Rolling the Dice on one of your Biggest Assets

I was watching a You Tube video the other day about home dentistry. In this video there were a number of people conducting tooth extractions using, dental floss tied to a doorknob, dental floss tied to an arrow that was released from a bow, and yes, pliers and multigrips. Putting aside the looks of terror on the “patients” faces during these activities, it made me think of why we use trained professionals to perform tasks for us that we ourselves are not qualified to perform.

I must say that I have no intention of conducting home dentistry on either myself or anyone I know, as I am not qualified to do so. I’m old enough to remember Laurel and Hardy practicing home dentistry on each other and that was enough for me.

If you are an owner principal of a dental practice one thing you can absolutely be sure of, you will sell your practice, whether it is today, tomorrow, or in a years’ time, it will happen. When it does come time to sell it will be in your best interest to engage professionals to conduct the transaction for you. And that is what it is, the sale of your practice is a business transaction. There is no dress rehearsal, and you will get one chance to maximise your return while ensuring the conditions of any contract are fair, equitable and acceptable.

So, when you sell your practice should you engage a professional broker and what should you be looking for in a professional broker? Obviously, they will need to be qualified to conduct the transaction for you.

Let’s look at the process being a “business transaction”. It is important that your broker has a high level of tertiary business qualification and understands what makes up a good business opportunity. One main reason for this, is that convincing a dentist, corporate or private aggregator to purchase is one thing however, the broker needs to be able to put forward a solid and coherent business case to the purchaser’s accountant. They will usually have the final say. Additional to business qualifications, your broker needs to have a strong history in transacting businesses, from both the purchasers and vendor’s side or at least be part of a team that has those broad skills.

If your broker has primarily conducted transactions from one side or the other, they will be limited in their ability to negotiate effectively. Good negotiators understand both sides of the negotiation while remembering who they are working for. I will come back to negotiation later in the article. What should you look for in the team that will handle the transaction?

Firstly, ensure there is a team. I believe that all teams that are effective are well rounded, and that each member brings something to the transaction and how it will run. Any team should be remunerated as a team not as individuals. In other words, the members of the team should not be individually incentivised, or they will not be as effective for you. Look at the team not only from their qualifications and business transaction history, but also how well they operate as a team and do they have team cohesion.
Team cohesion will be essential for effective negotiation. This is where the rubber hits the road. I know we all think we are good negotiators, primarily because we managed to negotiate free floor mats when we purchaser our last car. Sadly, this is not the definition of a good negotiator.

To negotiate effectively you need several attributes coming together. At its foundation effective negotiation requires empathy. A negotiator doesn’t have to agree with those that they are negotiating with however, they do need to understand why they have a set position. They need to be able to lend genuine legitimacy to their position, avoid zero sum negotiation, prepare well for the negotiation and be civil and courteous. Above all, negotiation is a learnt skill, so they need a lot of positive practice under their belt.

So, when it comes time to sell your practice, I suggest that you engage qualified brokers who operate in a cohesive team atmosphere, bringing multiple skill sets and business histories to the transaction, who are seasoned negotiators that have worked on both the purchaser’s and vendor’s side of transactions and that understand that the conditions of a contract are as important as the money.

Above all, make sure they are people you trust and can work with.