Selling a Practice - Avoid These Common Pitfalls
Updated: May 13, 2019
Having worked with dentists in the sales of their practices, there have been sellers who have enhanced their sale process and those who have undermined their sale process. A seller's most successful approach in their practice sale is to enlist an experienced and trusted advisory team including a practice broker, CPA and attorney who have all had experience in dental practice sales and transitions. This team will protect your confidentiality from curiosity seekers and present your practice in its best, but honest, light. Your advisory team will guide you through how and where to market for maximum exposure to potential buyers, how to structure the sale for maximum tax savings, and how to minimize the risks of post-sale lawsuits.
A common seller mistake is in the pricing of the practice. Sellers lack the objectivity and training to make an accurate assessment of their own practice. They may feel that in the universe of practices that theirs is unique and more valuable than all the others. While there are some notable exceptions, practice values are clustered fairly closely around statistical norms, and only a broker who understands the market for practices can accurately estimate when a practice significantly deviates from those norms.
Another seller mistake is deciding there is only one prospect they want to sell to. Not being open to other prospects, who may actually be better qualified and easier to work with, can result in much wasted time, effort, and emotional energy.
Sellers can become impatient when their practice doesn't immediately sell. In an effort to hasten a sale, sellers may ask me to reduce their practice price, thinking that the price is deterring prospects from inquiring. My thinking is that the advertised price does not deter prospects from inquiring about a practice. Anyone interested who thinks the price is too high will simply make a lower price offer. Some practices statistically take longer to sell than others. Lowering the price when there is an absence of activity is like bidding against oneself at an auction.
Brokers advise sellers against talking price and terms with prospects. Invariably, when sellers do this they tend to make major concessions. One little conversation can cost a seller tens of thousands of dollars.
The wheels can come off the wagon when sellers, who for the most part have never sold a practice, try to control the sale process. My best advice is to trust your broker, CPA and attorney and follow their advice. Your experienced and trusted advisory team know better than anyone the pathway to the most successful sale.
Grant Gerke is the founder and president of Mountain Top Practice Transitions. He has spent 25 years in the dental industry and personally services the Western United States. He is located in Portland, OR and can be reached at (503)-701-6697 or write to him: firstname.lastname@example.org