10 Things You Need to Know Before Managing Your Own Dental Practice Sale
People talk a lot about hindsight but so often this is like being told what the weather was like yesterday – it’s too late!
Hindsight is fabulous when you are likely to repeat an action or process as you then get the benefit of implementing the change or improvement. However, if you are only going to get one shot at it then it makes sense to be prepared as best you can.
So here’s a valuable insight from those who have gone before and managed their own dental practice sale. The things that no one tells you before you start on this journey.
Managing your own dental practice sale
- Setting the right price is easier said than done. From large corporates, to multiple practice owners and first time buyers they will all have an opinion on what your practice is worth. However, as the prospective buyer they have a vested interest in being conservative in their own valuation. They will tell you tales (this is polite as it is really utter rubbish) that the demand for practices is weak and the banks aren’t lending to dentists to buy practices. This doesn’t seem to be the experience of FTA Finance who raised over £140m for dentists to buy practices in the last year.
- Restrict the information you provide until serious interest is established. Knowing how much information to provide when some initial interest is established is critical. Show too much and you could be letting your competitors know about your secrets of success and too little the prospective buyer will struggle to make an informed decision.
- Upgrade your email account. You will most likely place an advert for your practice online or in a magazine. Either way filtering initial interest by email is the most efficient way to do this. However, depending on the profile of your practice you could fill your inbox by mid-morning with initial enquiries. The demand is exceptionally high for practices and it is not unknown to get 300+ emails. At present Frank Taylor & Associates have over 1,400 dentists looking for a mixed income practice in the home counties. If 20% of this group respond you have 280+ emails to respond to.
- Allocate time for the sale. To prepare a dental practice sale typically takes Frank Taylor & Associates 18-20 hours – this is to be able to present a quality sales prospectus with supporting financial information. Then the real work starts! You should expect to invest upwards of 200 hours to self-manage the sale of your dental practice. This is regardless of the size of your practice. Let’s assume you work to an average of £150 per hour this equates to £30,000 of your time.
- Secure commitment. As an individual it is often tricky to get some formal commitment from a buyer at the outset. Such is English law, until contracts are exchanged either party can walk away leaving each with their own costs to cover up to this point. An agent would insist on a buyer paying across a deposit when their offer is accepted as a commitment to the deal. As a private individual you may need to rely on a handshake and then keeping your fingers crossed.
- How do you know they can afford it? There is a chasm of difference between wanting something and being able to afford it. Unless there is the clear ability to fund the transaction you could be racking up costs on a deal that is doomed to fail. It is vital you get confirmation of funding being secured within the first few weeks of the deal.
- Your relationship with the buyer will get fractious. There will be elements of the transaction that will require discussion and agreement. This will be directly between you and the buyer with no ‘middle-man’ to broker the deal. Depending on the personalities involved this can be a powder keg of emotions and requires a diplomatic approach.
- Chasing your solicitor. There is an old adage about solicitors only touch files when you start shouting. This is harsh but the sentiment is that you need to keep on top of your solicitor. You need to be speaking with your solicitor at least weekly, if not more, to ensure the sale is progressing swiftly. Progressing a dental practice sale to completion is a different mind-set to working on a matter.
- Buyer wants to renegotiate the deal. This is a tactic often used by corporates or more sophisticated buyers. When you are 4-5 months into the deal and close to exchange a revised offer will be presented. You need a set of counter-arguments to rebuff this revised offer which could be a price drop, reduced rent, diluted associate terms, deferred payment, deferred completion to suit the buyer, making staff redundant – the list goes on.
- Stay sane! A dental practice sale, even with the help of an experienced agent, is a significant undertaking. You will need to commit about 8-10 months from the initial stages of getting your practice valued through to completion. During this time, you will also need to run your dental practice and live a life outside of the practice too. Keeping a balance through the process will enable you to make better and more rational decisions.
Frank Taylor & Associates – here to help with your dental practice sale
For most practice owners this is a once in a lifetime experience. You won’t have the benefit of hindsight to get it right next time. If you are looking to manage the dental practice sale yourself, we hope this guide provides you with some useful pointers. However, if you’d value the support of an experienced sales agent then the team at Frank Taylor & Associates would be delighted to assist.