Understanding the buyer's psychology
There’s more to selling a dental practice than most people think. Dean Barker of Mediestates explains why knowledge of the dental practice market and an understanding of the psychology of prospective buyers is crucial to achieving a successful sale
Anyone who has sold a house is aware of how involved and time-consuming the process of selling a property can be. Finding the right estate agent and solicitor, hunting out all the necessary paperwork and making your house as attractive as possible to prospective buyers is difficult, not least because it is normally a one-off, or at least very rare occurrence, and there are many aspects of the process over which you have little or no control.
Selling a dental practice, unfortunately, can be even more complicated. It is not simply the sale of a building, but of a whole business, which normally includes all the assets and equipment, but crucially and more stressfully, also includes the team and one very valuable asset – the patients (ie, the goodwill). In some cases, for instance when a practice owner is looking to retire, this business represents the sum total of their career and many years of hard work and dedication. Finding the right buyer for your practice is therefore essential, not just in order to get a fair price but also to ensure that the practice will continue to flourish under new ownership and your staff and patients will be satisfied with the outcome.
Understanding your potential buyers
You might be lucky enough to have an associate or a colleague you know is interested in buying your practice. In this case we can help to broker the deal on your behalf. This type of transition tends to be smooth as long as you have obtained the right advice and ensure all the paperwork is in order and a price can be agreed.
Where this is not possible, as is the case for most practice owners, you can always turn to the market to find a potential buyer. At Mediestates, having been established for over 15 years, we have a wealth of experience in buying and selling within the dental market. This has given us a deep understanding of all types of dental practices and armed us with the ability to effectively market those practices to a wide range of prospective buyers. It is our job to find the perfect ‘buyer-seller’ match.
When we look for this perfect match between buyer and seller we are in fact searching for a win-win situation and to get to this point requires a deep understanding of the needs and wants of both parties.
There are numerous psychological theories dealing with information gathering and processing that lead eventually to a choice being made – in this case, to buy or not to buy. In today’s dental market, where choice has become wider and more available, the challenge is to find ways to help purchasers make the right choice determined by their own self-interest, and also help vendors optimise their practice value or the package they receive, by enabling them to maintain control over their destiny.
Over the years, we have identified many different types of buyers, whose needs and wants can differ greatly. Our role as broker is to understand these characteristics and then bring each side together to create our win-win scenario.
With the rise of dental corporates gaining momentum, selling to this group can seem like an attractive option. However, often there are strings attached, sometimes including a transition period where the current owner is obliged to stay on under the new ownership, which can prove difficult for some.
These larger multi-practice concerns are usually ambivalent about the specifics of a practice, particularly if they are simply looking to expand their portfolio as an investment, based on profit and a strong financial outlook. But at the other end of the spectrum might be a dentist looking to take the plunge and become a practice owner for the first time, or a husband and wife team who are looking for a practice run by an outgoing partnership with a similar ethos to theirs. It’s likely that both of these purchaser types will have very definite ideas of what they are looking for and a more tailored approach will be required. Whichever group you are looking to sell to there are nuances and distinctions that should be taken into account to make your practice more attractive to different segments of the buying market.
Get your practice in order
Regardless of purchaser type, they will want to see various paperwork and accounts, and go through a process of due diligence. It is crucial therefore, to make sure that your practice is a viable business, with good prospects, that will be regarded as a healthy investment. Knowing the numbers and being able to drill down into details such as chair time utilisation, failto- attends and recall rates, gives prospects a complete insight into the business and an understanding of where beneficial improvements could be made. Starting this process in good time means you can institute any measures required to improve in weaker areas. Remember, the stronger your business appears, the higher the price it will command.
Use the right marketing channels to find your perfect match
Once you are ready to sell, the next step is to market your practice effectively to targeted potential purchasers and finding the right marketing channels to achieve this is key.
At Mediestates we have the largest reach in the UK and can help your practice reach the widest range of the most likely purchasers. We also actively market a number of practices to interested buyers, via our website and consultant network. In this way, we make your practice easy to find and keep it front-of-mind for any buyer who we believe is the right match.
By understanding the strengths of your practice we can pinpoint which buyer type we advise for a potential sale. But whatever your target market, if your practice is a successful business with a good financial outlook, that is well-marketed, your chances of achieving an attractive offer will be maximised.
Posted by: Dean Barker on 19 Apr 2018