17 Jun Why do I need Paragon to help me sell my practice?

Some dentists truly believe that they will save money by selling their practices without professional guidance. However, for that to be true, the doctor must make some unrealistic assumptions.

The seller must first assume that he or she can actually determine and objectively substantiate a value for the practice that is very near what value a professional appraiser would place on the practice. Then, the seller must assume he or she can get a purchaser to actually believe in that practice price (without any documentation or analysis to back up the practice value). Not only must the purchaser believe it, he or she will want to independently verify and validate the appraisal with his own advisors.

What are the realistic odds that the purchaser’s advisors will agree with the seller’s appraisal of the practice? That’s right, no chance at all. We experience purchaser’s declaring value discrepancies of 40% to 50% less all the time as the purchaser postures for some intense negotiation and compromise.

But, even assuming the seller can somehow cross this practice valuation bridge, the seller must then assume that he or she has all the necessary banking connections and expertise to get the transaction financed.

Then, the seller must also assume that he or she has the knowledge and expertise to work through all the complex legal, financial and tax issues surrounding the sale of a dental practice.

A poorly tax structured transaction can cost a seller far more in income taxes alone  than what the seller would ever pay to a professional transition consultant. When you figure in the additional legal and accounting fees the costs will soar far past the fee  that would be paid to a consultant!

If the seller does use an attorney or accountant to assist, then the seller must assume that these advisors actually know something about dental practice transitions and that they will actually help rather than hinder the transition process. Ultimately, the  seller must also assume that his or her time is of little or no value for the seller will spend hundreds of hours trying to put all the pieces of the transition puzzle together.

The truth is that dentists who attempt to go it alone either never sell their practices or eventually panic and end up negotiating chunks of their practice value away that will far exceed the fee the seller would have paid a professional to have the transaction done the right way.

However, if you still decide not to use a professional consulting firm, then at least be aware of the risks you are taking with one of your most valuable assets. These risks include, but are not limited to, the following true accounts from actual cases:

• The risk that you will waste countless hours with flaky purchasers who are either simply “tire kickers” or think they can wait you out for a lower price;
• The risk that any purchaser will be simultaneously pursuing multiple practice opportunities in the area, and may inform you after months of negotiation, posturing and advisor fees that he or she has decided to purchase a different practice;
• The risk that you and a serious purchaser will not be able to come to an agreement on the price or terms because neither of you can speak objectively or with authority to how much a dental practice truly is worth;
• The risk that the purchaser will have an advisor who will employ a totally adversarial approach to the negotiations;
• The risk that you finally locate the perfect purchaser only to later watch him or her become offended by your attorney or accountant and walk away from the deal;
• The risk that you will not receive the full fair market value of your practice and sell it for much less than it is really worth (this happens frequently);
• The risk that you will eventually get weary of the entire process and negotiate away large sums of money just to get it over with (this also happens frequently);
• The risk that the purchaser you finally come to terms with will be unable to secure the financing for the purchase;
• The risk that you will still have to pay your attorney to draft extensive documents and that he will not know how to properly draft certain key provisions which are absolutely essential to the success of dental transaction and the protection of the seller and the purchaser (attorneys frequently don’t know about many of the dental specific provisions needed until we explain it to them);
• The risk that the purchaser will fail to manage the practice properly and that he or she will run off both patients and staff and your contract doesn’t give you adequate remedies, timing or recourse;
• The risk that the purchaser simply moves the patients to a new facility with new equipment and then claims he owes you no more money on your seller note;
• The risk that transaction will cost you a lot of money in advisor fees but never happens (this happens at least 50% of the time in transactions without professional assistance).

Unlike attorneys, accountants and practice brokers who represent only one side of the transaction; a PARAGON consultant is someone who has proven his or her value and ability to be fully trusted by both sides to be competent, fair and objective. With PARAGON, you and the purchaser can proceed forward in confidence toward your mutual objectives, knowing that everything will work out successfully. PARAGON makes it a point to be in tune with the needs and expectations of both parties, and to be in a perfect position to know how the demands of one party may impact upon the needs and goals of the other party. After thousands of successful transactions, we are experts as an intermediary for minimizing conflict and resolving concerns. The entire transition process flows smoother, is less stressful and more productive with PARAGON.

Of course, PARAGON also specializes in dental practice transitions. That is all we do! Too many dentists entrust their most valuable asset to someone who sells dental supplies for a living and dental practices on the side. Ideally, your advisor should be competent  and confident in financial as well as legal matters, and should be capable of coaching and interacting with the lawyers and accountants who will likely be involved. An advisor who works in this capacity to the fullest extent will save you untold thousands in legal and accounting fees, and ultimately will help ensure that the transaction really happens. (Attorney’s aren’t known as deal killers for nothing!) A practice transition advisor should have direct experience in structuring successful practice transition transactions. Having closed thousands such transactions since 1988, PARAGON consultants have both the experience and the knowledge. PARAGON also boasts a 99.9% closure rate once the seller and purchaser go to contract.

PARAGON is also totally performance oriented, deriving all of our compensation from the results of the process; not by the hour. Consultants who offer to work by the hour may doubt their ability to get the job finished. They can run up sizable bills without really accomplishing anything.

Since 1988, PARAGON consultants have assisted thousands of dentists satisfy their transition needs and goals. We have always been compensated ONLY when the transaction closes. Strictly from the hours put into the average practice sale transaction,

we would have been a lot better off financially if we had been paid by the hour (like attorneys and accountants are paid). You never know about the countless hours we spend with the other party and the other party’s advisors. We buffer you from that part of the practice transition process so you will not be exposed to anything that could be construed as a negative. It is our job to shoulder the stressful and emotional parts of the process. In other words, PARAGON knows how to get the job done with the least amount of stress and effort on our clients.

NOTE: Some attorneys and accountants are very reasonable people who may make some meaningful contributions to the transition process. However, too many attorneys have little or no understanding of the business aspects of a dental practice transaction, and no comprehension of the delicate nature of the issues at stake. This is especially true when the seller and purchaser will be working together for years after the sale. In  an attempt to control the process (thereby generating much more in fees) they will often give absurd and destructive advice to their clients. The problem is that you, the dentist, won’t know which advice is good and which is absurd. A good consultant will. After all, a practice transition specialist deals with similar issues day in and day out. An experienced consultant can tell you when certain demands are out of bounds. If you happen to get conflicting advice from your advisors, be careful not to make  the mistake of assuming that the attorneys or accountants always know what is best just because they’re attorneys or accountants!