How working with an agent can ensure you achieve the best deal structure
When you consider selling your practice, direct approaches from fellow dentists and corporates can be very appealing. After all, a letter through the door from one of these interested parties indicates that there is grounded interest in your practice already, meaning that the selling process has the opportunity to be straightforward and less stressful.
But are you potentially limiting the value you can receive for your practice? What about the post-sale requirements being offered? These are important considerations, especially if you want to achieve sale terms that are in line with your future goals.
The risk of selling without an agent
When corporates or dentists approach you directly as a buyer, they will often have a set idea of what they think your practice is worth and a deal structure in mind that is most beneficial to them. Therefore, by only exploring this one avenue, you could be settling for less money and may even enter a deal structure that would not be in line with your future expectations.
For example, say a corporate has offered you a certain price for your practice. This price is likely calculated by what the corporate can afford to pay rather than what your practice is actually worth on the open market. The figure will also be based on their proposed operational structure post-sale, and as corporates utilise an associate-led model, this means that they may offer less than an independent dentist as they have to factor in their associate costs.
A buyer is also likely to offer a lower price if they aren’t aware of any direct competition. Consequently, the price you receive from a direct enquiry is rarely the maximum deal possible. By enlisting the help of a broker, you can attract other buyers and open up the competition.
What sort of deal structures are available?
Often when selling a practice, the principal dentist is expected to carry on working for a period of time post-sale to maintain the financial performance of the business and ease the transition for patients. For many dentists, the deal structure is almost more important than the sale price, especially as these terms will dictate how they work for the next few years and what this means for their earnings.
Deal structures come in many forms. You may be expected to work between 3 to 5 years in your practice and part of the sale price may be deferred and paid to you over this time as an incentive to optimise income. This deferral payment can be as much as 30% of the sale price. You must also consider the remuneration being offered to you post sale – while it may seem like the wise choice to take a higher remuneration rate, it may actually be beneficial to receive a more substantial lump sum at time of sale, as this is typically taxed less and can save you more.
By enlisting the help of an independent broker during the sale, they can ensure that various deal structures are on the table and negotiate the one most suited to your requirements.
Supporting your practice sale
Ultimately, the services of an independent broker are beneficial for numerous reasons. They not only attract more interested buyers for your practice, but can also help you to achieve a higher sale price and negotiate the most suitable deal structure. The team at MediEstates has years of experience supporting principal dentists with practice sales and works closely with you throughout the process. When you make the big decision to sell, they can help you achieve the best deal for you.
For more information, contact us on 01332 609318 to discuss your options.