WHY USE A DENTAL BROKER? THE RED ZONE? WHAT ARE YOU TALKING ABOUT KARL?
Updated: Mar 8, 2021
WHY USE A DENTAL BROKER?
If you don’t think that you’ll need a dental broker and believe you can handle all your dental transactions by yourself, think twice, and then think again. There are many benefits to hiring a dental broker, some benefits are intrinsic, some are financially based, some is just timing and desire here’s just a few.
THESE BENEFITS INCLUDE:
The most important thing you need to do while performing a dental transaction, regardless of whether you are buying or selling, is to find accurate financial information regarding the dental practice valuation. Finding the perfect practice is hard enough and then trying to find the perfect price with an imperfect science can add another layer of challenges. If you’re buying, you may be paying more than the actual value of the practice. Whereas while selling, you may not be fully aware of how much you should be asking. Some common questions that arise are “What is my goodwill,” “what is my EBITDA,” “what is my equipment worth,” also “what do I want to do after I sell?” Using a dental broker will provide you with an accurate assessment of all these items using past sales, current market trends, etc., to achieve your goals.
After you’ve determined the accurate valuation of the practice, things start to move fast. You’ll have to consistently go back and forth with the other party until you both reach an agreement that benefits both, which can be a tremendous stress and seem unattainable at times. Especially when you get to what we at Frye Practice Sales call “The Red Zone.” “The Red Zone” is a football analogy as you enter the last 20% of the deal. The deal is 80% done, but this is when things seem to get crazy. The bank asks for more stuff, the lender goes dark, the buyer is being weird, the seller is getting cold feet, the landlord wont release you from your guarantee, the insurance company won't underwrite your policy, the staff finds out early, etc. etc. etc., something always comes up, and if you haven’t navigated the “The Red Zone” and all the aforementioned potentially variants, you’ll want someone who has. A hiccup at this point could be a deal killer. A dental broker will take this headache away from you and navigate all the potential pitfalls they can to ensure that you are getting the best deal possible. They also know who to talk to, where to go, so that your deal doesn’t fall off the rails this late in the game.
In the case you are buying the dental practice and stepping into a new business or ownership for the first time, the transition phase can be daunting to say the least. You have an idea of what you want to do, but do you really know and are you 100% sure about the steps you need to take to get there? An excellent dental broker will help you through this phase of transition, ensuring that you have all the required information, vendor contacts, third party contacts, insurance contacts, utility contacts, etc. There are many items that are still in flux even post-close. Your broker is experienced here, and will save you time, money, and potential headache(s).
If you feel that you need a dental broker please click the link to connect with us or set up a time to talk further. Also check out our website to make sure you are on top of the latest listings, blog posts, etc.!