• Putting all your eggs in one basket
May 8 2019 - Simon Palmer - Sell a dental practiceValuation

“Putting all your eggs in one basket” is a well-known metaphor for a situation where someone is depending completely on just one idea, plan, or person, to the extent that they have no other option if things go wrong. There is no “Plan B”. It is usually used to describe someone who is being overly confident with a singular path and engaging in unnecessarily risky behaviour. The inference being, that if all of your eggs were in one container, and that container was damaged, you might lose all of your eggs in one quick and painful moment.

People are used to seeing this metaphor used to describe:

  • Someone who invested all their money in one stock
  • Someone looking for work who only applied for one job
  • Someone wanting to get a university degree who only applied for one course at one location

It could also just as easily be used by someone wanting to sell their business and only talking to one buyer.

Many times, Practice Sale Search has come across situations where a dental practice has told me that they were selling their practice to a single buyer (individual or aggregator) but, after many months of delays, and time and money spent on legal contracts, the buyer changed their mind or asked for some unreasonable conditions in the deal.

While I can only imagine how frustrating this must be, and I am always very sympathetic when I hear stories like this, I’m not sure why so many sellers give exclusivity to any buyer for long periods of time in the first place.

I realise that there are a lot of charming buyers out there, some of whom are very convincing when they say “what a great deal they are giving you”, that they want to “continue your legacy/integrity/high quality work” with patients and staff, and the practice seemed to be valued correctly…BUT:

1. How can you as a seller know that there aren’t other buyers out there who would offer considerably more? Do you have a good enough relationship with this buyer to justify potentially giving him/her a massive discount?

2. Why would a buyer in isolation give you their best offer? The only reason any buyer gives you their best offer is when there is a fear of missing out. Giving exclusivity to any buyer for a long period of time like this gives them power at the negotiating table. They can take their time making up their mind, dragging out securing their financing, engaging their lawyer and getting buying entities set up, all the while complacent in their knowledge that the practice is theirs and there is no need to hurry or put their best foot forward. They can attempt to reduce the price or change terms, and the worst that can happen is that the vendor refuses. They have no fear of being outbid by another buyer.

The only way to ensure that you get the right price and terms on your timetable is to NOT put all your eggs in one basket. Talk to multiple buyers and sell your practice using a competitive process. The laws of supply and demand tell us that the more demand there is for a product, the better the conditions and price the supplier can get. With your dental practice, the ideal would be to have several buyers interested in your practice, each outbidding the other with better prices and terms of sale for you.

Selling their practice is one of the most important decisions that a practice owner can make in their careers. A dentist's dental practice will usually be one of their most valuable assets and the money from its sale should make a huge difference in their lifestyle post sale. 

With so much at stake, it is not a time where you can afford to go with the path of least resistance and take the only option that has presented itself. It is a time to weigh up all the options available and carefully choose the one that brings you and your family the best results.

With this in mind, wouldn’t it make sense to find out what the market would pay you for your practice, instead of finding out what one person or aggregator would?