Six Reasons Why You Should Not Sell Your Practice Yourself
If you attempt to sell your own practice, it is highly unlikely that you can keep your intentions confidential. If your staff members find out you’re selling your practice, they may begin looking for another job. If your patients hear that you’re retiring or relocating, some will look for a new dentist.
Not knowing what your practice is worth
If you sell your own practice, who would appraise it? Using someone inexperienced to appraise your practice can be risky. Worse yet, using a rule of thumb is a poor idea. Do you base the value on cash flow, percent of gross revenue or profitability? The riskiest way to determine value is not having the practice appraised at all (guessing).
When a dentist lists his or her practice with Menlo Dental Transitions, that practice is immediately placed on our website and in the dental journals and advertising resources. It is Menlo’s reputation and the far reach of Menlo’s local network that attract most dental prospects. A dentist selling his or her own practice cannot match the traffic or interest that a successful practice broker can generate.
It is not usually a good idea for buyer and seller to negotiate directly. Many issues arise during negotiations, and some are difficult and contentious. Having an experienced agent such as Menlo negotiate on your behalf gives you the time necessary to think through various scenarios before committing yourself. Also, it is extremely important that the purchasing and selling dentists get along once the sale closes and the transition begins.
A good dental practice broker knows where to find prospective dental buyers and how to interview and screen qualified prospects, saving you value (and significant) time. Menlo Dental Transitions has developed methods to keep the practice sale confidential and to determine what information is essential for appraising a practice. We also knows what information needs to be given to interested prospects, how to structure a sale properly, and which lenders are interested in financing. A dentist trying to sell his or her own practice does not possess these skills. This is not the time or place for “on-the-job training.”
One of the critical mistakes a dentist makes in the logic of selling their practice themselves is that they are saving money. In reality, one of the major components is determining value (and price) of a practice is the gross revenue of the last 12 months. When a dentist starts spending 15-20 hours evaluating, marketing and showing their practice, that takes away from the time they can spend doing dental work and increasing (or at least maintaining) production levels. This decreased production results in a substantial decrease in the value that a prospective buyer is willing to pay for the practice. In reality, selling your practice yourself will end up costing you more money.