Whether you’re in the process of buying or selling a dental practice, the one question that always comes up is what information you will need to gather to get started. There is a basic list of information that your advisor will need to develop an asking price and assess the performance of the practice.
Unlike most dental practice sales brokers, we take a unique approach with our sellers. Over the years we have handled hundreds, if not thousands, of transactions from both the sellers’ side and the buyers’ side. It has been the buyers’ side that has helped us to understand what every seller should be compiling to help their dental practice sales advisor.
Most dental practice sales advisors are mainly concerned with developing an asking price for the practice, which means they are primarily concerned with cash flow only. They will typically ask for tax returns, annual reports with production and collection totals for the dental practice and maybe reports broken down by categories like diagnostic, preventative, operative, etc. They will also ask the seller to complete a questionnaire that helps the advisor learn about the practice and to develop a dental practice profile.
The ultimate goal of all of this is to attract a serious and willing buyer. By looking at this from a buyer’s perspective, that goal is more easily attainable. While buyers are interested in the price of the dental practice, they are also trying to learn so much more about the practice - its strengths, weaknesses, opportunities and threats (SWOT). All buyers MUST do their due diligence on the dental practice they are buying if they are going to borrow hundreds of thousands of dollars, therefore, they will usually ask for much more information than the typical seller/advisor has asked for and, unfortunately, this sometimes annoys both the seller and their advisor.
Based on the above, we take a buyer’s approach to the information gathering from the beginning of the process. We want to be in a position from the start to not only inform the seller of a fair asking price, but also provide the additional information about the practice when we find them a buyer. The other benefit is that this will also provide the information a buyer will require to do their due diligence.
An additional benefit to the seller is that when the buyer and their advisors receive all of this information so promptly, they will not become discouraged and feel that the seller is “dragging their feet”. From a buyer’s perspective, if gathering the information they need feels like they are “pulling teeth” (pun intended), one of two things potentially happen, either they move onto another practice or they make a lower offer. Our approach will deter the buyer from doing either of those.
For more information about your particular situation, contact Ellen Dorner or call us at (800) 772-1065