Recently I’ve been highlighting the searching process, whether that’s noticing red flags or gauging your excitement. Finding the right practice to buy is essential, and I wanted to focus on building a solid foundation before you get any farther in this process. Once you sign those papers, you’ll be glad you didn’t just grab the lowest hanging fruit from the tree…or should I say broker website.
I’ve worked with many buyers who have brought practices to me from brokers and from private sellers. What I have noticed in my experience, is that there is one overriding principle followed by those dentists who find a lot of good practice options to purchase—they have a broad, deep and friendly network in the dental community. And next comes everyone’s favorite word: network.
To be clear, I am not using network as a verb. It’s not all cocktail-party-mingling, letting out some boisterous laugh you never knew you had. I mean a strong network (noun) of sincere, personal relationships with the grey-haired dentists you’re looking to buy from.
The key word here is “sincere.” If you chat with Dr. Jensen for 10 minutes at a party and then continue to call her repeatedly, you’re just being creepy. If you’ve taken the time to know Dr. Jensen, your attempts at reaching out will remind her that you are serious about buying. (And even then, it still pays to avoid being creepy.) Worst case scenario, even if she isn’t selling, she may introduce you to his friend who is. In a future post, I’ll go into detail on how to go about making these personal connections. For now, let’s just get into the theory behind it.
The 80 in 80/20
80% of your search should be focused on reaching out to other dentists. I can’t stress the importance of this because in reality, the “good” practices often don’t even go through a broker. Let’s break it down logically. Brokers take a percentage of the sale price and the majority of doctors don’t want to pony up that kind of money, especially if the office is worth a pretty penny and the numbers speak for themselves.
The desperation you may feel in finding a practice is very similar to the desperation a seller may feel to unload their practice. If they can sell to you directly without paying a broker’s fee, that potentially six figures staying in their pocket. So finding your way into many potential sellers’ networks is going to benefit both you and them. Don’t be shy.
Just because building your network is a good idea, doesn’t make it easy, I know. But if this is your future, isn’t it worth it? You’re no stranger to hard work so why try and avoid it now when you’re so close? I’m a big believer in choosing your hard. For one thing, while it may be hard to build that network of dentists to find a strong practice, it will make the transition process much easier.
It may also make the transition itself go more smoothly. In the majority of broker-involved transitions I’ve handled, the practice was easy to find but the broker is often noncompliant in supplying documents, unresponsive to messages and resistant to working with your team of advisors (which you should definitely have). The exact opposite is true the majority of the time for off-market deals.
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I go into more detail on this — and every other aspect of purchasing a practice — in my online course. I recently dropped the price for the whole course ($997 now $749) and even split it into four mini courses: Preparation, Analysis, Negotiation, and Closing — each priced at only $199. Take the full course and you’ll be ahead of any competition in the hunt for a great practice to buy.
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The 20 in 80/20
None of that is to say that you shouldn’t check brokers’ sites or ask them about practices for sales that might fit your criteria. Brokers are still a good resource, and every so often, I have clients who found a great practice through a broker. In this case unicorns may be rare, but they do exist, and it’s worth hunting for them. It certainly would be easier for you if you find one!
As humans, we tend to follow the easy path, for obvious reasons. So we want to flip the 80/20 rule on its head. The problem with that in this case is clear. Think of it this way: you could bet that if you see a practice that has grabbed your attention on a broker’s site or if a broker has emailed you a listing, at least 7 other doctors are interested in that practice as well. The odds of the seller choosing to purchase their practice are similar to the chances that you’re selected for The Price is Right.
So building a network is harder. But it’s also much more likely to pay off in the long run. Pause and take a second and remind yourself why you pursued dentistry. Was it for the flexibility, salary opportunities and quality of life? Or was it so you could buy a mediocre practice and keep your student loans as long as possible?
Think of it as a marathon. You have trained so long for this, run your race, and now you’re close enough to see the finish line. It would be much easier to just say “Aw well I can see the end so I’m just going to walk now,” but where is the accomplishment in that?
If you walk across that finish line, you’ll instantly regret not pushing yourself the last little stretch. And then it’s too late; no redos allowed. Do the hard work now so you don’t regret it later. You’ll know you tried your hardest to finish that race and you’ll throw those arms up triumphantly like the dental Olympian you are.
Now that you know all about the 80/20, and that you should be working more with sellers than brokers, it’s time to talk about how. Next week is all about how to go about approaching other dentists to build your network. So if you haven’t yet, make sure you’re subscribed.
Read More:
Evaluating the Seller as much as the Practice | Is it a Good Dental Practice to Buy?
Identifying Habits of Successful Dental Practices | Negotiating a Dental Practice Purchase
How To Create Your Mailer | Finding a Dental Practice to Buy
