20 Jun The PARAGON 7% Seller Fee
Why should sellers pay an unfairly distributed fee for the sale of their practice? PARAGON does not think they should! The industry norm is a 10% transaction fee. This is an acceptable and fair fee to the consultant in return for providing expert guidance. But the industry norm is also for the seller to pay the entire 10% fee. Most all practice brokers charge a 10% seller fee (a few charge 12%). But even the “dual representation” consulting companies are charging the seller a 10% fee in addition to charging the purchaser a transaction fee.
PARAGON is also a very successful firm that utilizes the dual representation approach to ensure a fair and equitable transaction, but PARAGON sees things a little differently than other transition companies. We feel that a purchaser should pay his or her fair share of the cost of acquiring a practice through a professional such as a PARAGON consultant. After all, the purchaser is receiving continuous professional guidance and advice as well.
PARAGON adopted a dual fee structure. If we put a transaction together and are able to utilize our dual representation approach (which has been the case in virtually 100% of the thousands of transactions our consultants have handled), then the seller fee is only 7% of the selling price of the practice. The purchaser pays a fee of 3% of the selling price of the practice. PARAGON still receives a fair fee of 10%, but the total fee is more reasonably distributed between the seller and purchaser. The seller is not strapped with the entire expense of the transaction like they would be with other transition options.
Why is the fee not divided equally between the seller and the purchaser? Well, honestly, sellers do take more time and attention than purchasers and we have to spend a lot more time on the front end of each transaction developing the financial analysis and appraisal. The seller also requires a considerable amount of attention and time in distributing the asset allocations of the practice sale to maximize tax advantages and/or minimize tax burdens.
What happens if a purchaser does not want to pay his share of the fee? In that case, you are charged the full 10% fee for the transaction, just like you would be if you dealt with any other professional to handle the transaction. But frankly, this rarely if ever will occur. Quality purchasers (like the ones suitable for your practice) virtually always see the benefits and the economics of paying a fair share of the transaction costs.
Receive high quality professional assistance at a much more reasonable transaction cost. Call PARAGON today, you will be very glad you did.