Let me tell you about the time I fired a client.
Let’s call him John. At first, John was a great client. He was diligent about his search for a practice, putting in lots of time calling, mailing, and networking. He said all the right things, was polite and personable, and before too long had found a great practice to buy.
And then it all fell apart.
Once John had found the practice, I became more closely involved in the sale process, helping him craft a Letter of Intent with the basic parameters of the deal. Things were going really well until, as things progressed, it came to actually negotiate terms.
Now, negotiating is a good thing! And there’s plenty to negotiate during the transition process. But this isn’t a post about the minutiae of negotiations; it’s about the mindset you should adopt during those negotiations.
John began demanding changes to the terms outlined in the LOI, seemingly at random times in the process. And this happened A LOT. When I pressed him to tell me what was going on, he said that he’d heard some details about terms that acquaintances (or even strangers) were getting on their deals, and he didn’t want to miss out or be taken advantage of. He continued demanding changes constantly.
Eventually, it got bad enough that both the seller and broker threw their hands in the air and gave up on the deal. I heard later that the seller accepted a lower offer from someone else.
Too much of a good thing
John made a huge mistake. He had probably watched a few too many movies or read some bad books about negotiating and had decided that he wouldn’t be the sucker who got taken advantage of. To a certain point, that’s good! Nobody wants to be a sucker, and it’s good to be on the lookout for red flags in any deal or negotiation.
But “being on the lookout” can quickly turn into paranoia if you’re not careful. As a buyer, you should be negotiating in good faith, and your assumption should be that the seller and broker are as well. (In fact, part of my job as a buyer’s advocate is to use my experience with these deals to watch for irregularities and red flags so that you don’t have to.)
You’re buying relationships
When you purchase a dental practice, you’re not just buying an income stream, you’re buying your way into a series of relationships. Patients, staff, referral partners, even the seller: all of these will be important to your career, both in the short and long terms. Remember this in your negotiations and you’ll not only have a smoother transition into ownership, you’ll also have a better, more profitable career.
99% of people are not sharks
Back to John. I didn’t fire him right away after that first deal fell apart. He and I had a very candid chat about what had happened, and I gave him the speech that included much of what I just wrote above. So John went out and found another practice. And then the same thing happened, except that if anything, this time was worse.
John wasn’t interested in relationships, and he negotiated accordingly. He assumed the worst of everyone involved in the deal. He assumed everyone else was a shark and got paranoid. In the end, he turned out to be the very thing he claimed he was afraid of. So I finally dumped him.
In fact, the situation was so bad that I ended up calling my contacts and referral partners and apologizing for my own client’s behavior and recommending that they not work with him.
Don’t be THAT guy.
As you go into the negotiations phase of your practice purchase, remember to do so with your eyes open, but also with a charitable assumption about those you’re working with. It will save you a lot of heartache and headache during the purchase process, and it will also set you up for great relationships and better success down the road.
I go into more detail on this — and every other aspect of purchasing a practice — in my online course. Come check out the first module for free.