Bad Broker Behavior: Broker Generated Valuations
The Bad Broker Behavior series is intended to highlight some of the bad behaviors of some of the dental practice brokers in the US. I do not suggest that all brokers behave this way, only that some do. This series is offered to help dental practice sellers and buyers beware…
You may recall Dr Sally Seller from a previous post. She is selling her dental practice through her longtime acquaintance, Bob Broker. You may remember that Bob was fairly quick to convince Sally to drop her listing price. Sally did drop the selling price, but got an agreement that if Bob didn’t have the practice sold in three months, the listing would expire. At the end of the three months, Bob had not sold the practice. Enter Bill Broker.
Bill Broker (no relation to Bob Broker) has a slightly different approach to Sally. He offers her a “free” valuation… it is after all a $4,999.99 retail value. Sally feels knowing the real value of her practice will help her price it right.
Sellers Beware of Bad Brokers’ perverse incentives.
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2 comments
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Eric
March 29, 2011 at 9:24 am (UTC -6)
Very nice concept.
I am a buyer in San Diego area.
How should I get started?
(This is perhaps not the place to comment, but I tried to find your contact but it seems this is the only way to leave you a msg)
My assumption is that the seller has their own CPA.
The seller should prepare financial statement (tax return, P&L…)
Sign confidentiality agreement.
Agree on price. Sign a contract with a refundable deposit.
Question: the broker can hold it at a trust account. Who should store this deposit check?
Then perform due diligence. Check charts, finance…
Bring in consultant if necessary.
The buyer applies for loans. Meet the property owner to negotiate the lease.
Start shopping for insurance and permit, payroll, worker’s comp.
With seller permission, visit the office to see how it runs and meet and know the staff.
Get the lawyer to write the contract. I agree Woods and Delgado is great.
Followup with all these people till both seller and buyer sign and close.
After the deal is close, insurance credential process. Nailbiting for couple months and live happily ever after.
For seller, you are free from the chairs.
Question:
Am I missing anything? Is there anything you would like to add?
How do you come into play? Will you offer advice or support? How do you get paid?
onlythebestpractices
March 29, 2011 at 9:48 am (UTC -6)
Eric,
I liked the concept as well. It seems buyers don’t know the questions to ask, and sellers don’t know how to find buyers. The way I was getting paid is that I pre-negotiated with the Woods to create a more standardized fair-to-both-sides contract and with several different CPA companies to create third-party valuations. I got paid as a mark-up on the services. The total cost was $18,000 for transitioning through my service. Sadly, not enough dentists used my services, so I am migrating out of this business. If you wanted access to the services, I’m sure I could still hook you up. You can email me directly through my gmail account (JosephSpencer). I’d be happy to help if I can.
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