It’s All About The Offer

Imagine you’re thinking about selling your practice. What do you ask for? A cash offer? An equity purchase? Will you want to stay after the deal is done?

All of these are important questions, and the answers are not as simple as you might think.

For depth, let’s take a look at how different kinds of offers affect your patients.

1. There are offers to get them to contact you to become prospective patients. This could be “free whitening with first exam”, “get our free guide to cosmetic dentistry”, or “open weekends so your kids won’t need to miss school” All are valid reasons to have a prospective patient raise their hand”, and give you their information for follow-up.
2. There are offers you give to your current patients. These will often include things like “you need a filling but while we are doing that, the side of your tooth needs a small cosmetic repair – would you like that done at the same time so we can save you some money? Or “Mrs. Jones, your daughter is at the age where we should start looking at braces. Is there any reason not to do that today?”
3. There are offers that you would give to get future patients like “bring your young child to our office on Saturday, March 23^rd for our Free “Kids Palooza” for some fun and refreshments – your child will love the experience and it teaches them that “going to the dentist” can be fun!” or “would you like to earn valuable prizes and be entered into our grand prize draw for an 82” OLED T.V? One entry for every friend, relative, or co-worker you introduce to Dr. Smiley”

When you think about selling your practice, you want to attract offers from parties that may not know you – like example #1. The advantage of attracting these kinds of offers is that you may be surprised by options that you may not have considered. Getting offers that contain clauses you may not have asked for can often be requested in negotiations with other suitors that presented deals that would have otherwise not been considered.

Seeking offers with your initial “wish list” gives potential suitors an idea of your expectations. While #2 type offers are helpful, caution is needed because some expectations may be hard to retreat from. For example, if you ask for $1,000,000 for your practice you may be leaving money on the table if the suitor valued it at $1,246,000. Conversely, grossly overpricing could have the effect of repelling suitors that think you’re so overpriced that “negotiation may not be possible”. Caution, and knowing how to present your “wish list” is critical.

Future offers, the kind that promise a benefit in the future after an event has been performed, are rarely thought of by the dentist considering the sale of their practice. But these type #3 arrangements can be very lucrative to the selling dentist. For example, imagine getting an offer that’s “acceptable” but not “fantastic”. You may be able to negotiate a clause where you stay on with the practice after the sale, then, after a year you receive an additional payment because you achieved a 15% growth in the practice. Many suitors will pay you for that growth. This is a clause that many selling dentists never consider and as a result, earn less from the sale of their practice than they should have.

Now, you might be wondering: Can I negotiate and sell my practice on my own? And the answer is absolutely, yes. Especially if you’ve sold other practices before. But, if this is your first time selling, hiring a professional to guide you through the landmines and pitfalls is always great insurance.