Q: What is the 80/20 Rule of Finding a Good Dental Practice?
A: The 80/20 rule is my tried and true method for finding a really strong practice to purchase.
There are two ways to find good practices for sale: brokers and private sellers. You should spend 80% of your search time with private sellers and the remaining 20% using brokers to search.
80% of your search should be focused on reaching out to other dentists. The “good” practices often don’t even go through a broker for many reasons. One reason is simply that brokers take a huge percentage of the sale price. The majority of doctors with good practices for sale don’t want to pony up that kind of money because they don’t need help unloading their profitable practice.
Deals tend to go smoother with private sellers, too, with more direct communication and and a personal relationship between you and the seller.
Finally, a listed, public practice for sale is, well…public and listed. If a practice has grabbed your attention on a broker’s site or if a broker has emailed you a listing, at least seven other doctors are interested in that practice as well.
The tricky thing is that you need to be networked to potential sellers so they know to reach out to you when they’re ready to sell their practice. Spend 80% of your search time building a network of gray-haired dentists who might be in the market to sell their practice soon.
Just because building your network is a good idea, doesn’t make it easy, I know. Potential buyers traditionally will reach out directly to potential sellers to make a personal connection, or send mass mailers to get on private sellers’ radar.
Brokers are still a good resource, and every so often, I have clients who have found a great practice through a broker. These unicorns may be rare, but they do exist, and it’s worth hunting for them. It certainly would be easier for you if you find one…just don’t bank on it being the best way.