Why Should I Give You an Exclusive Listing?

Several years ago I was contacted by a dentist who was desperate to sell his practice. Although he already had a nonexclusive listing with another broker, he also agreed to list his practice with me in an exclusive listing, which meant that I would receive a commission even if the other broker sold the practice. (I told you he was desperate.)

We quickly received a full price offer for the practice. Shortly afterward, we got a call from the buyer telling us that he had seen the practice advertised by the other broker at aearl_douglas-xxs $100,000 lower price. So he lowered his offer by $100,000 since the practice was being advertised at that lower price.

Why was the other broker listing the practice for $100,000 less? The reason is that the practice was a newly-started practice, and it experienced very rapid growth in the early years. The other broker had valued the practice several years earlier and had not updated the practice financials in several years. So while the numbers were appropriate when it was first listed, they were seriously out of sync with the current practice revenues.

This seller’s experience of dealing with multiple brokers points out how expensive an open listing can be, especially if one of them does not do biannual updates and provide current financials.

As one broker put it, “We all fish out of the same pond,” which questions the benefit of open listings. Brokers all talk to the same prospects, so the expectation that more brokers mean more prospects is without merit. Serious brokers market extensively through websites, contacts, referrals, etc. to develop purchaser prospects, and purchasers have no problem finding all brokers who might have a practice for sale. Most brokers are already in contact with nearly every prospect.

The problems with an open listing begin when a prospect hears about a practice three or more different ways from three or more different brokers. It’s doubtful that any two of those listings even sound as if they are about the same practice. The results of three people trying to sell a practice to a single candidate are disastrous, and what could have been a well-managed sale by a single, competent broker can quickly disintegrate into chaos, and frequently a lost sale.

Consider also that when sellers are not committed to brokers, brokers will not be committed to them either. So these sellers will be at the bottom of several brokers’ lists rather than at the top of any one broker’s list. A seller with an exclusive listing should expect commitment from his or her broker, and if that broker does not make a committed best effort, there should be provisions for termination.

When a sale finally does take place, a seller may face another serious dilemma. Remember, “We all fish out of the same pond,” so a seller may be told by two or three brokers that they were the one to identify a buyer and they should receive the commission. It is not unheard of that lawsuits and all manner of legal actions arise from what should have been a happy closing.

Open listings are even worse for brokers, who put in their time, talent, and money, only to end up helping the seller close a sale of his own doing. After all, sellers have the broker’s commission to bargain with.

This leaves us with the question: What is the best approach for listing a practice for sale? When sellers ask about having an open listing and engage every broker out there to try to sell their practice, I share issues discussed here with them. I tell them they will be better off with one mutually committed broker relationship, even if it isn’t with me. My best suggestion is that they exclusively list with a broker who has a network of resources that includes other brokers, and that the broker is willing to pay a fee to any referrers who provide a buyer. This provides the benefit of exposure to multiple brokers and still maintains a unity of effort, which leads to the absolute best selling experience.

 

by Earl M. Douglas, DDS, MBA, BVAL

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Fear of the Dentist

Blog Title Fear Of the Dentist

What do clowns, spiders, monsters, and the dentist have in common?

They scare the living daylights out of many people; how many people? Over 75% of adults report some form of dental anxiety, and up to 10% suffer from full-blown phobias.

The causes for anxiety differ, but the escape is all the same: not scheduling that much-needed appointment. Avoiding clowns and monsters is fine, as they can’t offer services that could save you from tooth loss, gum disease, and potentially life-threatening heart diseases – but your dentist can, and that’s why it’s important to find a solution to your dental anxieties and make sure you’re keeping your smile as healthy as the rest of you.

Some causes for dental anxiety include:

  • Fear from a past experience
  • Fear of a painful procedure
  • Fear of the medical bill

The solution to all of the above is simple: Talk to your dentist. There are ways around each and every one of these that will allow you to ensure your dental health is taken care of and you are not at risk for unnecessary health complications!

If you had a painful experience in the past: Talk to your dentist! There are many ways to work around the issue – either by an alternate procedure, or perhaps a discussion about sedation dentistry to calm your nerves. If you tell your dentist the problem, they can work to find a solution that works for you.

If you are afraid of a painful procedure: Talk to your dentist! Again, there may be a less-painful procedure as an alternative. Or perhaps it’s not as painful as you originally feared. In many cases sedation dentistry is a fantastic option that either takes the edge off your nerves, or anesthetizes you entirely. What’s better than waking up with a shiny new smile and no fuss for you?

If you’re afraid of the potential bill: Talk to your dentist! You never have to be handed a bill you didn’t expect. First, get an estimate on the necessary procedures. Then talk! There are many options for those strapped for cash, including payment plans or various subsidies. But your dentist cannot help you answer a question that you didn’t ask! Remember as well, your health is an investment. You can pay to prevent or pay to correct, and the latter can be extraordinarily higher than the former; nothing can replace regular appointments and consistent care.

Remember, 75% of adults admit to some form of dental anxiety – your dentist has heard it before and will be happy to work with you to ensure you walk out with a smile that you’re both proud of.

By the way, fear of the dentist? That’s called odontophobia, and it doesn’t have to ruin your smile. Talk to your dentist and save your phobias for spiders and clowns.

ADS South, LLC
120 Istoria Drive
St. Augustine, FL 32095

Phone: (770) 664-1982
Fax: (678) 965-1812

Meet the Founding President of ADS South: Nat’l Org of Dental Practice Appraisers & Brokers

At ADS we value our clients and respect their time. That’s why Earl can be anywhere within our service areas in as little as two hours.

Dr. Douglas can present any of the following topics in as little as one hour and up to six hours.  Most topics also include essential information on how to be able to financially be successful in retirement.

1.  Your practice transition

2.  The ten biggest transition mistakes

3.  The fifteen biggest transition mistakes

4.   Increasing your practice value and marketability

5.   Creating and finding value in a dental practice

6.   Dental practice transitions in recession

7.   Evaluating and appraising dental practices

8.   Case studies in successful and not so successful practice transitions

9.   Practice transition principles and strategies

10.  Partnership pitfalls and how to avoid them

11.  Deciding on a practice to purchase

Besides being one of the most experienced transition experts and speakers in his field, Earl M. Douglas, DDS, MBA, BVAL, is the founder of ADS South, a dental practice appraisal and brokering company serving the Southeast.  He is the founding president of ADS, a national organization of dental practice appraisers and brokers.

Dr. Douglas earned his Doctor of Dental Surgery degree from the Baltimore College of Dental Surgery, University of Maryland School of Dentistry in 1971. He practiced in the U.S. Army Dental Corps at Fort Benning, Georgia from 1971 to 1974 and in Stuttgart, Germany from 1974 to 1977 and was in private practice in Atlanta, Georgia from 1978 through 1982.

After the sale of his private practice in 1982, he began his career in practice transition consulting. He received his Master in Business Administration degree from Brenau College in 1984 and founded Professional Practice Consultants, Ltd. in the same year.

Dr. Douglas is the author of cash flow analysis software used by professional brokers and lenders. Dr. Douglas is a member and contributor of the Practice Valuation Study Group and a member of The Institute of Business Appraisers and was awarded the BVAL designation (Business Valuator Accredited in Litigation) in 2007.  Dr. Douglas has been admitted as an expert witness before courts in Alabama, Arkansas, Georgia, North Carolina, and Tennessee.

Dr. Douglas has presented at many dental schools in the Southeast and to various dental study clubs, the Hinman Dental Convention, the Tennessee Dental Association, the National Dental Association, the New Orleans Dental Association, the Rossner Memorial Lecture in New Orleans and a two year series of presentations for Dental Economics.  He has presented for several years to the National Society of Certified Healthcare Business Consultants.

Dr. Douglas is also a contributing author for Dental Economics magazine.

Dr. Douglas can be reached at 770-664-1982 or douglas@adssouth.com