Let’s look into the future a bit and set the scene here. You’ve found a great practice, you’ve had Dental Buyer Advocates do a thorough valuation, and you’ve submitted a Letter of Intent. Now that the LOI has been accepted, it’s time to move to the next phase: negotiations.
I know that for many of us, the word “negotiations” is a little tough. It sounds confrontational, difficult, and kind of scary.
It’s not, I promise! At least, it doesn’t have to be. I’ll tell you why.
To get the answer, let’s consider what the purpose of negotiations actually is. Is it about two parties trying to get the better of each other? In fairness, sometimes it does turn out that way. Those deals end up being stressful and time consuming, and end up with someone holding the short end of the stick.
In reality, though, negotiating a practice purchase should be about two parties looking for a win-win together. In a dental practice transition, the buyer wants a great practice for a fair price, and the seller wants to be rewarded for building that great practice over decades as they ride off into the sunset of retirement.
Why not both? It can be done! Here’s what you need to have for a smooth negotiation:
A willingness to walk away
It’s hard to say goodbye! But sometimes it’s the right thing to do. Maybe it’s a great practice in a great location and you’ve got your heart set on it. But if the numbers don’t add up, or if the seller is being too obstinate in the negotiations, you have to be ready to walk away. There are plenty of other great practices out there, I promise!
Good tools and a great team
The best thing you can do as you get ready to buy a practice is to assemble a great team. Your accountant, lawyer, banker, and buyer’s rep are all important parts of your team. Why? In part because during negotiations, they’re the ones who will hand you the right tools for the job.
Your lawyer should help you avoid big pitfalls, and your banker and accountant will help you with the due diligence to make sure the numbers add up to a fair purchase price. Again, it’s not about getting the better of the seller, it’s about making sure that the purchase is a win for you as well as for them.
Elsewhere I’ve told the story of John, a client I had to fire. I won’t belabor it here, but suffice it to say, John was not a great negotiator. He assumed the worst intentions on the part of everyone involved with the deal, and took a very belligerent stance as a result. After two potential deals went up in flames because of his mindset, I had to let him go.
Think of it like Yoda’s cave on Dagobah. What will you find in the negotiation process? “Only what you take with you.” This may be simplifying it, since the seller could turn out to be a serious jerk, but that’s almost never the case—treat them well and chances are they’ll do the same to you.
Don’t go through your negotiations alone! I’ve been working in dental transitions for over a decade, and I’ve got a great team of former bankers, dentists, and accountants ready to help make sure you get that win-win. When you’re ready to buy a practice, give me a call.