Why You Need a Broker When Selling Your Practice
TIME – Time is money. I’m not sure who came up with that quote, but boy is it right. It’s especially true when selling a practice. We have done studies and found that it takes over 200 hours to sell a practice. We have had several practices that took over 500 hours. This includes doing a valuation, putting together a prospectus, posting ads in various publications, receiving phone calls from prospective buyers, emailing them a non-disclosure agreement, sending them the information on the practice, meeting them at the practice during off-hours, following up with them after the showing, possibly showing it to them a second or third time, helping put together a letter of intent, sitting through due diligence with the buyer for hours, reviewing the purchase agreement, following up again with the buyer, cancelling ads, meeting with staff and finally closing. Hopefully closing. Attorneys and bankers that specialize in dental practice sales have told us that when a broker is not involved with the sale of a practice, the transaction is 50% more likely to fall apart prior to closing.
EXPERTISE – You have to be a jack of all trades to complete a practice sale. A sale involves understanding legal contracts. You have to know how to write and post effective ads for your practice. You must also be able to read buyers and talk about the practice in a positive manner discussing the opportunities in the practice. Understanding numbers in your tax return and profit and loss statements is a must. Buyers and their advisors are always asking detailed questions about the numbers in your tax return and profit and loss statements. Be a good negotiator, from the price to how long you will help with the transition -these are just two of the terms that are negotiated. Other items will come up as well. And, of course, you need to know the practice management system, what the reports are saying and how to interpret them. A good broker will have some level of expertise in all of these areas.
MEDIATOR – Quite often there will be a dispute that arises. It may be taking over an advertising contract, working back as an associate, or the final price of the practice. On occasion, the dispute may get heated and the buyer will get upset with the seller or vice versa. The broker acts as a buffer in maintaining the peace and diffuse the dispute. Often the broker will keep things under wraps and dissolve the dispute before it becomes a dispute. This can save the transaction from falling apart.
TRANSACTION ENGINEER – Everyone involved in practice transitions, from the brokers to the bankers, CPAs, and attorneys will tell you that getting the buyer and seller to harmoniously cross the closing finish line is a difficult task. The broker keeps everyone on task. The broker ensures the buyer gets approved by a bank, hires the right dental attorney and CPA. If something is needed, whether for the buyer or seller, the broker is there to get it done.
Let us be the time-saver, the expert, the mediator, and the transaction engineer so that the sale of your practice is a success. Contact us today to schedule a no-cost, no-obligation planning meeting.