One of the things I say in my regular monthly webinar presentation telling dentists how to grow their practices, and be ready to sell their dental practices when the time is right, is that dentists need to have a BLUEPRINT PLAN for how they want the sale process for their practice to play out, when the time comes to sell the practice.

Which means that the selling dentist, or vendor, needs to have a clear vision as to what they want to achieve from the practice sale.

And when these selling dentists do have this clear vision, and a plan, the sale process should become a very simple matter.

What I do say during that presentation is this:

“AND selling a dental practice should be a life changing moment… the realisation of a business life well spent… nothing upsets me more than when an older dentist contacts me and wants to tart up his practice for a quick sale to some unsuspecting buyer…. To me that’s unethical and immoral, and it’s something that I just won’t do… and it doesn’t have to be that way….”

Recently…

A dentist I know really well was recently looking to acquire a dental practice.

Sadly the practice sale fell through while my colleague was running through her due diligence on the chosen practice.

What actually happened was that the vendor decided not to proceed with the sale to my colleague, despite the fact that my colleague was a cash buyer and had already paid a ten percent deposit for the practice to the agent.

Here’s what happened…

Firstly, my colleague decided that she wanted to organise an infection control compliance report for the practice. She wanted to make sure that the practice she was purchasing was operating under current infection control requirements, and so she sought to have an independent Infection Control Audit undertaken.

The second thing that my colleague was asking for was that she wanted a building report for the premises where the practice was situated. As the practice owner vendor was also the owner of the building where the practice was situated, and would become the landlord for my friend after the sale, my friend wanted to know that there were no liabilities in the standard of the building that as a tenant she might be asked to contribute payment for repairing.

My friend wanted to make sure that the building that her future practice was situated in was strong, and was not going to turn into a money pit.

Lastly, the vendor had agreed to stay on in the practice for twelve months as an associate dentist once my friend purchased the practice.

My friend wanted to engage the vendor’s company as the provider of the dental services under a Facility and Service Arrangement [FSA], with the vendor then being personally engaged by their own company as the providing dentist, rather than by my friend’s practice directly.

This is the new standard for FSAs. However the vendor did not want to use the intermediary company.

Lastly, the vendor wanted to be engaged on a commission of forty-five percent, rather than the usual industry standard of forty percent.

And because the vendor was only willing to stay on for twelve months, and at a 75% capacity compared to when the vendor was the practice owner [i.e. working three days each week rather than four], my friend decided that paying an extra 5% to someone who was definitely leaving, did not make logical business sense.

My friend was suspicious…

The vendor selling the practice also owned and worked at another dental practice ninety minutes’ drive away.

My colleague had always wondered whether the figures for the practice being sold had been creatively “adjusted” by running more of the expenses through the other practice’s ledger? If this was the case, then it would have definitely created an inflated profit and EBITDA for the practice being sold.

My friend was surprised…

My colleague was surprised when the vendor decided to terminate sale negotiations with her, and did so even before her true due diligence had begun.

My friend had been very open minded during all negotiations, but was not sure what exactly had been causing the hairs on the back of her neck to stand up on their ends… but they were up.

Now that the sale has been terminated, my friend feels that she has definitely dodged a bullet….

What do you think of this “situation”?

Do you think the vendor was overworking the sale?

Do you think that the vendor was trying to disguise an ongoing liability or two?

I think….

I think the vendor needed to realise that the sale of any item is the transfer of ownership of that item, in exchange for money.

In this case, the dental practice vendor was being handsomely rewarded in cash for the sale of their dental practice.

Yet for some reason the vendor of this dental practice still wanted to have control [as if they still were the owner] after receiving all the money they had asked for as the sale price for the practice.

Years ago…

Years ago in 1997, my wife and I sold our very first free-standing home. Through the course of a week, I had reason to drive by this home on two occasions each week.

My wife never drove past the home again once we had sold it.

When I asked her why she said:

“It’s not my house anymore. It belongs to the people who bought it. They own it now, and they’re entitled to do what they want with it now.”

In 2018, when Jayne and I sold our Sydney home and moved to the country, the people who purchased our home wanted to connect with us on social media and keep us up to date with all the changes they had planned for their new home.

I decided that this would only upset me, and so I adopted Jayne’s philosophy from 1997.

“It’s not my house anymore. It belongs to the people who bought it. They own it now, and they’re entitled to do what they want with it now.”

I think that the vendor of the dental practice that my friend was wanting to purchase needed to adopt this same philosophy of disconnection.

And I know it was a difficult situation, being the building owner and all…

But, as I said up above, for a sale to be effective, the vendor needs to have a clear vision of the blueprint required for the sale to be completed.

And the sale process and result needs to be a WIN-WIN for both parties involved.

There ends the sermon…

There ends the sermon…

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The Ultimate Patient Experience is a simple to build complete Customer Service system in itself that I developed that allowed me to create an extraordinary dental office in an ordinary Sydney suburb. If you’d like to know more, ask me about my free special report.

Email me at david@theupe.com