We’ve just looked back at the last 50 transactions we’ve been involved with (for buyers and sellers), and here’s what we learned:
- On average, it takes about three months from the time the LOI is accepted to the Closing to complete a transaction.
- On average, the purchase price is about four times cash flow or 1.2x over appraised value (particularly in the GTA).
- The highest purchase price was 1.6x over appraised.
- The shortest time a seller will stay on after the Closing is 0 days (typically, an asset sale with little or no production/patients).
- The longest time a seller will stay on after the Closing is five years.
- On average, a seller will stay on after the Closing for 12 months.
- The most we’ve seen come off the purchase price due to equipment being in need of repair or replacement is $5k.
- The most we’ve seen a seller pay an associate (who was not on contract) was $150k.
- The most we’ve seen come off a purchase price for financial discrepancies was $100k.
- The top issues facing buyers/sellers in a transition include: finding the ideal buyer (in terms of personality type, dental philosophy and competencies, etc.), is there a demolition/relocation clause in the lease, are the buyer/seller using a professional dental lawyer/accountant/banker, are the staff and associates on proper contracts, will the seller stay on to associate after the Closing, and is it an asset vs. share sale.
Please don’t rely upon the above if you’re looking to buy or sell a specific practice. This data came from transactions throughout Ontario over the past many months and things change over time. If you want specific insights into a particular practice, contact DMC LLP.