What are your expectations when negotiating a dental practice purchase? Most buyers correctly assume that the elements of the deal are negotiable. They understand they’re not required to simply accept everything a broker or seller requests. It’s what a buyer does next with that correct assumption that can potentially get him in trouble.
At least 80% of what you’re buying in a dental transition is relationships. You’re buying relationships with patients, staff, referral partners, and the seller. Negotiate well and those relationships will have a great, solid foundation. Negotiate poorly and you’ll destroy those relationships and wonder what happened.
Most buyers understand this and negotiate accordingly. The negotiations in these cases tend to be very amicable. Buyers’ and sellers’ teams work hard to understand how best to meet the needs of all parties within the typical and legal requirements. Communication is open and frequent, and both parties usually give a little bit to ensure the deal gets done.
A few buyers, however, believe that aggressive negotiations are the only way they’ll get “a good deal” on a practice. They mistakenly believe that the seller is out to take advantage of them. This type of buyer has read too many cynical dental facebook group posts about dentists being the suckers and are determined that no one is going to pull anything over on him in the transition.
Please don’t be THAT buyer when buying a dental practice.
I worked with one buyer who alienated every single person he dealt with on a dental practice transition. The buyer worked hard to network and find a practice saying all the right things and networking with brokers to find a good deal. Once he zeroed in on an office, though, the claws came out.
The LOI negotiations were contentious. Even with a signed LOI, the buyer would frequently request minor tweaks after learning something about another deal from a buddy or another dentist in town.
The seller and broker became so frustrated, they canceled the deal with this buyer and went with another (lower) offer.
The buyer found another practice for sale and was back to the same strategy. After signing an engagement letter and working about a week with an attorney, the buyer tried to switch to another attorney and skip out on the first attorney’s bill. The buyer originally received four offers from banks, but he negotiated so hard with them that two of the banks actually canceled their offers (a first for me!). One business insurance company also withdrew their offer because the buyer spent so much time negotiating with them on small things. They told him, “It won’t be worth our time to have you as a client.”
I found myself, the buyer’s accountant and advocate, actually calling people I referred the client to apologize and (in some cases) actively recommending that my referral partner NOT work with the buyer.
Don’t be THAT buyer.
J. Paul Getty said, “You must never try to make all the money that’s in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t have many deals.”
Don’t be the buyer who feels entitled through every step of the deal. Don’t be the buyer who alienates every party involved with overly aggressive negotiations. Don’t be the buyer who expects instant responses from everyone else, but gets back to others on their own time frame.
Remember most of what you’re really buying is relationships. Relationships with patients. Relationships with staff. Relationships with a seller who will tell every dental contact they’ve worked with for the last 30 years how it was to deal with you. Word will get around.
Go ahead and negotiate. But negotiate AND be a good person.
Did you read this as an email? Please pay it forward by sharing the article with a friend. They can use this link to sign up to get awesome articles like this every week.
Know someone considering buying a practice? Have them reach out directly to me via email, firstname.lastname@example.org to help them through the process.
Read more below about how to buy a dental practice because good advice is important!