How Does a Practice Evaluation Help Your Attorney at Close?
If you want to sell your dental practice, you will need a good attorney in your corner. This will likely be the most complex business deal of your life, and a seasoned, industry-knowledgeable attorney is a great asset when navigating the intricacies of selling your dental practice.
Their expertise is invaluable, particularly as you near the end of the deal cycle and are in the process of ensuring that your deal is structured to avoid any unnecessary legal and financial liabilities.
However, one key piece of the dental practice sale cycle needs to be addressed. Knowing the worth of your dental practice is very important and will make your attorneys even more impactful at close. Too many dentists use outdated and inaccurate “rules of thumb” when valuing their practice worth. These assessment tools might be fine for getting a quick range for your purposes, but they’re almost useless when finding a buyer, selling your practice, and closing the deal in your best interests.
The experts at Triumphant Transition Partners have been helping dentists sell and transition their practices for years and have learned a thing or two about dental practice evaluations in the process. In this blog, we’ll share how an accurate and detailed financial assessment will help you at close.
A Baseline Comparison
If you’re selling your dental practice to a dental support organization, it’s in their best interest to make you an initial offer and one that is likely not their best offer. It’s just a part of their business model and something you should be aware of. If you don’t fully understand what your practice is worth, the odds of you accepting a lowball offer rise tremendously. Depending on your practice and the dental support or dental partnership organization you’re selling to, this could mean a difference of tens or even hundreds of thousands of dollars!
The proposed compensation within a dental transition agreement can also be complex. Your total earnings could vary considerably, depending on the terms of the deal. Bonuses, base salary, and incentives can all impact your total earnings. Your practice’s value is a vital piece of this. A detailed and accurate valuation gives you a view of the value of the business, and this helps you better gauge if the compensation offered is in line with what other dentists command for similar practices. Only an accurate dental practice evaluation can help in this endeavor.
Employment Guidance
Your practice’s value is much more than just cash flow and debts. There likely will be key employees that the buyer will want to retain after the transition to ensure smooth operations. The nuts-and-bolts paperwork of your existing employees will need review, as well as the practice transitions. Everything from termination agreements, standard operating procedures for performance improvement plans, employment plans, non-disclosure agreements, and non-compete clauses is relevant to determining what the deal should look like. A clear view of the value of the practice is a substantial first step towards structuring this deal.
For instance, if the practice is valued highly and the DSO wishes to retain staff during the transition, understanding the value of the practice gives you some leeway when stating your desired terms. Your practice is worth more than just a dollar figure on paper. The people who help support operations and tend to patients add quite a bit of value to the dollar figure of the practice—knowing that dollar figure enables you to advocate for the terms you need to keep your best staff and keep the practice running successfully.
Bargaining Power
At the end of the day, selling your dental practice should happen when you want it to happen and feel comfortable with the terms, dollar figure, and DSO at hand. Having faith in your dental practice and recognizing its value means you can rest easy at the negotiation table. If you don’t feel comfortable with the DSO or deal in front of you, don’t sell. That’s much easier to do when you know your worth and what price you can command on the open market. The ability to have faith and walk away from a poor deal if you so desire is liberatory for many dentists, and that sort of bargaining power does not exist without a clear understanding of your practice’s worth.
Call Triumphant Transition Partners Today
You’ll need a good understanding of your practice’s value before you go to market. You could use a vague “rule-of-thumb,” but this is likely to be essentially an estimate. Getting a professional audit done is best to determine your practice’s value.
If you’re considering selling your dental practice, call Triumphant Transition Partners today! A veteran dental practice advisory firm is a tremendous asset to have in your corner as you go to market. We’re here to represent your interests in the deal, not those of the DSO or DPO. As a dental office brokerage, we focus on building lasting relationships and treat your practice as if it’s our very own. In a world where most sales are transactional, partner with Triumphant Transition Partners for relational dental practice transitions.
At Triumphant Transition Partners, we:
- Help You Understand the Value of Your Practice
- Review and Screen Potential Buyers with You
- Enable Access to Our Private Buyers Network
- Provide Your Attorneys with Useful Financial Data at Close
Call Triumphant Transition Partners today for your courtesy consultation!