A few years after finishing my residency, I decided I wanted to own my own practice. I was trapped working for a corporate practice that made me hate going to work everyday.
I was itching for a change and fast.
I began looking for practices to purchase in my ideal location. I would see a practice come on the market, and by the time I heard back from the listing agent, the practice would be under contract. I was frustrated and desperate.
After multiple requests for practice information, listing agents and sales reps realized I was actively looking for a practice and began providing leads for practices coming on the market. I would look at a practice. I would review a practice prospectus with all the amazing highlighted aspects of the practice and be told what I wanted to hear. Yet, many of the practices I looked at had red flags even I could see. I was even more afraid of what I didn’t know.
By the time I was ready to make an offer on a practice, it slipped through my fingers, and I became more desperate. I wanted out of my job.
I found what I thought would be a great fit, and I wanted to move forward. I did the smartest thing I have ever done: I hired a buyer’s consultant, “aka” a transition advisor. My transition advisor saved me from making this biggest mistake ever on different practices on multiple occasions.
On each occasion, I liked the location of the practice, the pretty décor and what the practice numbers appeared to be. I almost made a million-dollar mistake not once but on three different occasions.
Dental school taught me to be a good dentist; it did not teach me how to buy or own a dental practice. The smartest thing I ever did was find a trustworthy advisor who had my back in addition to a dental-specific attorney and accountant.
The practice owner pays the listing agent or broker. While they are also supposed to help the buyer, they directly benefit from selling you the practice. They don’t have to point out the not-so-pretty details of the profit and loss statement to you or explain the prospectus. It is your responsibility to make a wise choice on purchasing a practice. Without a transition advisor, I would be up a creek without a paddle. I cannot stress enough how important it is to protect yourself as the buyer – not just with a good lawyer and accountant but with a transition advisor who can tell you the good, the bad and the ugly.
While going through my search for a practice, I came across a horror story about a dentist who was purchasing her first practice. She purchased a high-end general practice. After opening the doors, she discovered the seller’s many skeletons: the fabricated procedure codes fraudulently used to make the dental practice appear to be a high-end practice. Patients received unnecessary treatment, and there was no disclosure to the purchaser of the fact that the patient base included a managed care contract.
The purchaser was compelled to hire an attorney and take the seller to court “seeking rescission of the purchase agreement and monetary damages.” Every penny paid for goodwill went up in flames. All of this was due to her failure to do her due diligence. She won the case, but the practice is now worth less than what she paid for it as patients left the practice because they lost all trust in the dentists. Moral of the story: do your homework and find someone who has your back.
Want to stop yourself from making a mistake that will affect the rest of your life? Hire a transition advisor! The few thousand dollars you spend on the front end will pay off big in the end.
I’ve since found the practice of my dreams and successfully closed on it a few weeks ago.
Please meet the advisor who saved my bacon. Her name is Mary Fisher-Day.
(Continued in the next article How a Qualified Transition Advisor Will Give You Peace of Mind and Save You Money)