AFTCO developed a unique process known as “Dual Representation,” whereby we represent the interest of both parties involved in a practice transition. Dealing exclusively with dental practices, AFTCO is now the largest consulting firm of its kind in the world. Our success is a testament to the fact that our unique process of Dual Representation works. Our surveys show that 94% of our clients (buyers and sellers) would highly recommend us to their colleagues. There are still those who maintain that it is “impossible” to represent the interest of two “opposing” parties in a transaction. What follows is a brief discussion about why Dual Representation is not only possible but also far superior to any other method of buying or selling a practice.
AFTCO has not always used Dual Representation. In the beginning, we brokered practices using unilateral representation just like every other broker. We also experienced the less than satisfactory results that most brokers get through unilateral representation. We would typically represent only the seller, and although we would work closely with buyers, our fiduciary responsibility to only one party often impeded our ability to communicate full disclosure of the practice to the buyer. As a result, buyers never really trusted the seller or us (as the seller’s representative), and rightfully so, since we actually did not represent them. As a result, buyers would retain some other “expert” to look out for their interests.
Unfortunately, buying a dental practice is a unique and delicate process. More often than not, the CPA, consultant, or attorney hired by the purchaser would step in like a bull in a china shop and do more damage than good. Most advisors could not understand that their client was buying into relationships and that their “hardball” negotiating destroyed the very thing the client is trying to acquire. We have even seen brokers or consultants (who should know better) called upon for “buyer representation,” step in and make some ludicrous one-sided offer with little or no concern for the overall impact it would have on the transaction itself. As representatives of only one side, we saw too many good transactions fail to develop because these uninformed “experts” led their clients down the wrong path.
We realized there had to be a better way to view the acquisition process itself. We first had to drop the notion that there were two sides with opposing interests. Actually, the more we thought about it, if the two parties had conflicting interests, then we probably had a bad match. A lower or higher price did not necessarily mean a better transaction. What matters most is that the two sides achieve their long-term objectives. We have found that Dual Representation allows this to happen in a very powerful way. Of course, skeptics maintain that unilateral representation has worked well in real estate and other “brokered” businesses (even though only 20% of businesses listed for sale were ever sold). When a buyer and seller sit down to hammer out a real estate transaction, they can posture and cajole and play hardball. After all, they don’t have to like each other or work together after the sale.
This process, however, does not work when transitioning a practice. Damage was done during grueling negotiation eventually comes home to roost. Staff members are usually the first to pick up on it. Sometimes the seller remarks a staff member in a moment of stress that eventually makes its way back to the patients, who begin to leave for unexplained reasons. Either way, the paradox remains: the more a transaction is negotiated, the more everyone loses.
AFTCO maintains a relationship with both parties. We understand the seller’s transition objectives and strive to prevent them from being compromised. After all, it’s the seller who has a lifetime of toil and effort at stake. We understand the buyer’s goals and aspirations and assist in accomplishing those goals. It is the buyer’s future on the line when acquiring a practice.
We make sure that the two clients in a transaction have compatible goals and objectives. This concept is entirely foreign to brokered transactions where virtually any warm body is a candidate. Whenever we work toward a transition with our clients, the question is always asked, “Are the needs and objectives of these two individuals sufficiently compatible to allow a true Win/Win transaction, or will someone need to compromise objectives to get a transaction accomplished?”
Paradoxically, whereas Dual Representation may appear to be a conflict of interest, it is, in reality, a mechanism for bringing integrity and discipline to the sale process. In his best-selling book, Seven Habits of Highly Effective People, Dr. Stephen Covey describes the true nature of a Win/Win transaction as the only viable option in business transactions. The alternatives to Lose/Win, Win/Lose, and Lose/Lose, are all unacceptable in the long run because they will all eventually lead to undesirable results. As Dr. Covey so aptly states, “There’s no way to achieve Win/Win ends with Win/Lose or Lose/Win means” (which is traditional with unilateral representation).
Neither party has to gain at the other’s expense. In fact, just the opposite is true. If both sides become sensitive to the needs of the other, and if they can clearly see that the realization of their individual goals and objectives are intertwined, then the synergy that results can propel the practice and the doctors to a far greater degree of success than they ever dreamed possible.
At some point in your career, you may decide that it’s time to acquire a practice, whether to get your career started, to relocate to another area, or to increase the income and profitability of your existing practice. For whatever reason, the acquisition of a practice can be one of the most profitable and rewarding experiences of your career.
Purchasing a practice is a complicated process that can take months or years to complete. It is not merely a matter of finding a practice in the classified ads, then negotiating a “good deal” and living happily ever after. It is not like buying a new car or a piece of real estate where the post-sale relationship with the seller is insignificant. When you purchase a practice, you acquire relationships with people who don’t know you, and who may or may not trust you as their new doctor or their new boss. You won’t be able to see or touch the real value of the acquisition until long after the ink is dry on your contract. If this sounds scary, it should. The dream of owning your practice can become your worst nightmare if it is not handled properly. There are innumerable ways to foul things up, and many of your “I already know everything” colleagues are finding new ways every day.
Transition is a word that connotes a sense of both time and changes and should be viewed as a process, not an event. Over the years, the people of AFTCO have been dedicated to understanding the practice transition process and what it takes to make it better, smoother, and more profitable for all our clients. Our vast experience has allowed us to develop and refine a genuinely superior method of transitioning professional practices. Once you understand it, we think you’ll agree. Remember that the practice you end up with is largely a function of the process you use to acquire it. Contrary to what skeptics say, someone does not have to lose for you to win. It’s time to call AFTCO.