For doctors contemplating the sale of their dental practice, it is often enticing to try to sell the practice on their own - also know as FSBO (For Sale By Owner). The transaction may seem simple enough — it should be quick and easy, and it should save a few bucks because you don't have to pay a broker's commission. That's smart, right? Not necessarily. In fact, it may be the worst mistake you ever make.
Please examine a few of the reasons why you should use a broker in the sale of your practice, and you will see why retaining a broker will actually make you money.
1. IT’S PRICED RIGHT. A qualified broker has the unique ability to properly value your practice for sale. You may underestimate the value of your practice, and therefore sell it for less than the “fair market value.”
2. DON”T MESS IT UP. the sale of your practice entails one of the largest business transactions of your life. Your practice represents your life’s work and possibly a substantial asset in your net worth. Do NOT risk the disaster of doing it on your own or piecing it together by using inexperienced or disreputable individuals. The best brokers have been involved with hundreds of transactions; they have the unique ability to act in your best interest while keeping the deal intact.
3. TAX SAVINGS. A good broker can net you 10% to 20% in tax savings. A seasoned broker will be able to identify and implement strategies in which you can significantly reduse your taxes. Naturally, this will increasethe net proceeds to you.
4. CREATING DEMAND. An effective broker has the ability to cultivate a large pool of qualified buyers and get these buyers truly interested in the practice. The most effective brokers use current marketing tools that are either simply unavailable or economically infeasible to most selling doctors. Nothing has value without demand. An effective broker will create “demand” for the practice, and hence increase its value.
5. “CLOSING THE DEAL.” Recently we sold two practices for doctors who had been attempting to sell them on their own for several years. Although the doctors had very fine practices, they had been unable to successfully sell their practices by themselves. They both complained about the time commitment and “too many tire kickers.” Unfortunately for them, when a qualified buyer came along, the doctors dd not know the methodology or techniques in which to put the transaction together. The result was months of frustration. An experienced broker knows how to do the right things at the right time,which produces a favorable result for everyone.
6. TIME IS MONEY. It may appear that a practice transition is anything but time consuming. You may think, “Selling my practice is just like selling a home.” This is a common myth in the practice transition world. The sale of a dental practice is significantly more complicated than the sale of a house. Our organization may spend over 100 hours and substantial resources on a simple practice transition. Taxes, legal documents, leases, insurance contracts, accounts receivable, patient relationships, ongoing business operations, staff issues, and bank financing are only a few of the many details that must be addressed for an effective transition. To be able to successfully put these factors together in a smooth practice transition takes the experience and time consuming hard work necessary to get the job done right.
Although it may be very tempting for you to sell or transition your practice in order to avoid a broker’s commission, if you analyze how much value is added by the best brokers, a broker’s value will far exceed the compensation paid.
If you are considering the sale of all or part of your practice, do yourself a favor and retain a good broker — it will actually make you money!