Thinking About Selling? Your Exit Plan Is Likely Wrong.

You're thinking about selling. Everyone is. The market is flooded with advisors selling exit planning. Most are worthless. Here's what actually matters.

The reality: Exit planning has four real levers: reducing owner dependency, professionalizing operations, proving consistent profit, and having a defensible payor mix. Everything else is noise. Your broker wants you to think "branding" and "patient satisfaction" are key. They're hygiene factors. Not value drivers.

What drives price: General practices sell for 65-80 percent of annual collections, or 2-3 times adjusted EBITDA. That multiple depends entirely on four things. One: a manager who can run the practice without you. Two: a hygiene program with multiple hygienists and solid recall. Three: a diverse payor mix with at least 40 percent PPO or fee-for-service. Four: a long-term lease with 5+ years remaining.

The painful truth: If you're highly operationally involved, your practice is worth less. If your hygiene book is thin, you're worth less. If you're 80 percent Delta, you're worth less. Most practices nail one of these. Great practices nail three. Exceptional practices get all four.

OPERATOR MATH

Your practice does $1.8M in annual collections. You want to sell in 3 years. Current valuation estimate: 70% of collections = $1.26M.

Current state audit:
Owner dependency: High. You're the only producer. No associates. Value penalty: -10%.
Hygiene program: One hygienist, shaky recall. Value penalty: -5%.
Payor mix: 65% Delta PPO, 35% other. Value penalty: -10%.
Lease: 2 years remaining. Value penalty: -5%.

Adjusted valuation: $1.26M × 0.70 (penalties applied) = $882,000.

Now model the fix:

Year 1: Hire an associate. Production split: you $1.2M, associate $400K. Total: $1.6M. Cost: $140K associate comp. Net owner income: same, but now transferable.
Year 2: Add second hygienist. Hygiene production up 30% = $180K additional. Cost: $75K comp. Net gain: $105K.
Year 3: Renegotiate Delta contract or shift 10% of patients to FFS. Payor mix improves to 55% Delta, 45% other. Renew lease for 7 years.

Year 3 valuation recalculation:
Collections: $1.8M (maintained with associate growth).
No owner dependency penalty: +10% = $180K.
Strong hygiene program: +5% = $90K.
Improved payor mix: +5% = $90K.
Long-term lease: +5% = $90K.
New valuation: $1.8M × 0.95 = $1.71M.

Value created: $1.71M - $882K = $828,000 in 3 years.

THE TAKEAWAY

Don't hire a broker yet. Audit your practice against the four value levers: owner dependency, hygiene strength, payor mix, lease term. Score yourself honestly on each.

Fix the biggest gap first. If you're 100% of production, hire an associate this year. If your hygiene is weak, recruit a second hygienist and implement a 6-month recall system. If your payor mix is terrible, start shifting patients to better plans or FFS over 18-24 months.

Track progress quarterly. Measure: associate production, hygiene production, payor mix percentages, lease renewal status. These are the only numbers a buyer cares about.

When you're ready to sell, get 3 valuations from different brokers. Average them. Negotiate from there. Don't accept the first offer. The market for profitable, transferable practices is strong.