When it comes time for a business owner to sell their business, most want to receive the best possible price for their business, and rightly so.  However, selling a business can be daunting and unfamiliar for most business owners.  This is where engaging a business broker can help a business owner achieve the most from their sale.

In this article Eric Gall, founder and licensed broker of Edison Business Advisors, discusses how engaging his services helped a dental practice increase an offering price from $4.7M before his engagement to $7.4M after his engagement.

The dental practice, owned by two dentists, received offers from two Dental Service Organizations (DSOs). The best offer, from a very well-known DSO, was $4.7M. The practice’s CPA firm asked Eric to evaluate these offers. After reviewing the practice’s financials and walking through the practice, Eric  believed the practice was greatly undervalued by the two DSOs. The practice owners engaged Eric’s assistance to achieve the most from their sale.

The first step in the process was for Eric to take a deep dive to estimate the market value of the practice.  This required the practice owners to provide detailed information about their practice, including financial statements, tax returns, list of assets and equipment, employee information, contracts, etc.  After the market value was estimated, Eric prepared a comprehensive Confidential Business Review (CBR) of the practice to provide buyers with a clear understanding of the practice before making an offer.  The practice was then marketed without an asking price to many DSOs, private equity groups, family offices, and dental groups. Doing so vastly increased the competition among buyers.  

As a result, the very well-known DSO increased its offer from $4.7M to $5.3M.  However, they were far from the highest offer.  Through the guidance and assistance of Eric, the practice owners ended up securing a sale price of $7.4M from a smaller, regional DSO that was willing to pay a premium for its first entry into the local market.  Furthermore, their philosophy and approach to dentistry were much more aligned with the practice owners’ than the initial DSO’s.  In addition, they provided both owners multi-year employment contracts paying them ten percentage points more on their collections than the initial DSO’s offer.

As the final step in the process, Eric guided the practice owners and the DSO through the closing process and transfer of the practice to the DSO.

In conclusion, by engaging a business broker, Eric Gall of Edison Business Advisors, the practice owners achieved the most from their sale. Not only did they optimize their sale price and terms, but they also found a more compatible buyer and received much more lucrative employment contracts. This was accomplished by properly preparing the practice for sale to present the practice in its best light and mitigate risk factors before going to market.  Doing so maximized the price buyers were willing to pay.  Bringing competition to the deal forced the most eager buyer to offer their best price to ensure they were the winning bid. If you are looking to achieve the most from your business sale, engage a business broker!

To learn more about Eric Gall, founder and licensed broker of Edison Business Advisors, click here.