Whether you’re considering buying or selling a dental practice in the St. Louis region, the smart choice is to consult with a Dental Practice Broker.
But what do you ask a broker when you meet up? Here are ten questions that you would be smart to discuss with a broker to determine if they are the best fit for you.
- Do you represent one party (Buyer or Seller) or do you represent both? While the purchase of a dental practice is not an adversarial event, we believe each side needs a representative. There are aspects of a practice sale where the interests of the parties are adverse and we think each side is better served having someone represent them – not a broker who is trying to straddle the “middle” in an attempt to represent both sides.
- Do you specialize in dental practice sales and valuations or do you have other business pursuits? Some brokers sell other types of businesses, some offer accounting or financial services. Some are full time and others are part time. We think a specialized broker is likely to have more experience and expertise in dental sales than a generalist.
- Is your company local or is it a branch office of an out-of-state firm? The vast majority of dental practices are local businesses and we think a local broker is best equipped to know the level of demand for a practice, its Fair Market Value based on comparable sales, and an understanding of all aspects that determine practice value.
- How do you keep up with industry trends and best business practices? We think a “professional” broker will belong to an industry group like the National Association of Practice Brokers and devote some time to continuing education like attendance at the meetings of the Practice Study Valuation Group. Brokers who spend time and money learning about trends and keeping up with developments are most likely to succeed in their market areas and remain in business over time.
- How are you compensated? Most brokers are paid a commission by the Seller upon the sale of a practice. Brokers who engage in “dual representation” are paid a commission by both the Buyer and the Seller.
- If there is a problem with your representation, how is it resolved? The answer to this question can be found in the brokerage agreement signed by the Seller. If the broker is local, a disagreement can be settled by LOCAL arbitration or by the court of local jurisdiction. If the broker’s home office is out of state, then you will have to engage in arbitration or legal processes in the state and city where the home office is located – a very serious and expensive requirement.
- Do you only work for Sellers? Most brokers will also represent Buyers just not in the same transaction where they are representing a seller.
- How would a broker representing a Buyer be compensated? That needs to be decided up front – most likely it will be a fee based on the time involved or perhaps a flat fee.
- If the Broker is representing the Seller, what can I expect from him or her? The Broker will provide you with a packet of information, show you the office, introduce you to the Seller, and provide additional information requested by your accountant. Many Brokers will introduce you to banks that will finance a purchase, attorneys that would represent you, and accountants that can advise you.
- Is a Broker even necessary when the Buyer and the Seller already know each other? Come back for our next blog to find out!
Do you have additional questions about the buying or selling practice for your dental practice? Contact us and we’ll guide you through the process with as little stress as possible.