Success is Where Preparation & Opportunity Meet
Preparation time is rarely time wasted. At a low level, I am sure we have all had situations where we have left the house ill-prepared to realise that a coat or gloves would have been a good idea through to a whole day spent on fine tuning a presentation – a world-class 60 minute presentation will take hours of preparation time.
Excellent preparation can make a small difference yet have staggering results. In the 2004 Olympics the men’s 800m final was won by 0.71 seconds.
So, if you are contemplating selling your practice the gains to be had from being well prepared are significant. The preparation will be a combination of ensuring your practice is fit for sale (many aren’t) and personal planning – e.g. what will you do post sale?
A critical part of your preparation is choosing the right sales agent. The start point for many when selecting an agent is to look for the agent with the lowest fee. With some agents offering to ‘sell your practice for free’ this would appear to be a great deal, or is it? This is based on a real-life example.
Agent A valued a practice for £1,100,000 and sold it for this price with no commission payable by the seller. So the seller (would have) received £1,100,000 in their bank account.
Agent B stepped in and valued the same practice for £1,250,000 and achieved a sale price of £1,400,000. For this remarkable difference the seller paid £30,000. The seller actually received £1,370,000 in their bank account.
The difference is staggering; life changing. When choosing an agent you need to ensure that they are serving you, and solely you in the transaction. Where the buyer is paying the agent (which, by the way, is how you get it for free) there is a conflict of interest and based on the example above this nearly cost a seller £370,000.
Vendors are increasingly looking to pay agents directly so they are confident that they are solely working in their interest. Equally, buyers are becoming reluctant to pay agents fee and adding this amount to their offer price for the practice – this is now becoming common practice among larger dental corporates.
There are other considerations too when choosing the right agent. Many agents have a lengthy lock-in period which would prevent you from marketing your practice with another agent if they fail to find you a buyer. Some have a two year lock-in period which means you are due to pay a fee if you sell (to anyone) over the next two years.
You also want to choose an agent that is busy and regularly are marketing new practices for sale, this means they have a good feel for the market and will get you a good price.
An active agent should also have a healthy supply of enthusiastic buyers and ask how many they have looking for a practice like yours.
Also ask for relevant comparable sales to give you confidence that they have the experience needed to help you achieve your goal.
Spending time choosing your agent is a critical part of preparing for your sale and done in good time will provide you with access to a valuable resource to maximise your value.