February 16, 2019 by omniadmin Seller Articles 0 comments
Choosing the Right Broker
You don’t choose your family. You don’t get to choose when you’re born. And you don’t get to choose your name given to you by your parents. But you do get to choose who your practice broker is going to be. So, how do you go about making sure you pick a broker who is going to represent your best interest and do a good job for you? After all, you have spent your blood, sweat, and tears building your practice. You want someone who is going to take good care of your transition. Here are some things to consider when making your selection:
- How many dental practices has your broker sold? If your broker just started selling practices and has sold between zero practices and ten practices, you may consider finding someone with more experience. Every transaction is different in the practice transition world. The seller, buyer, staff, patients, clinic, location, lease, building, attorneys, bankers, and others are all different for each practice. You must be able to manage different personalities, different types of leases, different building sales, loans, etc. It’s a complex mix to try to do with little experience.
- Who does your broker represent in the sale? Dual representation, where the broker represents BOTH the seller AND the buyer is illegal in several states and I question the ethics of it in all situations. You want a broker who will represent your best interest as a seller. Not the best interest of both the buyer and the seller. If a negotiating point comes up, how is the broker going to ethically work through the conflict by representing both sides?
- Is the broker licensed to sell a practice and real estate if the real estate is included in the sale? Some states require a broker to have a real estate license to sell a practice or any type of business. All states require a broker to have a real estate license to sell real estate. Check with the state department of licensing to see if your state requires a license and if the broker you are interviewing is licensed.
- Does the broker have any certifications or designations to perform a practice valuation? Designations may include a certified valuation analyst, accredited business appraiser, etc. Having a designation means they have spent the time to learn the ins and outs of a valuation and not just a simple rule of thumb. Certifications and accreditations require weeks and months of training, rigorous testing as well as review by a peer group of valuations.
- How does the broker perform their valuation? Do they do a site visit? Do they just use a rule of thumb valuation, which can be misleading? Do they use a cap rate, book value or production acquisition value? There are various types of methods and doing the valuation. Understanding how they get their numbers is important in the process.
- Has the broker sold practices to corporates? If so, have they been compensated by the corporate group in addition to being paid by the seller? This may be a tough question for some. Receiving compensation from both the seller and a corporate buyer can be illegal in some states. At a minimum, it should be disclosed to the seller that they are being compensated by the corporate buyer.
- Does the broker have a list of buyers ready to go? Having an active list of buyers will speed up the process of selling the practice.
- Where does the broker advertise the practice for sale? If they say “our website and the state association website” then you may consider moving on. A good broker will go above and beyond and advertise across the nation on many different websites and publications.
- Is your broker local, or at least familiar with your market? National brokers will sometimes sit from the comfort of their recliner while having you show your own practice, meet with buyers, send you documents and do most of the work. Local brokers will meet you at your practice, show the practice themselves and do what they are good at – selling practices.
- Are you comfortable with the broker’s personality and style? You’re going to be working closely with your broker through the transition process. The amount of time maybe up to 100 or more hours. Be sure you are comfortable with that persons’ style, demeanor and philosophy. Ask them questions about how they show the practice, what they look for in a buyer and how they determine a good match for your practice.
Choosing the right broker is an important decision. You spent a good amount of your time, money and emotional value building your practice. Your staff and patients have become like an extended part of your family. Wouldn’t you want to choose the best broker to look at for your best interest? Asking these questions of your broker will help ensure that you have the best broker in your area.