Nope. Not all at. Not unless you want to pay 10% of the sale price to them and think they offer you some kind of magical value. The truth is: prospective purchasers form part of a pool of candidates. And we all have access to that same pool. That’s right: we have access to thousands of prospective purchaser dentists in Ontario. So what is it that a broker really brings to the table?
Let’s see the top 5 reasons why Brokers want dentists to use them…
1. They’ve Been Around
True. Brokers have been around for a while. And they’ve done a lot of deals. But you know who else was around for a while? Blockbuster. But you know what happened to them, right? When they kept charging their exorbitant fees and stopped adding value, they went belly up. We charge fixed fees based on the specific elements of the deal. Our fees aren’t tied in to the purchase price.
2. They’ll Get You the Highest Price
Actually, the market will dictate what price you get. All they can do is market your practice. But if it’s a dud practice (demo clause, no staff on contract, financials going down), you’ll get a dud price. If it’s a great practice (Kudos to you by the way!), you’ll get a great price. And guess who else can market your practice (eBlasts, open houses, calling up dentists, etc.)? That’s right – WE CAN! FYI, the best practice we sold in 2016 year had 40+ people attend the open house, 15+ registered offers, and it ultimately sold for 1.6 x appraised. Talk about us getting our dentist client an awesome return!
3. They Represent Your Best Interests
That’s a little hard to swallow given that they pay for marketing out of their own pocket and only get paid WHEN the deal closes. So they have an inherent conflict because they are incentivized to close quickly and perhaps take a less than ideal offer to recoup their initial expenses. That differs from us: we get paid based on doing our job (marketing + legal). It’s fixed. You know our fees in advance. And because we are lawyers and held to that very high professional standard (like dentists, but not like others), we have a duty to zealously represent your interests above our own and above others. And because we’ll be involved from the transaction LONG before you actually sell (for example, by putting your staff on contract, renegotiating your lease, helping you purify your corporation), we’ll have cleaned up all those pesky things that could come back during a sale to cost you HUNDREDS OF THOUSANDS of dollars. Can brokers do that? NOPE!
4. They Prepare Appraisals
Truth is: depending on WHO prepares the appraisal, you’ll get a lot of different values. And MANY appraisals we’ve seen are incomplete, deficient, and inaccurate. They’ll over-value the practice. They’ll include revenues which shouldn’t be there. They’ll under-or-over state expenses. They’ll get the patient information (active patient charts) all wrong, or won’t even go down that path of trying to tell you how many there are. Their marketing demographics are virtually non-existent. And what’s the value of an appraisal? $5k? If I had one chance to sell, I would go with Dental Strategy to prepare my appraisal. Yes, they may cost a little more, but they are way more comprehensive and actual highlight the opportunities for a buyer to make more MONEY post-closing! What a great document to help sell the practice. Not all appraisals are the same; and I call ‘bullSh$%’ on a lot of what’s out there. Also, depending on who’s name is on the appraisal, our firm may not even GET INVOLVED in helping a purchaser buy because we simply don’t trust the appraisal AT ALL.
5. Brokers Are Afraid of DSOs and Dental Consolidators
DSOs or dental service organizations team up with dentists to acquire practices. The non-dentist part of the DSO model offers support services (business and admin) to the dental practice to make it easier for patients to be cared for (the dentist focuses on the clinical things; the DSO focuses on streamlining and making the practice more efficient).
Dental consolidators are dentists who own multiple practices. They’re smaller scale DSOs.
Here’s the thing: Brokers are afraid of DSOs and Dental Consolidators. Why? Because DSOs and Dental Consolidators TEND NOT to buy from brokers. They don’t want to pay for a broker’s commissions.
Bottom Line: Brokers Make You… Broke-er 😉
If you’re thinking of selling your dental practice, contact DMC LLP well in advance!