If you are ready to sell your practice – or even if you just want to discuss the possibility – schedule a time to talk with one of our practice transition professionals.
When you’re ready to move forward, they will provide you with a listing agreement that allows us to get to work selling your practice. This agreement sets some of the basic information, including the commission amount and the length of time we have to sell your practice.
The terms in our agreement are fairly standard. One question many dentists have is about our ‘tail’ agreement. This says that if any buyers that we introduce to your practice end up purchasing your practice up to 24 months after our listing expires, we are still owed commission on that deal. We didn’t have this tail in the past, and unfortunately we had two unscrupulous sellers who let us do the work setting a solid listing price, preparing their documentation for review, marketing their practice, and finding the perfect buyer – only for these sellers to purposefully let our listing expire before moving forward with the buyers we procured. Since we added the tail agreement, this has not been an issue.
When a buyer is sufficiently interested in your practice, they will submit an offer (Letter of Intent) in writing. This offer will have one or more contingencies. Usually, the contingencies concern a detailed review of your financial records, a review and re-negotiation of your lease arrangements (if applicable), and financing considerations. You may accept the terms of the offer or you may make a counter-proposal. At first review, you may not be pleased with a particular offer; however, it is important to look at it carefully. It may be lacking in some areas, but it might also have some pluses to seriously consider.
Once you and the buyer are in agreement, both of you should work to satisfy and remove the contingencies in the offer. It is important that you cooperate fully in this process. You don’t want the buyer to think that you are dragging your feet or trying to hide anything. The buyer may, at this point, bring in outside advisors to help them review the information. When all the conditions have been met, final papers will be drawn and signed. Once the closing has been completed, money will be distributed, and the new owner will take possession of the practice.
A buyer will want up-to-date financial information. We can work directly with your accountant to help you collect current information. When you choose an attorney, it is always better to work with a dental specific attorney who specializes in practice transitions. You might also ask if their schedule will allow them to participate in the closing on very short notice. Time is of the essence in any business sale transaction. The failure to close on schedule permits the buyer to reconsider or make changes in the original proposal.
Business brokers are the professionals who will facilitate the successful sale of your business. It is important that you understand just what a professional business broker can do — as well as what they can’t. They can help you decide how to price your practice and how to structure the sale so that it makes sense for everyone — both you and the buyer. They can find the right buyer for your business, identify potential problem areas before they become problems, work with you and the buyer in negotiating, and help along every step of the way until the transaction is successfully closed.
On the other hand, a business broker is not a magician who can sell an overpriced business (as much as we’d like to be!). Most businesses are saleable only if priced and structured properly. You should understand that only the marketplace can eventually determine the price at which any business will sell. With that said, as professional dental practice brokers, we are experts at navigating the market to find you the right buyer at the highest value.
It generally takes, on average, between five to eight months to sell most practices. Keep in mind that an average is just that – an average. Some practices will take longer to sell (especially those in rural areas), while others will sell in a shorter period of time. We regularly have signed offers less than a week after the seller signs our listing agreement. The sooner you have all the information needed to begin the marketing process, the shorter the time period should be. It is also important that the business be priced properly right from the start. Some sellers, operating under the premise that they can always come down in price, overprice their business. This theory often “backfires,” because buyers often will refuse to look at an overpriced business. It has been shown that the amount of the down payment may be the key ingredient to a quick sale. The lower the down payment, generally 40 percent of the asking price or less, the shorter the time to a successful sale. A reasonable down payment also tells a potential buyer that the seller has confidence in the business’s ability to make the payments.