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Some dentists believe that selling their practices without professional help will save them money. This may be the case for a select few, but the truth is that most dentists who go it alone rarely sell their practices for full value, or don't sell it at all. It takes special knowledge and experience to work through the entire complex legal, financial, and tax issues surrounding the sale of a dental practice. A poorly structured transaction can cost far more in taxes than what could ever be charged in consultants' fees. In addition, objectively substantiating a value for a practice that is close to what an appraiser would place on it, then finding a purchaser and a team of advisors who actually believe the analysis, can be extremely challenging.
Why not to sell on your own
There are many factors that must come together to have a successful transition, especially when dealing with first-time buyers and sellers. It's easy to think you have a qualified buyer, when in fact the person's credit history is poor or he or she can't pull the trigger. The person may also be seriously looking at other opportunities and wasting your time. It generally takes several buyers to consummate a transaction. Many times, outside consultants hired by purchasers are more interested in justifying fees than in paying fair value.
Selling on your own makes it almost impossible to act as your own agent. As the purchaser postures for some intense negotiation, dentists who go it alone usually aren't aware of the numerous details involved, and they end up negotiating away far more than it would have cost them to hire a transition consultant.
Asking an attorney or accountant to assist might help, but also assumes a lot of risk. These professionals need to know a lot more than just “something” about dental practice transitions to really be able to help, not hinder the process. A dentist may also incur extensive attorney fees during negotiations and the drafting of documents, some of which the attorney may not know how to do properly. Unfortunately, attorneys get paid by the hour, not the deed. Securing financing, flaky buyers, and keeping the staff unaware of the sale are all major risk factors to consider.
Choosing the right consultant
Hiring a professional is the least risky way to go; however, choosing the right professional is the key to actually realizing the full fair market value of your practice and not selling it for less than it's worth. Your consultant should have direct experience in structuring successful transactions similar to the kind you wish to have. Your transition consultant must be competent in financial and legal matters, and capable of coaching and interacting with the attorneys, accountants, and other experts involved. Your consultant should have credibility with purchasers and only bring candidates who are professionally and financially qualified to the table.
A consultant who works in this capacity to the fullest extent will save you untold thousands of dollars in legal and accounting fees, and will ultimately help ensure that the transaction really happens with timely and positive results for all parties.
Alan Clemens, MBA, president of The Clemens Group, services the states of New York, New Jersey, and Connecticut. He can be reached at (800) 300-2939, or visit the company's Web site at www.theclemensgroup.com. Clemens is also a member of ADS, Practice Valuation Study Group, and has lectured nationally and locally on practice transitions for more than 35 years.
