making the initial inquiry.
I Review Your Situation
I examine the available information with particular attention to:
- Your corporate and tax position
- Capital gains exemption considerations
- Financial performance and opportunities
- Lease-related and other transaction risks
- Buyer appeal and financing concerns
- Your timeline and transition objectives
I identify the issues that may warrant additional planning, documentation or specialist review.
We Discuss the Findings Together
We schedule a meeting by Microsoft Teams or telephone to discuss the strengths of your practice, potential obstacles to a sale, opportunities worth considering and the steps that may help you prepare.
Together, we'll distinguish between matters that should be addressed before selling and those that can be managed during the transaction.
Teams or telephoneEstablish Your Next Steps
Depending on the findings, the next step may involve tax planning, corporate restructuring, lease review, operational improvements, a professional appraisal or preparation for a private sale.
If you're ready to proceed, Meditax can also assist with the sale itself, whether you already have a buyer or need help finding one.
The scope and the applicable hourly rate are confirmed with you before any work begins.
Billed according to the professional time required and the scope of the work.
The time involved depends on the complexity of your corporate structure, the documents available, the issues identified and the level of analysis needed. A straightforward preliminary review may require less work than a file involving multiple corporations, tax-planning concerns or significant lease issues.
Before beginning, I'll explain the proposed scope and applicable hourly rate.
If the review identifies a need for more extensive legal or tax planning, specialist assessments or additional transaction work, those services can be discussed separately.
Request a Pre-Sale Practice Review →You're Thinking About Selling.You Want to Know What to Do First.
The Pre-Sale Practice Review is intended for dental practice owners who want to prepare before entering the selling process.
- You may be several years away from retirement and wondering what you should be doing now.
- You may be considering a sale within the next year and want to identify anything that could interfere with the transaction.
- You may have received an unsolicited offer and want to understand whether your practice and corporate structure are ready.
- Or you may be concerned that your lease, tax situation or operational performance could affect your ability to sell.
You don't necessarily need a buyer today.You need to know whether your practice is ready for one.
FAQ
How far in advance should I review my practice before selling?
Ideally, as early as possible. Certain tax, corporate and lease-related issues may require advance planning. A review can also be useful when a sale is approaching, although the options available may be more limited.
Can you tell me whether I'll be able to sell tax-free?
I can review your corporate and tax situation to identify potential eligibility for the Lifetime Capital Gains Exemption and issues that may require further planning. Eligibility depends on the applicable rules and your specific circumstances, so a tax-free sale cannot be guaranteed.
Do I need an appraisal before requesting a pre-sale review?
Not necessarily. The review can help identify whether an appraisal should be obtained or updated. A formal dental practice appraisal is a separate service involving an appropriate valuation mandate.
Will the review tell me what my practice is worth?
The review can identify factors that influence value and marketability, but it is not a substitute for a formal appraisal. If you need an opinion of fair market value, Meditax can coordinate a professional dental practice evaluation.
Can you help me decide whether to renovate or replace equipment before selling?
Yes. We can consider whether proposed investments are likely to improve the practice's attractiveness or address concerns that buyers may raise. Not every investment will be recovered through a higher selling price.
What if my commercial lease is a problem?
We'll examine the available lease provisions and identify concerns that could affect the sale or a buyer's financing. Depending on the circumstances, it may be appropriate to explore renewal, amendment or assignment issues with the landlord. A solution cannot be guaranteed.
Can you help me plan my retirement or transition after selling?
We can discuss how your intended departure date, possible continued clinical involvement and other transition objectives may affect the sale. Personal financial or investment planning may require coordination with your other professional advisers.
I already have a buyer. Is the review still useful?
Yes. Reviewing your corporate structure, tax position, lease and transaction readiness before finalizing an agreement can help identify matters that deserve attention. Meditax can also represent you in the sale.
Can Meditax help me find a buyer after the review?
Yes. Meditax offers a confidential, private dental practice brokerage service. If you decide to sell and do not already have a purchaser, we can discuss the appropriate next steps for identifying potential buyers.
Before You Sell Your Practice, Make Sure You're Ready.
The best sale isn't necessarily the one that happens the fastest.
It's the one you've prepared for—with a clear understanding of your practice's strengths, the risks that could affect the transaction, the tax consequences and the transition you want to achieve.
You may discover that your practice is ready to sell. You may also discover that a few important decisions made today could put you in a stronger position when the right buyer comes along.
Before you focus on finding a buyer, make sure your practice is ready to be bought.
Request a Pre-Sale Practice Review →Tell me about your practice and when you're considering selling. I'll review your inquiry personally and contact you to discuss the appropriate next steps.