Planning to sell a dental practice? Don’t go at it alone.
FACT: A dental practice is typically the doctor’s most valuable and prized possession.
FACT: A dentist will typically sell a dental practice only once during his or her professional career.
Considering these facts, many dentists will make a wise choice and entrust the responsibility of selling their practices to a professional who has the knowledge and experience to facilitate a successful transition … a dental practice broker. In my experience as both a dental lender and practice broker, these dentists typically receive a higher value for their practices, have a more amicable relationship with their buyers following the sale, and experience much less stress and anxiety during the closing process than their counterparts who try the “do it yourself” approach.
Selling a dental practice is not like selling a vehicle… it is a complicated process which extends far beyond simply finding a buyer and closing on the sale. While some practice owners may be able to identify a buyer who is interested in purchasing their practice with little difficulty, getting from that point to the closing table is the most challenging component of a practice sale. Determining the market value of the practice, finding the right buyer, negotiating the purchase price, drafting the asset purchase agreement, formulating the transition plan, negotiating the lease assignment, and obtaining practice financing are just a few of the key areas where a potential practice sale can be derailed and the experience, expertise, and guidance of a practice broker can prove to be invaluable.
Doctors who are preparing to sell a dental practice often ask us what our role in the process will entail. Here are the primary responsibilities of a practice broker:
- Identify and accomplish the seller’s goals for the transition – Every doctor and practice is unique so it is imperative for the practice broker to spend the time to understand the seller’s individual situation and goals and formulate a transition strategy to meet their needs.
- Solely represent the seller’s interest throughout the process – While the practice broker should be focused on putting together a win-win transaction for all parties involved, their responsibility is to solely represent the seller’s best interest during the transition process. Beware of practice brokers who offer “dual representation”, as it is impossible to represent the best interests of both the buyer and seller simultaneously.
- Determine a fair market value for the practice, maximize the value the seller receives at closing, and be able to support and articulate the value to interested buyers and their advisors.
We will explore the remainder of a practice broker’s role in the transition process in Part 2 of this article.