The Players in a Dental Acquisition
- Dental Broker
- Banker (commercial lender)
- Lawyer (hopefully dental specific)
- Accountant and Financial Planner (dental specific needed)
- Buyer Representative
The biggest take away from building your team of professionals is that you want them all to be competent in their specific roles. Not one person will know everything about everything. This is where having a team of professionals that are willing to collaborate with one another is imperative.
You want to make sure your team has a can-do attitude. Having one professional that is a Debbie-downer can be a deal breaker for the selling dentist. I didn’t always ask who the other professionals were on the other end of the deal, but as you become familiar with how individuals work in each of these areas, you begin to see patterns in all industries. A great example of this is how certain banks lend and structure deals in the dental space. Some banks will bend over backwards to secure your loan and future business, and others could careless and it is very black and white.
An Additional Lesson
When you are looking to buy a dental practice, you want to present yourself as the Ideal candidate to sell the practice to. This means everything from the liquidity of your bank account, how you manage your finances, to how professional you come across in a formal meeting is essential prep work for any dentist looking to buy a practice.
Using a Dental Broker or “off market deals”
Now what I am about to tell you is easier said than done. If you can do the ground work and find that dental office that will be selling in the next 1-2 years before the selling dentist contacts a broker for listing help, this can help structure a more lucrative deal for both parties. The main problem is that the selling dentist is having a hard time finding the buying dentist, without the help of a broker. If you can fix this reality then you can start to bridge the gap, and find these off-market deals.
Finding an off-market dental practice, is great for several reasons. You most likely are not competing against someone who might have deeper pockets and can make a better offer. (Remember Cash is King) If the dental broker is looking to help sell a practice, and two individuals are interested. Who gets priority, I can tell you it is the buyer that looks and feels more secure. (financially and professionally)
Understanding Practice Financials and Valuations
I could spend a great deal of time on this subject. Let me put it concisely, if you do not have a dental specific accountant and financial planner that can look at the practice numbers beforehand, that is willing to do a walk through, and come back to you with adjusted numbers based on variables such as: What you would be making after the sell, adjusting insurance rates, and debt to income ratios. You need to invest in one. Period. The dentists that do their due diligence and hire outside help are far more successful and usually more profitable in the long-term.
Ultimately, you can do a lot of the heavy lifting on your own. Knowing when you need a professional and when you do not need a professional is essential. I would rather pay out of pocket for advice in my blind spots then not spend money at all. I do this all the time with my business, and I will continue to pay for advice that fills in holes that my expertise lacks in. For instance, Marketing. I have no problem with spending $10,000-$20,000 on a marketing consultant if I know my business now needs it. As a business owner or a future business owner making educated decisions in a timely manner is a great recipe for success. Do your homework, but do not be afraid to pull the trigger if you think hiring outside help is needed.