If you’re a dentist selling your practice and struggling to find a buyer, retaining a broker is a crucial and worthwhile investment. Typically, a broker’s fee for matching a purchaser with a seller is 10% of the final selling price, excluding any real estate.
Selling a dental practice is a complex process, far more involved than a simple real estate transaction. Even if a practice owner identifies a prospective buyer, successfully navigating the journey to the closing table presents numerous challenges and nuances often unknown to both parties. The process involves multiple critical steps that can easily derail a sale, such as:
- Determining the practice’s true market value.
- Identifying the ideal purchaser.
- Negotiating the final purchase price.
- Drafting the asset purchase agreement.
- Developing a comprehensive transition plan.
- Negotiating the lease assignment or real estate sale.
- Securing practice financing.
The guidance, expertise, and lived experience of a trusted broker, alongside legal and accounting professionals and a reliable bank finance officer, prove invaluable in managing these complexities.
Key Services Provided by a Dental Broker
A dental broker plays a comprehensive role in facilitating a successful sale:
- Valuation and Confidentiality: The broker generally prepares the practice valuation and manages confidentiality by securing a signed confidentiality letter from potential purchasers before releasing sensitive information.
- Securing Financing: They are instrumental in helping to secure financing for the practice and any real estate, a task that has become more critical due to changes in lending conditions and interest rates. While securing full cash payment for the seller still takes effort, the broker and a trusted bank officer make it achievable.
- Negotiation and Documentation: The broker is best positioned to take responsibility for negotiating and achieving consensus on all business points of the transaction. They prepare the listing agreement, stipulating a 10% brokerage fee, and often prepare the letter of intent. All documentation and terms are often subject to approval by the selling dentist’s attorney and/or CPA.
Ensuring a Smooth Transition
Since the broker is retained by the seller, they should possess intimate, firsthand knowledge of the practice. A skilled broker should be able to communicate effectively with both parties to determine the best approach for critical items like accounts receivable, patient credit balances, work in progress, and any necessary corrective dentistry.
The broker helps the parties agree on a fair price and addresses the practical needs for a seamless closing and post-closing experience. This may include essential setup for the buyer, such as establishing a credit card machine, payroll service, and third-party payer credentialing. They map out all necessary benchmarks to meet the closing date, including timely satisfaction of lender conditions, and coordinate the actual closing event. The best brokers often provide template agreements and to-do lists, guiding all parties toward best practices for every business point.