Thinking of Selling Your Practice? Why ‘One Buyer is No Buyer’
By Bob Septak, MBA
UPBA President & Broker
We often receive calls and emails from periodontists with questions like these:
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“A DSO (Dental Service Organization) contacted me. Should I sell to them?”
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“I received a letter from a group with a potential buyer. Should I contact them?”
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“A colleague has approached me. Is it a good idea to sell directly to them?”
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“I’m thinking of hiring an associate to eventually sell to. Is that the best way to transition?”
My answer to all these questions is the same, and it’s based on a fundamental principle of business brokerage: “One buyer is no buyer.”
Why Open Market Competition is Key
How can you know you’re getting a good deal if you’re only speaking to one person or group? The truth is, you can’t. If you want to achieve the best possible outcome for your practice—in terms of price, terms, and a smooth transition—you must allow the open market to determine its true value.
The Limitations of Collections and Appraisals
But what about an appraisal or a valuation based on collections? While collections and an appraisal are important data points, they are not the final say on your practice’s worth.
Collections
Collections are just one metric of many that a serious buyer will consider. The profitability of your practice, your overhead, the quality of your patient base, and your unique geographic location all play a critical role in its final value. (We’ll explore this in more detail in a future instalment).
Appraisals
Appraisals provide a professional opinion of value based on a specific methodology. However, it’s a snapshot in time and one person’s opinion—it doesn’t account for the current demand for practices like yours.
The Power of Multiple Bidders
We recently brokered a sale where we had multiple qualified buyers. The competitive bidding process not only drove the final sale price well above the asking price, but it also resulted in a swift and smooth transaction. The final price was a testament to the true market value of the practice, a value that a single-offer approach would have never revealed.