Why You Need a Broker When Negotiating With a Dental Service Organization (DSO)

How Brokers Help When Dealing With a DSO

Many dentists think that a practice will sell itself when selling to a dental service organization (DSO). They may question the need for a broker if the transaction seems like it may happen anyway. However, a broker is your best bet for getting the right terms for your deal and ensuring that the deal goes through.

DSOs Have an Advantage

When you are selling a practice, it represents your professional career and a lifetime of your effort. Chances are that this is the first and only time that you will sell a practice. The DSO does this every day. From that alone, they could have the advantage in any negotiation.

You would need advice to plan for the transaction process. Selling your practice is not something that is taken lightly, especially when selling to a Dental Service Organization. You have pushed hard to build this practice, and it has been your life’s work for years. Therefore, you need to plan for selling it. Many people do not even know where to begin. A broker could give you the background and education that you need to understand the process from the beginning. This includes arriving at the right asking price.

Selling to a Dental Service Organization Does Not Mean the Best Price

Just because a DSO is interested in your practice does not mean that it is automatically the best deal for you. Yes, DSOs can be aggressive when they are interested in a practice, but it does not mean that they will automatically offer you top dollar. In fact, you may not know exactly how much your practice is worth.

A broker will know the true value of your practice. They work with practice sales every day, and they will know the current trends in practice valuation. You could be valuing your own practice way too low based on what is currently happening in the industry. There could be something particularly attractive about your practice that could warrant a higher sales price. You would not know that if you were handling the transaction on your own.

You Want Multiple DSOs Bidding

In addition, just because you are selling to a Dental Service Organization does not automatically guarantee you the best price. The best scenario for your sale is that you have a bidding war with competing offers. This is always the best thing in any transaction because it results in the highest price for the seller.

A broker would continue to solicit interest in your business, even after you receive your first offer. This is their obligation to you. If they are able to get a second or third buyer involved in the picture, you may end up with competitors for your practice. It is a rule of thumb that sellers win when buyers compete.

Many practice sellers have never been involved in a transaction before. They do not know the process or the rules of the road. Selling a dental practice is not as easy as agreeing on a price and closing the transaction. As a seller, you need advice on the process from someone who works in the field every day. This is what a broker from Henry Schein Professional Practice Transitions can bring to the table.

Your Practice Needs to Be in the Right DSO Hands

There is far more at stake than money. Of course, dollars are very important because they take care of your needs. You also have staff and patients, and you want to ensure that they are all in good hands. Dentists feel loyalty to those who they have worked with and taken care of for years, and they need the right buyer to look after what they have built. This is where your broker could add value and information based on their knowledge.

Experience also means knowing how to negotiate for the best sales price. The DSO will likely not make their best offer first. They buy practices with regularity, and they know how to get the best price for themselves. Their offer may not make sense for you at first. However, they could have some room to increase their price to make the deal happen. There is often a process in the negotiation to arrive at the final price. It requires patience and a skilled negotiating hand.

Negotiating practice sales is not easy. Even if you are a good businessperson, you are up against professionals in a zero-sum game. You may not even know how much the DSO could increase their initial offer.

A Broker Gives Advice on the DSO Sales Process

Agreeing on the price is just the first step of the process. After that, you will need a contract to finalize the transaction. There are numerous terms that could involve timing, financing and other special situations. You need to review the contract closely to ensure that it meets your expectations of the deal. If there are any changes, you need to negotiate the terms with the DSO. A broker can represent you when you do that.

Finally, there is a transition process for every practice sale. As the contract is being negotiated and finalized, there are certain milestones and steps that each party must take to make the deal happen. You may be stepping out of the practice as the DSO readies itself to take over. A broker could help you with that process, making sure that the transaction keeps running smoothly en route to closing.

Trying a DIY approach for a dental practice sale may not bring about the best results. When you are selling to a DSO, you need the expertise of a broker to get the best price and ensure a successful deal. Contact us today to learn more.