As experienced dental practice brokers in Australia, my team and I are always amazed at the misconceptions that some dentists have about the process of buying and selling a practice. In this series of articles, we thought we would address some of the more commonly heard and persistent misconceptions that practice buyers have:

Buyer Myth 1:   Everyones perfect practice is out there waiting for them
Many buyers have a rigid list of success criteria of what they are looking for in a practice and what it will cost, and won’t look at opportunities that lie outside of these criteria. What they don’t realise is:

1. You pay for perfection. When something perfect or close to perfect appears, there is a lot of demand. A lot of the time, everyone is looking for the same criteria and, when it appears, the demand can push the price up beyond what you feel is reasonable.
2. Potential perfection is far cheaper than proven perfection. Sometimes, if you look slightly outside of your wish list, you can find diamonds in the rough.  The foundation and potential for perfection is there, behind a less-perfect exterior, waiting for someone to come in and smooth over the rough edges. 
3. You may not know what “perfect” looks like yet. If you start looking at things outside of your initial criteria, you may find that what equals “perfect” changes. You may find that some things that you previously thought were a “must have” become less important, and you find other things to prioritise in your wish list. 

Buyer Myth 2:  A lawyer is a lawyer, and a source of finance is a source of finance.

When you are selecting a lawyer and financier, please look for one who is:

1. Available and quick to respond

There is a saying that “Time kills deals”. When you have a deal on the table and both sides are eager to accept, you want that excitement to help carry the deal to the finish line. Any delay can break that momentum and allow circumstances inside or outside the practice (another offer comes in, changes in economic circumstances, etc.) to interfere with that momentum. Lawyers and banks that can work on your matter and respond quickly are much more likely to get you to the finish line.

1. Professional and polite in their approach

A lawyer who is antagonistic and combative or rude in their correspondence can kill a deal.

1. Experienced in medical/dental practice sales

Most dentists would cringe to hear of someone in their profession overselling their expertise and trying to do complex clinical work that is outside of their abilities, work that should be referred to a specialist. This is how I feel when a buyer tells me that they:

• Will be using a lawyer to help them buy a practice that they used for their divorce, immigration or buying their house 
• Have a lawyer that “does a bit of everything”
• Are going to use a financier to help them buy their practice that has never financed a business before

Buying a practice is an expensive and complex transaction, with many moving parts. To give yourself the best chance of success, you need specialised help from a bank and lawyer that have deep knowledge of the profession you are in and the type of business that you are buying.

Buyer Myth 3: The best way to negotiate the price is to criticise what is being sold 
There is a school of thought that, in a price negotiation, the buyer should point out every fault, weaknesses, minor flaw and imperfection of the acquisition and talk down any strengths in order to justify giving the vendor a lower-than-expected price.

This negotiating strategy may seem like a logical way to communicate your lower appraisal of the asset in question. It may be honest feedback, and it may even work when buying assets like a second-hand car from a used car salesman. However, when buying a business from someone who has owned, worked in and built it up for years (sometimes decades), this type of negotiation is more likely to be completely ineffective and counterproductive.

Time and time again I have seen a vendor be more likely to bend their price expectations for the purchaser who expresses appreciation and respect for them and their practice, than the one who does not.