Don’t lose sight of the big picture
This is part two of a two-part blog series. Click here to read part one on deal breakers when finding your match.
When making significant life decisions, a list of needs and wants can set a guiding path to ensure you make the best choice. Lists can be helpful when buying a house, finding a future spouse and even buying or selling a dental practice.
Included in these lists are often an individual’s “deal breakers” – the factors or preferences that will make them pass up on an opportunity almost immediately.
In the beginning stages of the dental transition, as buyers search for a practice, or sellers seek a buyer or partner, most people have specific factors that are important to them. For example, buyers may have a preference about the finish out of the practice, or sellers may look for a buyer with a specific personality type.
In the middle stages of the transition, as the parties iron out the contract details, there are even more elements to consider. From negotiations about owning the building, the seller’s workback or other details, buyers and sellers often have a vision and their own aversions in these areas.
It’s important to have priorities in the transition, but this comes with a caveat. If buyers and sellers aren’t careful, these preferences can also have a negative impact during the transition.
When people are too focused on their initial ideal, they may begin to lose sight of the big picture. It’s key to keep an open mind throughout the process and concentrate on the ultimate end goals. This will help in preventing a delay in the transition process or worse, damaging the deal completely.
While every buyer and seller is different with their unique desires, here are a few examples where deal breakers can have a disruptive impact during the transition.
Owning vs. Not Owning the Building
For some buyers, owning the building is important to them for various reasons. It could be because the building is an investment piece that they can control, or they feel rent is a bad expense to have. And when they love the geographical location, the amount of space and the finish out, sometimes the building is simply a must-have in their book.
However, there are times when a seller doesn’t want to sell right away, or the seller doesn’t own the building and the buyer will never have the right to purchase it.
“Many factors and preferences need to align between the buyer and seller before a deal moves forward,” NDP Senior Listing Specialist Catriona MacLachlan said. “That’s why it’s unfortunate to see situations where the buyer and seller’s timelines are aligned, price on practice is aligned, but the real estate is what holds them back.”
Some buyers have the perspective that they won’t truly own the practice unless they also own the real estate. But to be a thriving practice owner, these factors are not mutually exclusive.
“You can own a successful practice without owning the building,” NDP Partner Christy Ratcliff said. “You can even move the practice and build a new building. Just know that there are many people in various parts of the country who never own their real estate and have just as much success.”
Remember the overall goal here. If the goal is to own a practice, but the inability to purchase the real estate is a deal breaker, consider the other factors of the opportunity. The practice as a whole may still be favorable, and there could be opportunity to turn it into what the buyer envisions.
The period of time that a seller works back in the practice post-close is often a point of contention for both buyers and sellers. Disagreements can occur for a variety of reasons. Buyers and sellers each have their own preferences, life situations, financial situations, timelines, etc., which can drive their vision of the seller’s involvement post-close.
In some instances, sellers think the buyer will need their help to ensure success, so they’ll want a longer workback.
“It’s hard not to be needed,” Christy said. “Oftentimes, the buyer has the confidence, and especially if it’s a walkaway sale, the buyer is most likely capable of doing the work on their own. Sellers should see the buyer’s confidence as a good thing rather than a personal affront.”
On the opposite side, the seller may be personally ready to quickly step away and doesn’t want a long workback, but the buyer doesn’t feel confident enough to do the work. If the buyer doesn’t have a lot of experience, if they’re nervous or lack the clinical skill to do everything immediately post-close, they may want the seller to work back for a more definitive amount of time. If that doesn’t fit with the seller’s timeline or they’re fully ready for retirement, this deal breaker could cause some conflict or require a realignment of vision.
There are also times where a seller just wants to keep practicing. They love what they do, but they’re ready to simply be an associate. Sometimes, they even request there won’t be an option to be terminated before a certain number of years so they can ensure they’re secure in their new role. But what if this new role doesn’t go as planned? And what if the buyer isn’t interested in a short-term “partnership”?
There are always unique pieces to the puzzle and a variety of situations and preferences for how people want the seller workback to take place. Sometimes, these deal breakers can cause tunnel vision, preventing people from truly envisioning what that workback will look like and seeing the long-term effects. It’s important to be open minded as people think through it and understand how it relates back to the ultimate goals.
Caught Up in the Details
Deal breakers can have large and small impacts, and sometimes, people just get hung up on the little details. For instance, some buyers or sellers have been known to get caught up in determining who pays for the patient introduction letter, but when it comes down to it, it’s not the actual thing that really matters to them.
“There’s a large emotional component in dental transitions,” Christy said. “That’s why most of the time, it’s not about the specific matter; it’s trepidation about the process in general. This can make an insignificant detail a bigger deal than it should be.”
Because this is often a new process for people and most only go through a transition once in their careers, the key is to acknowledge the emotions involved in the process and use perspective to assess the situation as a whole.
“I encourage buyers and sellers to not get hung up on anything that’s so tiny,” Christy said. “Something like a retreatment clause can be really important in a transition, but when there’s conflicting mindsets over whether it’s 55% or 60% that’s being paid in reimbursement, does that really matter given the fact that retreatment is a pretty rare occurrence? Rather than clinging on to things, let’s remember the ultimate goals here and what the items in question really mean for the big picture.”
What Truly Matters
How a buyer or seller feels the day after closing the deal is not the same way they’ll feel six months post-close. Mindsets and feelings change, and people don’t always know what’s on the other side of the fence.
Instead of checking off all the boxes on the preference list, prioritize your deal breakers in the order that matters most.
The transition may not always work out according to plan, but digging deep and having a little perspective will help bring the end goals back into focus.
Our advisors at NDP can ensure your dental transition aligns with your ultimate goals, serving as a trusted guide through the big and small decisions. Reach out to our team for a complimentary call.