07 Aug What if Each Team Brought Their Own Referees to the Super Bowl?
I think we can all agree that if each team in the Super Bowl was allowed to provide their own referees it would certainly create a major conflict of interest. The biggest game of all would be, at best, chaotic and, at worst, a complete disaster filled with totally unfair rulings and decisions. With so much money at stake, the referees for each team would do everything possible to make sure that their team eventually wins the game. The eventual winner would not necessarily be the best team, but rather the team that was able to bring the best referees who knew how to prolong the game long enough for their team to outlast the other.
Thankfully, the teams in the Super Bowl are not allowed to bring referees that only work for that team to officiate the big game. An unbiased third-party, the NFL, provides the referees for the Super Bowl so the game is officiated by a group of very experienced professionals who are not working for the benefit of one team over the other. The referees are assigned the task of representing both teams equally so the outcome of the game is determined on a fair and equitable basis… the proverbial “level playing field.”
PARAGON feels that a practice transition transaction should also be based on a “level playing field.” The transaction must have an unbiased third-party in position to monitor everything so the transaction will reach a fair and equitable outcome. This is what “Dual Representation” is all about.
Dual Representation means that we develop and maintain a professional client relationship with both the buyer and seller in every transaction. For the seller, this means that we take the time to understand his or her objectives and that we not allow those objectives to be compromised. After all, it is the seller that has a lifetime of toil and effort at stake. For the buyer, this means that we develop a keen awareness of his or her goals and aspirations and that we do everything in our power to make sure those goals and aspirations are satisfied. After all, it is the buyer who will put his future on the line to acquire the practice. It also means that we take great care to make sure that the two clients in every transaction have compatible goals and objectives. This concept is totally foreign to brokered transactions where virtually any warm body is a suitable candidate to buy a practice. Whenever we work toward a transition with our clients, the question is always, “Are the needs and objectives of these two individuals sufficiently compatible to allow a true Win/Win transaction, or will someone need to compromise their goals and objectives in order to get a deal done?”
While Dual Representation is claimed by some to be a conflict of interest, it is in reality a mechanism for bringing integrity and discipline to the transition process. As an intermediary expert with fiduciary responsibilities extending to both the seller and the buyer, we must make sure that the transactions we put together are absolutely appropriate and fair to all parties. We must be prepared to recommend that a practice opportunity or a buyer be passed on because, with Dual Representation, our reputation is totally dependent on the success of the transaction. Dual Representation forces PARAGON to be long-term goal oriented and to ONLY facilitate equitable transactions. Brokers, on the other hand, can walk away with their fee in hand and always blame the buyer or the seller, thus disclaiming any responsibility for fouling things up if the transition does not go well.
No one party has to gain at the other’s expense. In fact, just the opposite is true. If both parties become sensitive to the needs of the other, and if they can clearly see that the realization of their individual goals and objectives are intertwined, then the synergy that results can propel the practice and the doctors to a far greater degree of success than they ever dreamed possible. That is why at PARAGON it is “Win/Win” or it is NO DEAL!
A “Win/Win” transaction means that a fair price for the practice is established for the seller in direct relation to the buyer receiving a fair return on his or her investment and a reasonable annual cash flow in proportion to the risk of the investment. This is where PARAGON’s Dual Representation philosophy is so important. For some, it may initially seem unorthodox to represent both the buyer and the seller, but if you really think about it… dual representation is completely logical.
It is virtually impossible to negotiate fair! The pure nature of negotiation means that someone must lose. We say virtually impossible because you may somehow luck out on a fair outcome through negotiations, but it would be simply that… pure LUCK! However, fair can be pre-determined based on a logical foundation designed to produce a fair outcome for both the seller and the buyer. Dual Representation eliminates having to artificially set a high price to allow enough room for the buyer to negotiate that price down to what he or she feels is fair.
PARAGON’s approach to each practice valuation actually involves comparing the buyer’s bottom line to the practice fair market value. Adjustments in our valuation are always based on the buyer’s projected cash flow and anticipated earnings rate. This is probably quite reverse of the way you may be thinking. However, using this approach, PARAGON arrives at a fair price supported by statistical data to show a buyer how that practice value was determined. We then utilize dual representation throughout the transaction to make sure a fair outcome is realized for both the seller and the buyer.
Pricing “to sell at a fair price for the seller and buyer” rather than pricing “to negotiate” is logical. Most of our practice listings are sold to the very first buyer who looks at the opportunity. Why? Because the opportunity is structured fairly on the front-end based on sound logic and proper documentation. We also have the necessary support tools. The comprehensive financial analysis we develop for each of our buyers reveals everything as to how we established both the price and the transition structure to be fair for the seller and buyer.
Everyone deserves to win. You simply have to decide that you want the transaction to be fair for all… and it will be! A Win/Win transaction is all that is acceptable to PARAGON and our clients and we know that Dual Representation accomplishes this goal every time!
