So, you have worked for many years and spent many unpaid hours building your practice up to where it is today and now is the time to investigate selling up. Question is, who do you turn to for an unbiased opinion that will also maximise your return and conditions of leaving?
Your Main Associate
Many principals with larger practices initially begin with a picture perfect scenario of selling their practice to an associate, having groomed them over the years and positioned them to take over. We see this many times over so why does it not happen very often?
Firstly, negotiation over price and transitioning out can become stressful whereby the opinions between the principal and associate over the value of the practice vary greatly with no prizes for guessing which way. Naturally, the associate often wishes to buy the practice at a lower than market price given the relationship with you and also the feeling that they have helped grow the practice to where it currently sits. They have been your second in command for a long while and may have an expectation that it is their right to take over once you decide to sell. Many associates are also reluctant to take on the risk, responsibility and finance of such a large outlay and so the negotiations grind to a halt.
An Approach from a Corporate Group
It is no secret that dental groups are feverishly trying to buy up large, profitable practices to add to their portfolio; either to list on the ASX, incorporate into their existing health fund, or grow their own empire. Whilst the shifting sands in the dental industry suggest this is the way to go for many large practices, an approach from, and negotiation with one group alone is certainly not going to maximise your return. They will tell you the story of going on a journey with them as they handle your backend processing and HR management. However they are unlikely to put their ‘best offer’ to you unless some competition can be generated from at least one or two other buyers.
Your accountant can value your practice using various models and come up with a dollar figure of what they believe it is worth. Some accountants can also provide a valuation of your practice, at a not so small cost. However, many accountants have a blinkered view either of corporate groups buying up practices and ultimately, if you do sell either to a group or an individual, are they really providing you with an unbiased and independent opinion, seeing as they will be losing a lucrative client i.e. you, if you do sell up? Even if your accountant ‘specialises’ in the dental industry, their main focus is on accountancy, NOT selling businesses.
A Business Broker
Yes, a broker will charge you for their services, usually on a fee for sale basis. Whilst some principals may be reluctant to venture down this path, a good, qualified, broker should be able to get you a higher price (even taking into account their fees) and better conditions for you to transition out than you could yourself.
A good broker will know which existing groups are in ‘acquisition mode’ which will lead onto higher offers received, will remain independent at all times and act as a negotiator to keep you at arm’s length and maintain a healthy relationship between you and the prospective buyer.
Whilst it may be obvious to state that brokers who specialise in the dental industry will have a better understanding of your environment than those who do not, first check that the broker you select is able to work with all the corporate groups in the industry and has a solid grasp on what they are offering in terms of price, earn out and conditions, as well as what they provide from their side.
Dental Prac Sales is a leading specialist dental brokering company. We provide complimentary practice evaluations to principals looking at selling either now or in the future and will work at the pace you want.
In the ever evolving World of Dentistry, you need someone by your side working with your interests at heart.