As a dental practice buyer, you should have the ability to perform proper due diligence on the practice you want to buy. Most brokers/sellers will be very accommodating with the release of information with a properly executed non-disclosure agreement and other minimally invasive assurances to ensure you, the buyer, is not a tire-kicker. With that said, understand, as a buyer, if you do these things, do not be surprised if that initial cooperation begins to decline.
What are the things that can make a broker/seller begin to reign in their level of cooperation?
- The returning customer who only window-shops – this is the buyer that has requested information on many practices over the months or years and has made little to no effort to pursue any of the practices in which they have received information. At some point, the broker will see you as a tire-kicker, someone that has no serious interest in buying, and you will begin to get the cold shoulder…as you should.
- You ask for entirely too much information – to perform proper due diligence on the asking price AND the practice performance, there is certainly a list of information that a buyer will need to ask for. However, sometimes a buyer who is not using professional assistance will likely ask for information that they simply do not need. An example of this (in my opinion) is the buyer that asks for the last twelve or twenty-four months of bank statements. In 95% of the situations, a buyer should rarely need to see monthly bank statements, and asking for them will simply turn off both broker & seller.
- The never-ending request – this is the buyer that does not know exactly what to ask for at the beginning and instead, makes ten different requests over a couple of weeks or months where each request is either one or two items, asking for the same information, or asking for the same information without knowing it. Maybe you originally asked for certain tax returns at the beginning, then forgot a couple of weeks later and asked for them (or one of them) again. Or asked for an annual production report that also shows annual collections, then asked for annual collections later on. At some point, the broker and seller will have had enough
- Taking WAY too long between requests to ask for more information to make an offer. If you are into your third or fourth month from your original request and you are still asking for information (assuming you have received exactly what you have asked for every time), at some point, the broker and seller will simply wave you off and move on to a more organized and serious buyer.
- The buyer who is not qualified to purchase a practice – sometimes, a buyer may have borrowing issues, production issues, experience issues, or other issues that might not make them lendable by the mainstream dental lenders. Most brokers attempt to determine a buyer’s ability to borrow at the beginning, and sometimes there is no clear conclusion, or the conclusion takes too long to show itself. If and when the broker learns that you may not be able to get financing to buy a practice, you will likely see the cooperation cease quickly.
I am not trying to discourage buyers from seeking practice opportunities. Sometimes I hear complaints from dentists about the lack of cooperation, only to learn for myself what is really going on. The point of this blog is to prepare buyers and to let them know that they should get educated on the buying process, be organized during the buying process, and use experienced professionals during the process to make the buying experience more pleasant for everyone involved.