Merger Misconceptions That Can Kill Deals
Perhaps you’re looking to consolidate your multi-doctor and multi-location dental practice with private equity-backed dental practice buyers.
Since a merger is one of the most important transactions of your life, you’ll want to give it the same focus and attention you put into building your practice.
For this reason, the last thing you want is to fall into merger myths and misconceptions that can kill deals.
Myths About Mergers You Shouldn’t Fall For
MYTH #1: “Negotiations are over once the LOI is signed.”
The Letter of Intent (LOI) is a non-binding document that shows an agreement in principle for the buyer to purchase your dental practice. Moreover, it outlines the proposed price and terms. Once the LOI is mutually signed, the buyer proceeds with the phase of acquisition called due diligence.
Since the due diligence process is a critical step, experts in mergers and acquisitions (M&A) recommend that you retain legal counsel to guide you through it. You may also need additional support from your bookkeeper, accountant, and office manager to ensure that this phase runs smoothly.
However, it’s dangerous to assume that the LOI is the end of the negotiations. Anything done wrong during the due diligence process can potentially kill the deal. Unless a purchasing agreement is in place, negotiations aren’t concluded.
MYTH #2: “Mergers and acquisitions take three to six months.”
While some "for sale" acquisitions can be completed with shorter timelines, most mergers and acquisitions can take at least 12 months to finalize. It would be best if you didn't rush to lay the proper groundwork involving market research, strategy development, identification of prospective companies, and integration of two entities. Likewise, the due diligence process can take at least a month to complete.
MYTH #3: “Every buyer who makes an offer has the money to follow through.”
Unfortunately, some buyers can make an offer without securing the money to purchase the practice. Unless you're willing to risk wasting your time dealing with unqualified buyers, it's best to enlist the help of an experienced M&A professional.
MYTH #4: “You won’t need a team to sell your practice.”
Selling your practice without the assistance of a team of M&A professionals means handling the time-consuming aspects of the sale process while trying to run your practice. Besides harming the value of their practice, most of those who take this route feel like they’re stretching themselves too thin.
In contrast, dental practice owners who work with an experienced M&A advisory and investment bank in dentistry can expect around 20% more transaction value. Since these skilled negotiators leverage their existing relationships with buyers, they can help you get the biggest offers and the best deals.
MYTH #5: “Always make closing the deal your solitary goal.”
Although growth is essential, maintaining discipline and caution is crucial to the success of a merger. Focusing too much on closing the deal will cause you to lose perspective.
When it comes to conducting investigations and negotiations, it's easier to maintain an impartial and rational view if you work with a team of M&A experts.
Are You Looking for Qualified Dental Practice Buyers?
The dedicated team at Viper Partners has the knowledge and expertise necessary to help entities consolidate and be consolidated to bring mutually beneficial results.
We’ve distinguished ourselves as America’s Leading Transition Consultation Firm for the Medical Industry, specializing in our work with dentists, dermatologists, and plastic and cosmetic surgeons.
Contact us today to learn more about what we can do for your dental practice.