Don’t let the simplicity of the offer cost you.
Even when you’re prepared to sell your medical or dental practice, it’s easy to become overwhelmed. Trying to manage the sales process while running your practice is a lot of work. It may seem like an easy next step to field a direct offer from groups like Dental Support Organizations (DSOs) or Medical Service Organizations (MSO); they offer a streamlined approach to purchasing your practice. The simplicity of having a direct offer on the table may also seem compelling to you as a practitioner. You no longer have to think about shopping around for the best price.
In this article, we explore what to consider before you say yes to the offer on the table, and whether or not hiring health care practice brokers is right for you.
What’s a fair price? How do you know?
A buyer’s primary concern is to buy your practice for a price that benefits them financially; however, the best deals are those where both parties benefit. This can be achieved when both sides are well-informed and agree to a fair price.
If you’re a dentist or a doctor with an offer in hand, ask yourself:
- How do I know this is a fair price? (Note that high and fair are not always synonymous).
- What do I know about the market conditions for practices like mine?
- Do I care about selling for the highest price or am I okay with a splashy offer even if the buyer decreases it later? (Note that DSOs and MSOs can and do walk back offers during underwriting with unrepresented buyers).
- Do I know a broker that can get me an offer that covers at least their broker fee and more?
You can pay the broker or you can pay the DSO or MSO.
What’s often overlooked is that DSOs and MSOs pay their doctor partners high referral fees. In addition, they spend millions on their business development department. DSOs and MSOs know this is a complex process with lots of variables, so they spend money on marketing to offer a clear solution and efficient pathway to selling. At the same time, you are likely leaving a lot of money on the table for the seeming convenience.
Here at PTG, we have seen that seeking representation from knowledgeable dental business brokers and medical business brokers offers you a fuller and more accurate view of what your practice is worth.
What good health care practice brokers do.
True market valuations take research and time to understand. The job of dental office brokers and medical practice brokers is to take the initial homework off your plate. Good brokers act as a guide to figuring out the deal that lines up best with your priorities. It is preferable for you to have your own guide to the market, rather than relying on a buyer to interpret worth.
Remember – buyers looking to directly purchase practices want to purchase at a discounted price. They have a vested interest in keeping valuations low in order to improve their own company’s bottom line. In contrast, hiring dental business brokers or medical business brokers brings structure, knowledge, and momentum to the process, while advocating from your side of the table. Plus, they only get paid after the deal is signed.
Nobody is an expert the first time they try something. After spending decades building a successful practice, you have become an expert in your field. In the same way, brokers like us at PTG have become experts in pursuing and closing dental and medical M&A deals.
Strong representatives protect your interests. As brokers, we limit risk because we know and live in the landscape of selling and closing deals. We hold the knowledge and provide leverage over DSOs and MSOs looking to build positive reputations within the industry.
Summary
At PTG, our job is to offer a fuller picture of what selling could look like. Our clients say they feel supported through these complex and often emotional times. As medical practice brokers, we move you from being a passive recipient of an offer to taking a more active approach in driving the deal to close.
