The Broker’s Role in Buying a Practice

This is the second post for The Broker’s Role in Buying a Practice. What should you expect from a broker when buying or selling a practice?
Written by: Reno Iannini, Broker for First Choice Practice Sales.

How does  a dental broker work for you? The Broker negotiates terms and financing!

Qualifying each party in the transaction is another important step. Sellers are thoroughly screened to determine that they have a serious interest in selling and are using realistic pricing terms for their practice. This step is critical to both parties – it saves each valuable time.

A full service broker also will have experience in facilitating patient transfers to assure the highest possible patient retention rate. And, he can assist in negotiating the best possible purchase terms, which include securing financing from either a local financial institution or directly from the seller.

What to expect

Once Dr. Wilson had determined the services available from each brokre, he decided to ues the full-service broker. In their first meeting, the broker interviewed Dr. Wilson in depth. From this meeting, the broker developed a buyer profile, which outlined key information about locations desired, amount of capital to invest, the type of patient mix and which procedures Dr. Wilson would perform as well as those he would refer to specialists.

Another important part of the interview was to determine the types of practices Dr. Wilson had already seen and the reasons he did not buy them.

This information is very useful to the broker in determining which listings are likely to suit a buyer’s criteria. Based on this meeting, it was clear that Dr. Wilson was seeking a practice with a gross income of $100,000-$150,000 in a desirable, suburban location, and that he was interested in an existing fee structure that would attract middle-income patients looking for quality dental care.

Dr. Wilson met success with the second practice the broker introduced him to. The owner, Dr. Brown, was in his early 40s and had maintained his practice for seven years on a part-time basis. He had developed another business interest outside of dentistry and was now ready to sell his practice to pursue his new business full-time.

The practice met all of Dr. Wilson’s requirements. It was located in a professional building in a good location and had two operatories with a gross income of $105,000 during the previous year. The practice had an active base of more than 600 patients that has been seen within the past two years.

With careful evaluation, the broker helped Dr. Wilson determine that the practice could be even more profitable for him because he was capable of performing various dental procedures such as molar endodontics which Dr. Brown was referring to other dentists.

Closing the Transaction

While it can take as long as three months to close a sale, the transaction between Doctors Wilson and Brown was completed in just six weeks. The broker worked to negotiate the best possible terms and to secure financing. Dr. Wilson bought the practice for $80,000 with $20,000 down.

Transferring a practice as efficiently as possible with the highest possible patient retention ratio is another area where the broker can be of assistance. Before the closing, the broker worked with Doctors Wilson and Brown to compose a letter introducing Dr. Wilson to Dr. Brown’s patients.  Dr Brown agreed to personally introduce his patients to Dr. Brown for up to three months for a fee of $150 a day.

Within a month, Dr. Wilson no longer required that service. With patients booking several weeks in advance, Dr. Wilson was able to quit his part-time job and devote all his time to building the newly-acquired practice. in just two months time. Dr. Wilson increased the three-day-a-week practice to four-days-a-week practice by fully utilizing the patient pool. He send out recalls, which Dr, Brown neglected to do, and performs a variety of dental services that Dr. Brown was referring.

 

As Dr. Wilson learned, a full service broker can save considerable time, energy and money, Buying a practice is one of the most important business transactions a dentist will ever undertake. it is imperative that he or she make all the right decisions, a broker can help to ensure that by working closely with buyer and seller throughout the transaction.

If you are looking for a full-service broker, Give Reno, Evelyn or Eric a call at First Choice Practice Sales. Since 1993, we have assisted dentists in all aspects of practice transactions. You may view all of our practices for sale at our website; www.firstchoicedds.com or by calling us at (949) 548-4559.

 

This is the first post for The Broker’s Role in Buying a Practice. What should you expect from a broker when buying or selling a practice?
Written by: Reno Iannini, Broker for First Choice Practice Sales.

 

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