Are you thinking about selling your dental practice? Are you considering doing it yourself over hiring a broker? Remember, brokers get paid a commission only when the practice sells so even though you won’t receive 100% of the sale price, hiring a broker is worth not having to deal with the headaches that can arise when trying to sell your dental practice.
What does a broker do?
Here are some things that a broker should do to help you sell your practice.
- Dental Practice Valuation – some brokerage firms will calculate based on a percentage of revenue. And then firms like the Hindley Burgmaier Group will provide a calculation of value where a licensed Certified Valuation Analyst will value based specific valuation approaches, methods and procedures, and the process results in a written report.
- No Dual Representation – Even though a practice transaction should benefit both the seller and the buyer, a good broker will only represent the seller. Even though some brokers will say they are offering dual representation, be weary if you are a buyer. Usually in these circumstances, the broker was engaged by the seller so they are looking out for the seller’s best interest. If you are a buyer, engage your own representation to make sure your best interest is being taken care of as well. The Hindley Burgmaier Group represents buyers as well as sellers. We have been engaged by numerous dentists purchasing practices that were not listed with us and then went on to assist them with their accounting and payroll needs.
- Dental Practice Profile – a broker should create a detailed marketing profile and cash flow analysis for you. It should include all the information that not only potential buyers will need but also their advisors.
- Advertising – a broker should advertise your practice at the local, state, and national level through websites, publications, direct marketing, and word of mouth, spreading a wide net to catch the most fish.
- Communications – a broker should be the first contact with potential buyers to weed out tire kickers from serious, qualified buyers. A broker will screen potential buyers, put together the letter of intent, and make sure both the seller and the buyer have fair representation to support the negotiation.
- Acceptance of Letter of Intent – the acceptance of the letter of intent is only the beginning of the sale process. A broker will facilitate the process and compile all documentation for the due diligence process. The letter of intent is not a binding contract and does not mean that the buyer is guaranteed to purchase the practice. The Hindley Burgmaier Group puts together an Abridged Terms of Sale as the Letter of Intent. This is so most of the important details of the contract are worked out at the beginning of the process, so the sale won’t get held up at the end because there is a disagreement about the Employment Agreement.
- Assistance with Financing – a broker will also assist in securing financing for the buyer. The Hindley Burgmaier Group has a wheelhouse of bankers who we partner with to assist with this process.
- Assisting the Buyer with a Team of Advisors – in some cases buyers have not engaged a professional to conduct the due diligence on a practice where we have prepared the valuation, or will need a referral to an attorney to look over all the contracts. Like stated before, the Hindley Burgmaier Group has built relationships with professionals in the community that can assist buyers with all their needs while going through the process.
A broker plays an important role in the transaction and the transition of the dental practice. Considering your primary role as a business owner and caring for patients, hiring a broker to help you with your transaction will be important for the prevention of any additional stress and/or anxiety you may experience with self representation. -Kelley Yardman, Client Relationship Manager
