Dentists considering the sale of their practice are often told—sometimes aggressively—that they need a broke-er or real estate sales representative to achieve a successful outcome. This is NOT TRUE! And it’s most definitely COSTLY!
Broke-ers and real estate agents perform ONLY A SMALL fraction of what is required to complete a dental practice sale. The vast majority of the work, risk management, and value creation occurs at the legal stage, handled by experienced Dental Lawyers.
Broke-ers and real estate agents merely prepare appraisals and introduce buyers and then disappear, while dental lawyers at DMC find buyers and do the rest to get it done for the selling dentist (which often takes months or longer to complete!).
What Brokers and Real Estate Agents Actually Do
At their core, broke-ers and real estate salespeople typically do two things:
- Prepare a boilerplate valuation or appraisal, and
- Run an open house or marketing process to locate a potential buyer.
Once a buyer is found, the broke-er’s role is complete. The transaction is then handed off to lawyers and accountants to deal with everything that actually determines whether the deal closes—and on what terms.
Despite this limited role, brokers often charge a WHOPPING 8% to 10% of the sale price, amounts that can reach hundreds of thousands of dollars. After introductions are made, they cannot solve problems, cannot give legal or tax advice, and cannot carry a deal across the finish line. Their default response when complexity arises is simple: “speak to your lawyer as we can’t assist” and then they are gone.
Where the Real Work Begins: What Dental Lawyers Actually Do
At DMC, we are not introduced at the end of a transaction. We are involved years in advance, preparing practices for sale and structuring them for maximum value retention. The reality is this: dental lawyers do the vast majority of the deal (and the rest is handled by the accountant and third-party appraiser).
Preparing the Practice for Sale — Often Years in Advance
A successful sale is not just about price; it is about how much you keep after tax and liability exposure. At DMC, we work with dentists well before a sale to:
- Put staff on proper employment or associate contracts.
- Review corporate structures for tax efficiency (when it comes to tax planning, it is not what you get on closing day that matters most—it is what you keep. Proper legal and tax planning can mean the difference of hundreds of thousands of dollars)
- Identify lease related risks which could prevent or prohibit a deal from coming to fruition.
Independent Appraisals — No Conflicts of Interest
Unlike brokers, who often attempt to both appraise and sell a practice (a clear conflict of interest), DMC works with independent third-party appraisal firms. This ensures objectivity, credibility, and defensibility. Our role is not to inflate numbers to win a listing. Our role is to structure a transaction that closes cleanly and withstands scrutiny.
Organizing Due Diligence From the Start
We organize due diligence documents before buyers request them, because we know exactly what will be required:
- Minute Book
- Financial statements
- Production Reports
- HARP Reports
- X-Ray Floor Plans
- Lease documentation
- Employment and associate agreements
- Etc.
If issues exist—and in most practice sales they do—we identify and address them early, not when a buyer is already at the table.
Drafting and Negotiating All Legal Documents
Brokers do not draft legal documents. Lawyers do. At DMC, we prepare and negotiate letters of intent (i.e. offers), purchase and sale agreements, associate agreements (if the seller is sticking around after the sale), closing agendas and closing documents, lease transfer documents, employment-related documents (if needed), corporate re-organizational documents and minute book updates (if needed), and reporting letters summarizing the entire transaction. Broke-ers and real estate agents should NOT be drafting any of these vital legal documents.
Landlords, Banks, Employees, and Creditors
A dental sale does not happen in isolation. We review the lease and negotiate landlord consent to transfer. We work with lenders and banks to satisfy financing conditions. We assess employee liability and termination exposure. We pay out secured creditors from closing proceeds. These are critical steps in closing a deal. Broke-ers and real estate salespeople are not trained, qualified, or experienced in any of these things and certainly shouldn’t be trying to handle them for a selling dentist!
Tax Planning With Your Accountant
We work directly with your accountant to structure transactions in the most tax-efficient manner possible. This includes preparing your practice as a share sale so that you can take advantage of avoiding paying tens or hundreds of thousands of dollars in capital gains tax (through the use of the 1.25-million lifetime capital gains exemption per person). We structure or sometimes restructure the dentistry professional corporation to multiply the use of the lifetime capital gains exemption by involving other family members (e.g. a dentist’s parents and adult children). Or in an asset sale, we fight to allocate the purchase price among those assets that will help reduce HST on the sale of leaseholds and allow for tax-free capital dividends to be declared from the sale of Goodwill. These strategies can save dentists enormous sums. Broke-ers and real estate salespeople cannot do this work. They are not trained to, they didn’t go to school, and they are not qualified to.
Closing Day, Adjustments, and Reporting
Near the end of the transaction, we advise on a multitude of closing day and post-closing matters, such as accounts receivable adjustments, work-in-progress calculations, and closing day mechanics (staff intros, point of sale terminal installations, notifying various bodies like XRIS about the change of ownership in x-ray equipment). We also deal with paying out secured creditors and disbursing funds to the sellers in accordance with the accountant’s and the allocation of share ownership.
After closing, we deliver a comprehensive reporting letter with all material documents in electronic format for you and your accountant. The reporting letter explains exactly what occurred throughout the transaction and serves as a permanent record.
Broke-ers and real estate salespeople do none of this. Lawyers Close Deals. Brokers Do Not. We are trained professionals. We work with opposing counsel to resolve issues while protecting your best interests. We understand the legal and tax implications of dental practice transactions. We manage complexity and risk so that deals actually close.
Expecting a broker to do this work is like asking a hygienist to place an implant. They should not—and cannot.
We Also Find Buyers (No Broke-Er Required!)
Importantly, dentists do not need broke-ers or real estate salespeople when they work with DMC. We actively draw buyers to practices by running open houses, conducting targeted e-blasts, and working directly with dental professionals who know/have access to buyers.
We also understand dental operations intimately. Since 2015, we have operated annual Dental Outreach Programs in the Caribbean. We help recruit hundreds of volunteers to go down with us to run temporary 20-operatory clinics serving impoverished communities in Grenada, Jamaica, Turks & Caicos, Bahamas, St. Lucia, and Antigua. These programs include volunteers from across North America, including dentists, hygienists, assistants, and dental students from dental schools such as U of T and Western (UWO). Through this volunteer work, we have firsthand operational experience. Personally, I have served as an intake/outtake person, office manager, assistant (including taking X-rays) and team leader. I’ve done it I’vemes since 2015 and I still do it every year.
A Clear Warning to Dentists Considering a Sale
Selling a dental practice carries significant legal, regulatory, employment, tax, and financial consequences. Brokers and real estate agents only touch a tiny portion of the process. Lawyers do the rest. At DMC, we do everything brokers do—and everything they cannot. They cannot do our work. We do all of theirs. For dentists considering a sale, the choice is not even close.
