A common question we get from buyers and sellers is: how much will it cost me to get through the process? There is no exact answer as every deal is different and can entail more or less hours from your advisers. This post will outline so of the average costs for you to expect to get through the process from start to finish.
- Legal Fees:
No one wants to pay a lawyer (or broker) but I truly believe that if you have the RIGHT people involved that they will save you time, money, and headaches and you should see this value post sale. There are so many things that hurt you if you are not aware of the ramifications. Doctor’s Choice highly advises that you find an attorney that is familiar with dental acquisitions as they are worth every penny from our experience and perspective. One of the first questions you should ask is what is their hourly rate? The legal fees on your average deal range anywhere from $3,000 to $7,000 depending upon the hours put in. It could be less or more than this but we feel this is a good ball park to expect. Dental specific lawyers understand various things that a typical attorney would not like: what is a fair non-compete? What should the sellers reps and warranties be? And the list goes on.
2. CPA / Accountant
Again, having a qualified CPA / Accountant familiar with dental practice sales is recommended as others will not be aware of things like: How much is typically allocated towards goodwill? Hard assets? Ect. if it isn’t done right then it could cost you tens of thousands of dollars.Dental specific advisers understand how to structure the allocation that best fits your situation. For example, if you are a C corp then you could be taxed double on the sale of your practice if it is not structured accordingly. These fees typically range from $1,000.00 to $3,000.00.
3. Broker Fees
Lastly, the dreaded broker fees. As a seller you may be able to find a buyer on your own, however finding a buyer is only 25% of our job and you are only on first base at this point. Most dentists think all we do is find a buyer but that couldn’t be further from the truth. Our job is to find a buyer that matches the personality and practice philosophy of the seller, then to structure the deal as a win-win. This involves coming to terms on the price and post transition period. We are here to answers all your questions and make sure the process is as seamless as possible. Buyers are always looking for a reason to get cold feet and walk away or lower the price. Many times a buyers concern may not even be an issue after we explain why to them.
It is important for buyers and sellers to know and understand that every broker structures their commission differently. Some will charge both the buyer and seller, then some just the seller. Our company Doctor’s Choice only charges a seller however we act as a transaction broker which means that we do not represent the buyer or seller. Our job is to make sure the deal is fair and equitable for both parties involved as we are a neutral party that just helps facilitate the deal. BUYERS BEWARE: Dental supply companies that have gotten into the practice brokerage business are a bit more rogue about how they operate. Right before closing (and not before typically) they will approach you and tell you that you have two options: pay us a flat fee of $10,000.00 OR sign a dental supply exclusivity agreement for 2 years.
In conclusion, when working with Doctor’s Choice buyers will not pay us a penny and sellers will pay us a commission based upon a percentage of the sale price. Our brokerage fees vary upon the sale price but we are in line with the national average for business brokerage. Call us to find out what we would charge for your specific situation as it varies. We highly recommend reaching out 3 years before your target sale date so that we can help advise on items that will maximize your sale price.