What to Know if You Plan to Sell in 2024

Sponsored Content: TUSK Partners

You only get one chance to sell your business – make sure you make a well-informed decision.

By Kevin Cumbus, Founder & President, TUSK Partners

Your dental practice serves as not only your primary source of income but likely your most valuable asset. With patients, team members, and your professional reputation at stake, careful planning is essential as you are effectively swapping cash flow from the business for a lump sum payment of many years of cash flow on which you will only pay long term capital gains at today’s rates.

What is YOUR business worth, TODAY? 

There is no Zillow.com for dental practices. As a result, seeking expert advice becomes crucial. TUSK performs hundreds of practice valuations each year to help owners understand the value of their business. We then provide doctors with a market read of where the value is likely to trend based on previous transactions, current buyer sentiment and general economic trends. Armed with this knowledge, you can confidently make informed decisions about your sale. 

Timing Your Sale Wisely

The right time to sell is when you are ready, and the market value meets your needs. Trying to time the market is fool’s gold because M&A markets, like the stock market, move in cycles. We have recently seen the greatest rise in practice values in the history of M&A. While demand remains strong, increased borrowing costs have made buyers more selective. In 2023 year to date, we have sold practices at an average of 32% over the initial expected valuation range. 

The January Issue

The recurring trend of rushing to close transactions by the end of the year creates a scarcity of deals in the market at the beginning of January, coinciding with high demand from DSOs. The deals that we took to market in Q1 enjoyed a nice premium over deals that we took to market in Q2. If you want to take advantage of this in 2024, you need to be working with us today. We are working with many groups and practice owners prepping them to go to market in January of next year.  

Boogie Man in the Closet

When there is uncertainty in the U.S. economy, CEOs stall decisions, lenders get nervous and capital freezes up. Today, the markets are solid, and capital is flowing. If the Presidency comes down to a few Electoral College votes from swing states at midnight, prepare for a choppy September and October. If Democrats keep the White House, you must assume that they will look to more taxes. Additionally, the lifetime Estate Tax Exemption (currently at $12.9M) is scheduled to sunset on Jan. 1, 2026, and will be cut in half. This could lead to a glut of business for sale in 2025. If the supply of businesses for sale exceeds demand from buyers, you will certainly see a precipitous decline in pricing.  

Where Do You Start? 

In this dynamic environment, it’s essential to take proactive steps. TUSK is here to assist you throughout the process. We offer complimentary practice valuations that provide clarity on your current standing. Make an informed decision and ensure that your dental practice sale is a success. 

For more information visit: www.tusk-partners.com.