What does a broker do?
A dental practice broker underwrites, markets, and negotiates the sale of a dental practice or dental practices. At Practice Transitions Group, the dental practice broker is just one part of a larger team. The client also has access to a:
- CPA
- In House Attorney
- Former Dental Practice Manager
- Underwriting lead
These financial experts know which reports to pull and how to pull them confidentially to place a value on the practice and take it to market.
(A dental practice broker who manages sales to a dental service organization (DSO) may also be called a DSO broker.)
Curious about how a dental practice broker’s work plays out in real life? Here’s a behind-the-scenes look at the Hendricks who hired Thomas Allen at Practice Transitions Group to negotiate a DSO dental practice sale.
The Story
Dr. Robert Hendricks and Dr. Kristen Hendricks have built two successful practices over twelve years. They initially enjoyed the growth; they were seeing more patients each year and hired staff and associates to accommodate the growth. Over the years, the staff felt like family. The Hendricks stepped back from the practice and thought “We started discussing this as a dream in our house and now here it is: an actual business.” They felt excited and grateful.
However management began to take more time than dentistry. The Hendricks wanted to spend more time with their young kids. They began to consider selling their practices.
“We were both feeling like we’ve taken the office, as far as we were able to with the energy that we had with what we had at home going on.”
Thomas Allen first met the Hendricks when he helped them find a location for their second practice. So when they began researching Texas dental practice brokers, they reached out to Practice Transitions Group.
“I think our experience with Thomas was that he’s upfront and transparent about expectations. He’s experienced and gets things done. And I’ve had other colleagues that have used them for similar transactions. I felt Thomas and his team would do what they said they were going to do.”
With a track record of successful real estate transactions behind them, the Hendricks hired Thomas Allen and his team at Practice Real Estate Group. He first spent time listening to the driving forces behind their decision to sell, their “why”. Thomas knew that they needed more time with their kids and to step away from dentistry for a bit.
He also knew that the kind of buyers that could afford the Hendricks’ practices oftentimes want the lead doctors to stay and work. After all, it’s their vision, leadership, and clinical expertise that got the practice to such a profitable place.
In addition to the Hendricks being able to step away from the practice, Thomas would need to negotiate a price. The Hendricks practice was very profitable and the couple wanted financial stability from the offer that could replace what they were making as entrepreneurs.
Instead of hoping for luck, Thomas and his team launched the process they developed over time selling over 100 practices to DSOs.
Dental Practice Transitions Brokerage in Action
What does a dental practice transitions brokerage do? In this case, Practice Transitions Group:
- Began underwriting the practice. With a CPA and former dental practice manager on the team, Practice Transitions Group knew which reports to pull and how to pull them. Then, the financial analyst combed through the expenses to find add-backs and then again to calculate EBITDA. By starting with a thorough analysis of the practices’ financials, Thomas could market the practice’s price confidently and transparently. In addition, having a strong underwriting process ensures that the seller’s practice is taken seriously in the market. When buyers see a thorough underwriting process, they’re less worried about spending their own time and money only to find a skeleton in the closet months down the road. It gives the buyers confidence that the numbers they’re reviewing are accurate and true.
- Next, Practice Transitions Group marketed the practice. While they did list the practice on common dental practice broker sites, Thomas personally reached out to ten DSOs. He chose the DSOs based on their geography, interest in acquiring family dentistry practices, and leadership personalities that he thought would match the sellers.
- As interest began rolling in, Thomas highlighted the strengths of the Hendricks’ practices including their loyal staff, strong associates, and ability to expand their model. He examined the practices’ weaknesses until he saw the opportunity and marketed them as such. Finally, he worked through every possible objection and prepared answers with his clients so they could keep the negotiations unemotional and based on data.
Finally, the Hendricks received five offers. The offer they chose was 25% higher than the next highest offer. That offer also allowed them to completely step away from their practices and spend time with their kids, which was the impetus for selling the practices in the first place. It truly “checked all of the boxes”.
I always said the stars had to align, and it had to check all the boxes. And that offer did.
We couldn’t be more pleased with the outcome. It exceeded our expectations.
Summary
What do Practice Brokers Do for Practice Transitions? Dental Practice Brokers underwrite, market, and negotiate dental practice transitions in between doctors and DSO dental practice sales.
