selling a dental practice

FREQUENTLY ASKED QUESTIONS

How do brokers usually get remunerated?


Dental brokers are typically paid on a percentage of the sale price. Once the transaction is completed, the commission is paid to the broker. Brokerage fees can vary depending on the type of practice (general vs. specialty), the area (city vs. rural) and the size of the practice (number of operatories). Fees vary between 8-12 % of the sale price.




How do we determine the asking price of a dental practice for sale?


The only way to properly price a dental practice is to obtain a dental appraisal by a certified specialist. At Intermedd, our team of specialists that work on appraisals have extensive knowledge in the dental industry and have backgrounds in accounting and tax law.




Why does a Purchaser or Seller need to sign a confidentiality agreement?


We require all our clients to sign confidentiality agreements, whether they are considering selling or purchasing. This ensures that all our clients’ confidential information is protected and that they benefit from the discretion that is required to ensure a relationship built on trust and professionalism.




Do you advertise my practice?


We do not advertise specific practices on our site, unless the seller requires it. Most of our clients appreciate discretion, they do not wish for staff or the wider community to be aware of them selling their business. As such, to access our listings, you will need to start by booking a consultation with one of our advisors.




Once I have a signed accepted offer on my dental clinic, how long does it take to finalize the legal paperwork?


The legal work required to finalize a dental practice purchase and sale transaction typically takes less than 90 days to carry out, depending on the responsiveness of third parties such as the Bank, the parties’ accountants or the landlord in cases where a lease needs to be assigned.




What are the main legal steps when selling a practice?


The main legal steps of a dental practice purchase and sale transaction are the following: Letter of Intent, Offer to Purchase, Due Diligence, Bank Financing, Share or Asset Purchase Agreement, Closing, Transition.

By choosing Intermedd, you will have the benefit to retain corporate and tax lawyers from Meditax Consulting Inc., our affiliated law firm. Entrusting your entire transaction to a single team of experts will thus eliminate the need for other intermediaries and cut down the time and other resources required to finalize your transaction.




What is Due Diligence and what is its purpose?


“Due Diligence” can be defined as “establishing the assets and the liabilities of the dental practice and obtaining all contracts to assess the risk factor for the purchaser”. Its purpose is comparable to that of a house inspection. Since each industry has its own pitfalls, it is thus recommended to work with an industry expert to properly assess the risks of purchasing the dental practice you intend on buying.




Why should I get a dental practice appraisal?


There are more purposes to valuating your dental practice then assessing the purchase price of your clinic when deciding to sell. Other reasons to have your dental appraised include:

  • Allowing purchasers to secure financing from financial institutions to pay for the dental practice;

  • Outside of a purchase and sale transaction, a dentist may wish to transfer assets from his or her sole proprietorship to his or her dental corporation at their Fair Market Value (FMV), thus benefitting from the rollover exception for tax purposes;

  • In the Family Law context, valuating assets and/or shares is often required so that the accurate values may be submitted in various situations;

  • Appraisals are also useful for properly documenting the purchase and sale transaction because they will provide a readily available list of assets found at the dental practice.




If I want to sell my dental practice, should I incorporate before selling?


Selling a dental practice, whether it is an asset transaction or share transaction (see the question What is the difference between selling assets versus shares for further explanation on the difference) has tax consequences usually borne by the Seller. Like selling a house, certain capital gains may increase your personal taxable income. By choosing Intermedd, our team of tax experts and corporate lawyers from Meditax Consulting Inc. can assist you in incorporating before selling in order to benefit from certain tax exemptions such as the Capital Gain Exemption (CGE).




What is the difference between selling assets versus shares?


An asset transaction differs from a share transaction in a few ways. In an asset transaction, the Seller is selling the dental practice’s assets (equipment, inventory, goodwill, etc.). In a share transaction, the Seller is parting with his or her shares in the dental corporation. In the former situation, the Purchaser does not inherit the past liabilities of the dental practice whereas in the latter context, since the Purchaser is effectively buying the legal entity of the Seller, the Purchaser will incur the liabilities of that dental corporation. From a tax standpoint, both sales taxes and the income tax payable from the profit on the Purchase Price are usually borne by the Seller in an asset transaction.





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