It is always advisable to have an attorney review the legal documents in a transition. It is important, however, that the attorney you hire is familiar with the dental practice buying process and has the time available to handle the paperwork on a timely basis. If the attorney does not have experience in handling dental practice sales, you will end up paying for the attorney’s education and slow the process down tremendously.
You wouldn’t let a podiatrist do a root canal, even though they are both doctors. In the same way, just because your best friend/cousin/uncle is an attorney does not mean that they are the right attorney for your transition. At IPS, we have a great list of trusted attorneys who specialize in the practice transition process. An experienced attorney can be of real assistance in making sure that all of the details are handled properly. Business brokers are not qualified to give legal advice.
However, keep in mind that many attorneys are not qualified to give business advice. Your attorney will be, and should be, looking after your interests; however, you need to remember that the seller’s interests must also be considered. If the attorney goes too far in trying to protect your interests, the seller’s attorney will instruct his or her client not to proceed. The transaction must be fair for all parties. The attorney works for you, and you must have a say in how everything is done.
You have to make the final decision; that “leap of faith” between looking and actually being in private practice for yourself is a decision that only you can make!
A professional practice broker can be helpful in many ways. They can provide you with a selection of different and unique practices, including many that you would not be able to find on your own (including a number of ‘pocket listings’ that are not advertised anywhere).
Brokers are also an excellent source of information about dental practices and the practice buying process. They are familiar with the market and can advise you about trends, pricing, and what is happening locally. Your practice broker will handle all of the details of the business sale and will do everything possible to guide you in the right direction, including, if necessary, consulting other professionals who may be able to assist you.
When you find a practice, the practice broker will be able to answer many of your questions immediately or will research them for you. Once you get your preliminary questions answered, the typical next step is for the broker to prepare an offer based on the price and terms you feel are appropriate. This offer will generally be subject to your approval of the actual books and records supporting the figures that have been supplied to you. The main purpose of the offer is to see if the seller is willing to accept the price and terms you offered.
There isn’t much point in continuing if you and the seller can’t get together on price and terms. The offer is then presented to the seller who can approve it, reject it, or counter it with his or her own offer. You, obviously, have the decision of accepting the counter proposal from the seller or rejecting it and going on to consider other businesses.
If you and the seller agree on the price and terms, the next step is for you to do your “due diligence.” The burden is on you – the buyer – no one else. You may choose to bring in other outside advisors or to do it on your own – the choice is yours. Once you have checked and approved those areas of concern, the closing documents can be prepared, and your purchase of the business can be successfully closed. You will now join many others who, like you, have chosen to enjoy the flexibility, autonomy, and financial rewards of private practice!
Obviously, you want to consider only those practices that you would feel comfortable owning and operating. “Pride of Ownership” is an important ingredient for success. The practice you purchase also must be able to supply you with enough income – after making payments on it – to pay your bills and life comfortably. However, you should look at a practice with an eye toward what you can do with it – how you can improve it and make it more productive and profitable.
There are many opportunities in dentistry to purchase practices you may not have initially considered. More rural practices can afford the buyer a higher standard of living. Larger practices can instantly and dramatically increase your income. A quality practice broker will listen to what you want and help you creatively find the best solution for your life and your family.
Generally, at the outset, a prospective seller will ask the practice broker what he or she thinks the business will sell for. The broker usually explains that a review of the financial information will be necessary before a price, or a range of prices, can be suggested for the business.
Most sellers have some idea about what they feel their business should sell for – and this is certainly taken into consideration. However, the business broker is familiar with market considerations and, by reviewing the financial records of the business, can make a recommendation of what he or she feels the market will dictate. A range is normally set with a low and high price.
Within this range, the seller and broker will set a listing price. This price should account for all the different factors that go into a valuation and provide a potential buyer with a reward (income) commensurate with the level of risk (practice price) that they take on.