Phil Cole 0:05
Hello, and welcome to KLAS Solutions dental education Podcast, the podcast series where we share knowledge and experience to provide value to you and your dental practice. I'm your host, Phil Cole, and I'm with my co host, Chris Webb. And in today's episode, we'll be talking about practice valuations and finding the right in quotations when I say "broker" to work with.
Phil Cole 0:30
And I say broker because later on in the podcast, we'll be able to give you a our idea of what a broker is versus what we consider transition consultants. So we want to welcome everybody. And Chris, big topic.
Phil Cole 0:50
Right now, because practice valuations, of course, tax season's over, the conversations start to ramp up about different things. But this is also time a season two, where people start to reflect on on what their future is going to be, and how to how do they start making those decisions? And practice valuation is always one of those things that they got to think about.
Phil Cole 1:17
So, you know, why is practice valuation so important?...I guess, is really the first question, right?
Chris Webb 1:27
Yeah, I think, you know, I would, I would agree with you, you get you get done writing your big check to the IRS. And you say, Man, do I really want to keep doing this? And am I ready to hand this off to somebody else? So that that first step in figuring out what your future plan is going to be at practice valuation. So can you just talk us through real quick, like, why is it important getting a practice evaluation?
Phil Cole 1:54
Well, I mean, I think the biggest thing with a practice valuation is is no different than getting an assessment of your practice, right? When you're in your early to mid career. Practice assessments are important, because you want to know what potential you have in the practice, practice, what's working, what could be, you know, fixed and work even better. So that you can you can be as profitable as possible. And I think valuations are another one of those things where we seem to always run into the problem of getting people to call us and say, I'm ready to retire in the next year, you know, what do I have to do, and at that stage of the game valuations are, are almost too late, right? Because we know what we're running across right now all the time is, is we're getting doctors that are wanting to sell their practice, but they've waited too long. And so now, to sell the practice, it's it's we're running into those areas of the practice isn't really sellable, because it's not been set up properly. So for me, that gets the biggest thing is, is the reason why a practice valuation is so important as to know what the value is. So that you can start to plan sooner than wait until the last minute and find out bad results. That's one. And so that eliminates that problem. Now, the one of the ways that we've eliminated that, or well, I shouldn't say we Well, I think we've eliminated it and why we have done that is we've created a what's called a lifetime valuation, so you do the valuation with us, and then we'll update it for free for the rest of your life. And the reason why we did it is is because of this problem, right? We these guys wait until the last minute to put to do their valuation. And then when we get the valuation, like we just had one, just a while ago, 15 straight years of, of, you know, in the whole practice. Now, granted, we can adjust things out and stuff like that, which we do to show some profit, but it's still what what people don't understand, or what dentists don't understand, you know, in their mind, my accountant told me to do this right? In my accountant, and it's in my mind, it's all makes sense. And I'm making a good living to the buyer. It's perception. Right? The buyer immediately sits there and goes, this practice isn't making any money. So you've just made a person, a broker or somebody like us, which we consider ourselves transition consultants have to now explain, we have to give reason to it. And so it puts it in bad light. The other thing that I would say is the importance of a practice valuation is, is when we do our when we do transitions, we always tell doctors, there's three parts of a transition right? And one of them is the financial piece. We have run across too many times where doctors say they're ready to retire, and they want to retire, they want to sell their practice. And then we always ask them, have you talked to a financial planner? Right? We've had a financial planner on our podcast, right?
Phil Cole 5:16
We can't stress it enough, we've had multiple ones, I can't stress it enough. Because in here's just the stats, the the average, so 63% of dentists do not start saving for retirement until the age of 46. and a half, the national average is 60. I think it's 68%. I may be off a couple percentage, 67, whatever, but 68% until the age of 50. So I mean, when you have that problem, then when you go to retire, you know, I would say, wouldn't you agree, Chris, when we're doing when we're doing these, probably at least 60% of the time, the dentist look at us and say I have to sell my practice for this. Right this price, because I need to I need to retire with this. Right?
Chris Webb 6:11
So listen, I'm I'm thrilled that you hit this point, because this is one of the things when I started working with you, that I loved about our conversations with doctors, is, you know, have you worked? Have you been working with a financial planner? Have you talked to your financial planner? And is your retirement dependent on the sale of this practice? Right. And you would alluded to it? And, you know, I don't think he's controversial, but I know a lot of people don't like him, but Dave Ramsey, you know, he preaches about how, you know, investing earlier, and the opportunity of of that, you know, continued growth in you know, grown interest on your investments, you know, so just the earlier you get started, the better you can't make up for it with time.
Chris Webb 7:00
Absolutely. You just you can't. So you have you have to get started earlier, which, which then leads me to this, right, you hit this hard in when when I started working with you. And then when I actually came on board with KLAS, not just as, as like working with you as a partner, but coming on board with KLAS, you hammered this point of like talking to them about working with their financial planner talking about what they need to do for retirement. So that leads me to my next question on valuations, which is, when is the right time to have a valuation? Like, do you have to wait until you're ready to sell? And I think you have the I think you have a great answer for that.
Phil Cole 7:37
Well, I was just gonna say the third point that I was gonna make and incent you ask it this way is, is what's the right time, I would say at least 10 years out. But the reason this is the other reason why we created a lifetime valuation, right? Because there's never there's never a bad time now. Right? Why would you not get a valuation? Now granted, if you just bought a practice? I wouldn't, I wouldn't say that you gotta evaluate your practice, you know, the next year, right? Can't say that it's going to hurt. But I mean, it's not really going to, you know, what the value of your practices, but in five years, 10 years, you know, I would say for sure, in 10 years, if you took a practice that you bought for $800,000, and you're now doing 1.4 million with it, don't you think your financial planner wants to know that? Here's the other problem I have with it, too, is it's the exact opposite of what I just said right there. I don't know how many times I've run into a situation. I'll give you a prime example. This is real life story, sat down with a dentist, we're going to sell the practice, we we've gone through all the things with the the buyer, we've done all of our system, you know, we're very systematic. So we put everything together. We've gone through our APA worksheet, we've sat down, we've we've got everything ready to now sign the paperwork, right. So we schedule a time to go meet at a restaurant. For dinner, we're gonna have our last final thing and then we're gonna go back to the office, which was only a block away to sign the paperwork, where we're done with dinner, and we're like, we're gonna move back and all of a sudden the seller says to me, okay, so there's one thing before we go back to the office, I gotta, I gotta talk to you about and I just look at him and the buyer kind of gives me that glare like what is you know, because it was just that you could tell that was the moment Right? You know, he says Phil I listened to you but probably a little too late though. And so I talked to my investment guy again, and he said I can't retire for three years. So I need buyer you to be an associate for three years and then I'll sell you the practice. Well, you of course my mouth drops and hits the table. Buyer walks by or looks right at me goes deals done. I'm out of here.
Phil Cole 10:00
And guess why, again, when when hours and hours away bought a practice for, I think it was 600,000. It's now doing 1.8 mil. I mean, he. So to him it was by God's grace, He this guy helped me out because I'm doing really good. But for for the seller and so, of course he walks out of the restaurant and I'm there with the seller, say, Okay, you talk to your best investment guy, or did you talk to a planner? I talked to the investment guy, okay, here's the biggest reason why I will say this. And investment guys, don't worry about your money after you retire, they they're there, and nine times out of 10. So don't get I don't want to do anybody that's an investment guy out there. I don't want you calling me saying that you lie. I don't do that. But nine times out of 10 your investment companies, you say I want to retire with 6 million, they will they will do everything they can to get you at that 6 million. But the problem is with that is once you hit 6 million, and they say yes, you can retire. When you don't know what the tax rules are, you don't like capital gains is is right now, blah, blah, blah. So you got 6 million. But let's say that we were going to have there until the house. And this isn't to be a political thing. But when the House Republicans took over the house, what did what was one of the bills they killed right away, capital gains being double taxed, right. So now if for some reason we lose that, again, if that was to be brought back again, and your investment guy who just got you the 6 million, but isn't looking at those kinds of things.
Phil Cole 11:47
And you now I want to sell your practice, when that when that bill happens, and you're gonna get double tax on your capital gains, or your capital gains is doubled, whatever. Sorry, if I'm not, hence reason why go to a financial planner to get the explanation, right. But whatever the case may be, do you understand where a financial planner is, is watching, all of that stuff is talking about...Okay, you're going to need to take out this amount of money when you're out of your 401 K that we're also going to take over here from this bucket. And so there's like five buckets, right? That you need to be aware of, and when is it ready to pull? When is it not ready to pull it huge? It's just huge to make sure that your setup, right, right?
Chris Webb 12:32
Yeah, they're not looking at amassing wealth. They're looking at disbursements. Right, right. And how do those disbursements work to avoid as much tax liability as possible.
Phil Cole 12:42
So I had another I had another broker from another company telling me that that when I told them about this, they're like, you know, that's interesting, I've never thought of that. And I usually don't get into that, right. Hence, where I go with the broker type thing, they don't talk about this, because their job is just to sell a practice. So I guess let's just talk about right, the second, we we at KLAS solutions, we're not a broker, we are a transition consultant. Okay, we are going to consult you from the A to Z of the practice sale, and work with you through all of that we're going to be working with team members like the CPAs and, and financial planners, making sure that everything is set and that you have an absolute understanding of where you're going. So when I was talking to him about he said, That's interesting, because I had a doctor that was with Raymond James, and they had it set up that he was going to get $150,000 Every year, right. And it was like something like 10 or $12,000 a month, whatever the number is, and whatever the case may be no planning. And so this guy turned around and had a couple things happen with capital gains, tax laws, and different things like that. He burned threw his first $150,000 You know, within like, eight months or something, and he says, Yeah, then I got this phone call, you know, from me, like, Hey, I thought this wasn't he's like, Hey, I've sold your practice. That's all I'm in for it and stuff. Now, granted, I'm not saying it's the brokers fault, you know, but on the other hand, you know, be more get them to be more informed, right. So that they they're making a good decision, because the last thing I want to do is see somebody you know, our job is to me as a as a transition consultant is to make sure that their legacy that that this family member, basically this practice is their family, that it's it's their baby and their baby has been now taken care of and been processed over to somebody else that's going to care and love for just as much as they did. And it's not one of these things where it just falls apart. So I think that I think for that purpose. Now the other purpose why for evaluation, I think is really really vital. Oh, is because of disability. And I don't think people understand this and hear me loud and clear. One out of every two dentists has to retire early because of disability or death. All right. You know, Chris, we have in our last six transitions, four of them have been because of disability issues. So it's so rampant. And, you know, for the one in the for the one that we have in that was in the Western Michigan area. I mean, you can you tell the story. I mean, sad.
Chris Webb 15:45
Yeah. I mean, so. So with that, the way I look at it is the, the evaluation. And we talked about, like, why is it important? And when should it be done, and you had mentioned five or 10 years after buying it, you know, at least 10 years before you're looking to sell. But it's, it's a life insurance for your practice. Right. Now, at least at one point, you had an idea of what your practice was worth. So your financial planner could look at it, you could look at it for the benefit of your family members, your dependents when you when you're gone. And you can no longer practice.
Phil Cole 16:17
Yeah, so I mean, and the other thing with with evaluations, there's once again, like you get to practice valuated. Here's another prime example, sat down with evaluation one time. There's too many doctors out there that hear the DSOs and what they're paying and how they pay and stuff. And they think that everybody's going to pay that right. So the doctor was producing $1.2 million. And he thought his practice was worth $1.2 million. And he's telling us fine, he's got a financial plan, or he's doing the right thing. But he's telling his financial planner, it's worth $1.2 million. Yeah. So so now when you when he has $500,000 of write offs, and because of being a PPO and stuff like that the practice comes in, and is valued at and I don't remember, but let's just let's just say, you know, 850,000, guess what the first thing he says, Well, my financial planner is really upset with me, because he's been planning for a $1.2 million sale this whole time. And you're telling me it's $300,000 less or 400,000? Whatever? I mean, we'll justify in our valuation everything right. But whatever the case may be, that's, that's a big problem. No different than once again, you know, why it's not too soon, is because the exact opposite? How many doctors, you especially after COVID have left their practices go. And so that doesn't hold the cash flow, to be able to sell the practice. It can be a vibrant practice, that's fine. Fine. I mean, we have we run across it, but we have one and in another in lower Michigan. And basically, what's the problem with it is it's a great practice fee for service, which is awesome, nice building on a major traffic area and in a metropolitan city. But what does it not do? It can't cash flow debt services. So what does he want? He wants, you know, he but he's in his mind, my practice is worth this, my buildings worth this. And he's gone out and ask non dental affiliated people, and of course, they just ramp up things. And so what did he do when he sat down with us to the valuation? He said, This is ridiculous. You know, I'm not listing with you. That's fine. You know, for us, it's like we were giving you the honest valuation set there for a year now. And he's gone through how many brokers no one can sell it because you can't sell something that a bank can't finance. It's just that simple. But yeah, you know, if we, if he didn't wait, when he came to us, he came to us that I wanted to retire right? And I was told that sense where I'm at I should be able to sell this within three months. Okay. And sell it in three months. So what's our deadline and stuff maybe a year depending on what your practice looks like but he was you know, for him sitting down with him at the practice is great um, fee for him because he was fee for service. He thought everything was great. The problem is is his p&l is in the way as accounting was done was so messed up. That it once again, it didn't cashflow. And we've had several of those. Yeah. When that happens, you don't in you want to sell in a year's time. You don't give us a time we got to clean that up. So hence get your valuation minimum minimum five years if you know you're going to want to sell in two or three years get the valuation right now if you want to sell in five years, get it right now. But I would really prefer you to get get evaluation done 10-15 years out, because there's a lot of other things that we can do. And then we can monitor that as well, too. So that if you have all of a sudden, the practice is doing a million dollars in the next year, you dip to 800,000. Why? You know, I've been coming to work and, and just sore, I'm tired. So I decided to instead of working four days, I went down to three and a half days. Okay. That's a big difference, right? $200,000? So, once again, can we fit that into the parameters of what you're looking for, in five years have a practice sale or 10 years of practice sale? Is there other things that we can do if you're getting that tired, and you don't want to refight tire for 10 years, you actually think you're gonna make it another nine years?
Phil Cole 20:47
If you're already, you know, feeling it? So do we have to bring it you know, do it, start looking at other avenues and associate different things like that. Those are all things that give us the ability to really give you good sound advice, whether you take it or not, that's up to you. But at least get the at least have your options.
Chris Webb 21:13
So let's let's backtrack real quick, I'll give two examples of things that we've run into. So one is a doctor who is young, like really young, not hasn't even hit 50. Yet, all of a sudden developed a neurological disorder. can't practice dentistry. Yep. So again, you're talking about, you know, doing a practice valuation early, who in their right mind in their 40s would say, Yeah, I want to get my practice valued. I want to know what my practice valuation is, well, here's where we talk about what that insurance, right. So now all of a sudden, it's, Hey, I need to do the practice, valuation need to sell my practice, because I can no longer practice dentistry, right? So you got to come to you got to, you got to get all the information together, you got to put together the practice valuation, then you've got to start to market the practice. And in trying to bring it up, I mean, it takes time, right, it's not a quick turnaround thing. There's time involved in it. So now we're losing time, while he can't practice to try to get the to get the information together to put the valuation together, and then find a buyer to sell the practice. So we we were able to do that, right. But just think of the amount of stress and anxiety that could have been taken off of his shoulders, had he had the valuation done already, and kind of had an idea of what to expect. So that we could jump right in and move forward with it rather real quick tweak and update to the valuation, get it listed. Now you're talking days instead of weeks or months. So on the positive thing, we did evaluation for a doctor early, he want he wanted to do it ahead of time. So we did it. A year and a half later, he has a massive heart attack. And is like laid up in the hospital, his his wife calls and she says Chris, I don't know what to do. Like, you know, my husband had a heart attack, he can't continue to practice dentistry. What Do I Do I Do I need to sell the practice, like, what do we need to figure out? Well, we had the valuation. So we were able to get together on it and, and talk about it and say, okay, we can get some updated numbers, we can update the valuation, we can sell it. So we had everything ready to go. And luckily, you know, the surgeons at the hospital, were able to help and get him on the road to recovery, he started to get better started to feel better, and decided he wanted to go back to work. So instead of selling the practice, we found an associate. But again, we have all that information ready to go. So that we could start marketing the practice. And we can mark it for an associate. So that that life insurance for the practice helped give them peace of mind. And instead of being even more stressed about a really stressful, scary situation, they were able to come to me and I was able to take that stress on and run that part for them. They could just focus on his health. So yeah, so that that's the kind of situation in your coming in clear now. So do you want to jump back to what we were talking about?
Phil Cole 24:11
Yeah, so I was just gonna say, I mean, I think the thing is, is when you're doing those evaluations, what we always stress upon is is like it's an emotional thing, right? I mean, when you start to fill out our questionnaire and start to get all the reports and we start asking you all kinds of questions, that becomes a very emotional time. You know, you're like overwhelmed. So just think about being disabled now, or having another problem where you're like, like I had one of my gentlemen to where one day he shows up to work and he's working fine. The next day he shows up he can't hold a handpiece if he can't is his hands gone numb in one day, in one day. So now think of that emotional like you're already stressed. Like why can't I hold this handpiece and now I gotta come to you and sit there and say hey, by the way, fill all this stuff out. And we need this this and this to be able to do this valuation but what That's That in itself is not a, you know, piece of cake moment. It's there's a little bit of stress added to that. But then to turn around and have that with the doctor's nail on you, and we got to run this test and this test. I mean, it's just, you can't you can't overemphasize the importance of it.
Chris Webb 25:18
Yeah. Yeah. And that I mean, that hits, like you talked about earlier. You know, financial is, is just one of those pieces of a transition. The other one is the emotional piece. Really, we're, we're emotional beings, even if you don't think you are, you're you make decisions based on emotions. And so when you're getting into something, you're talking about the end of your career, the end of your practice, that you've been working so hard on what you went to school for what you dreamed about for years, it's gonna get emotional. So So you're right, if you can get that done ahead of time before that time comes where reality sinks in, and it is time for you to transition out of dentistry and to hand your practice off to someone else. If that's going to be emotional enough, why not do it ahead of time. So that part's done? We agree. Yeah. So. So again, I want to reiterate that, that's one of the things I love about what you've established in our company, and why we do the things we do when we do them. One more thing that we had kind of touched on, but you get the valuation done. You know why it's important now, right? So you kind of know where you're going and where you're headed. You can track your practice, you can work with your financial planner on it. It's important, it's life insurance for your practice, get it early. So we kind of covered those things. But but now you have your practice valuation, and it's time to sell your practice, right? There's so many different transition companies out there. And again, just for uniformity of language, that there's many practice brokers, right? So let's talk through what what are some of the questions that you should be asking a practice broker before you sign with them? Because there are a lot of things I don't think people pay attention to or doctors pay attention to. They just they want to list the practice. And they say, hey, yeah, I know, this group, I recognize this name. So what are the things you should know before you're willing to sign a listing agreement with a practice broker?
Phil Cole 27:15
Well, I, you know, for me, it's always going to be the commission structure, right? I mean, what do you charge for selling the practice is always going to be the big one. But I think the other one, that's something that really should be considered or that you should be asking for is is like, what's your involvement? Right? I mean, there's, there's a lot of companies out there that when they get the listing, they they advertise it, and when the buyer comes in, or if they already have a buyer, then all they do is put the two seller and the buyer together with lawyers and CPAs, and let the lawyers do their work, right. So for us, I think that that's that to me, is I've, I've seen all those scenarios, and never do they really work out when you talk to the dentists that have had a terrible transition. What do they always say? It's those kinds of scenarios, right, there was no involvement. So I think that's, there's a couple things, one with our valuation, you know, we make them non negotiable, because we believe in in our motto is fair, transparent transitions. So I think that that's first, you know, we're going to put, we're going to make the valuation fair. And if you're not, if you're trying to be if you don't believe in a win win situation. And if you don't believe in making that transition, be simple, and, and just simple, but I didn't lose, I didn't necessarily get one overtop of the other guy. But we both win on this one, because it was fair, and I feel very comfortable at who's taken over my practice, which is the most important. And I so with that being said, I think that's what another question is like, what are you what are you trying to establish with the buyer? Because when we have bought and we have all kinds of buyers in a database, right? And every broker does, it's it's a seller's market right now, buyers are are all over the place. But but every just because if we're selling a practice in, you know, West, Palm Beach, Florida, right, and we have 15 buyers, it doesn't mean that we're going to bring all 15 buyers to that seller. And the reason a big reason being is is because out of those 15, 10 of them might not even have the same philosophy. They don't want to do the same dentistry they're you know, they just aren't a fit. So that's I think the big thing is, is when you're trying to figure out who to list with is like, what do they do for you? The other thing for us is, like I said, when when I said in the very beginning from A to Z, I mean, we're doing we're helping with the due diligence, we're helping with that we know we have we have created systems. That's just all like It says we've created systems so that everything needs to be followed. You don't need to go to your lawyer and ask them, What should I do here? What should I do there? You don't need to go to your CPA to say, What should I do here? Because once again, you know, we just I just got the phone yesterday with with a gentleman and he says, Well, you know, I gotta go to my lawyer for this. Okay. Has your lawyer ever done a dental transition before? And he says, No. Yeah. So so. So why would you go to him? That's all I'm asking. And you don't have to go to me once again, I don't I want somebody that wants to work with KLAS Solutions, right? I don't want you to feel you have to, I want you to want to work with us. But I guess that's my question. Right? Is why would you go to with somebody that's never done a dental transition, and has never doesn't even isn't even affiliated with dental? I mean, you know, you and I had a practice where I had the seller, you had the buyer. And then the buyer said, we said, you know, let's just use these lawyers. They're dental specific, and she brings in a friend, that's a bankruptcy lawyer. I mean, not a good, not a good scenario. Right. So you got to, like, there's no help on that. So I guess, you know, what are they going to do with with that? I mean, how involved are they going to be? And I think that the the other one is basically, you know, are they going to be an advocate? Or are they going to help the buyer, making sure and being careful of knowing that everything is, is stand in good standing with everything that needs to be done, because the other thing that we fall into? And I know some people will call it unilateral versus bilateral representation. You know, you got to make sure though, that whether you're, we're both right, if we, if the doctor seller says we only want I only want you representing me, that's fine. But I want to explain to them that listen, if a doctor if the buyer has a representation, and their representation is once again a CPA, that's aunt Holly, and she doesn't do dentists is she going to be how long do you want this thing to drag out? Because we can close the thing and we can close the thing and you know, 30-40 days if we need to, with our with our due diligence, but we're going to give the buyer checklist, we're going to make sure that they're funded. I mean and stuff. Because once again, if buyers don't know, they, they don't know what they don't know. Right? So another example that just is happening right now we go to the buyer says yes, I'm, I am going to be using PNC, I'm all set, we go ahead and do everything come to find out, you know what? He said, When he said it all set his ideas is he's all set. He's going with PNC. When we hear all set, you're pre approved? And he says, Yes, we think you're pre approved. Right? No, you've started all that process. Yeah, you didn't even you haven't gone to the bank yet. And you didn't know that you had to go to the bank. So those are the kinds of things that I say is, is where I feel brokers are expecting them to know all that we know this is all going to happen. And we all know what's going to happen. So we take over the last thing that I would say that you should ask is, before you get involved with anybody is will you co broker, so in the real estate world, we know that, you know, buyer seller represents so they get 3% the other one gets 3% in the transition world, co brokering is just a bad thing. I don't know why. Because to me, if we're going to actually represent our sellers, or buyers, then we should be willing to you know, do whatever we can to get it. So we will co-broker out of the nation. I think we've may be found 4 brokers that will co broker with us and in my career and in everywhere in the United States. It's just a bad omen and I don't get it. But here's once again, the problem is is everybody for some reason brokers feel that, you know, they don't want to what we hear all the time is I don't want to share my commission, because there's a lot of buyers right now, right? So they feel as though they're going to they'll find somebody because there's enough buyers. The problem with that is is it's been like that for the last 15 years or so. So you know, but there's eventually going to be a switch. It's no different than, you know, the bull market versus you know, it's the market will change. And when it becomes a buyers market, and there's all kinds of sellers out there and we don't have any buyers. I would love to see what's going to happen with brokers then well all of a sudden co brokering come back or not, I don't know but you definitely should ask.
Chris Webb 34:55
Yeah, let me okay, let me hit that from the real estate side. So coming from the Real Estate world, the bilateral unilateral conversation, when we, when we run a transition, most of the time, we'll run it as a transaction broker, meaning that we are serving the practice the deal, and not one doctor or the other. So we don't have a fiduciary to one side or the other. Our goal is to keep it simple, fair and transparent, the things that we talk about all the time. So that's why we have our non negotiable valuation, right? We do the same thing with the real estate, we're going to help figure this thing out so that it works for both sides. And again, win win, you know, you don't have to take advantage of somebody else to be, you know, to be victorious in a transition, right? So so we run it as a transaction broker. So so we are going to be more bilateral in the way that we're servicing the practice, right. And then, and then second of all, when it comes to co brokering, you know, you hit the nail on the head, when you talk about residential real estate, which which everybody is, is a little bit more fluent with, right and a little bit more in, you know, engaged in, so you hire somebody to list your house, they're gonna negotiate a commission with you, right? A lot of the times you're gonna see, you know, 6%, three, and three. But again, we're not trying to stimulate or stipulate what those commissions are, it could be whatever agreement you have, right? But you agree to a commission to pay your listing broker, okay, they list your house and market it, if a buyer comes along without an agent, and buys your house, you still pay that same commission to that listing broker, right. But if that buyer comes along, and they have an agent, your expectation is that that agent is going to split the commission with the buyer's agent. And they're going to work together to get your deal done. All the paperwork, all the legal stuff, the title, all that stuff, right. So they're working together, and they're going to split that commission. But you're right, it's really odd in the transition world, when you sign with a listing broker. It's not an expectation that if a buyer comes along and has a represent a representative, that they're going to split that commission, and most brokers won't do that. So they'll say, oh, no, nope, in in the either one, they won't show it to your buyer, because that buyer is working with you. Or two, they'll say, Hey, if you want to get paid, then your buyer is going to have to pay you. Does the seller know that? If the seller knows and is okay with that, then that's fine. But does the seller know that you've now just limited your pool of available buyers? And does the seller know that you're not willing to split your commission with somebody to try to get a deal done for them? Even if it's the right doctor, the right fit the right situation? So just you know, if you don't care, then that's fine. But man, you should at least be informed. Because otherwise you're going in with the understanding that your broker is doing their fiduciary for you their best for you to find somebody. And they may not be. So you should know, are they willing to co broker?
Phil Cole 38:09
Yeah, absolutely. And I but I think what you're going to find is your I mean, those who are listening, you're not going to find too many. And they're gonna have their reasons, right, they're gonna have the reasons but as far as I'm concerned, is, once again, to be able to do what's best for both buyer and seller. And once again, it's the transaction, right? It's the transition of the practice. And if we're doing what we're, what we say we're going to do, and do it the ethical, moral way, then, and we're, the transparency is the most important part, you know, and if we can eliminate some of these other things that we that we put in place, then the transitions should be very simple. And with no problems whatsoever. So I don't know what the stats, I don't even know if the stat is true or something. But I've I've heard or I've seen where stats where practice brokers have a 65% closed rate.
Phil Cole 39:10
I mean, I met we're at 98%. We've had one, the one that I mentioned in this podcast, where we were at the dinner table, and we were supposed to go back. That's the one that that's the one that failed. But I don't I don't think that from that point on. I learned from that right? It was one of those things where I would I've made the mistake of saying well, he's made his choice, and instead of forcing him to have the conversation and make sure you're okay, instead I said if he doesn't want to talk to him and its his choice. You know, Chris and you've worked with me enough I found it and to the sellers had to talk to their financial planner and get an answer first, a lot of times, we'd like to talk to them ourselves, so that we can make sure that they're getting the right information as well. But I think that's it. I mean, those are probably the major things that you should be concerned about anything after that, you're probably getting a little ticky, tacky on some things, but I just think that the big thing is, is, you know, ask them, What are they going to do for you? And if it's just going to be that they're going to post it on the local, you know, dental town, and they're going to put it on the local state?
Phil Cole 40:31
You know, convention or Association website? I mean, it is what it is, I mean, you get, you're gonna get what's your I mean, you'll get it sold, probably eventually. But who knows? What's going to happen? I would say the other thing is, too, is, maybe this would be another one to ask the brokers who they use for their professional team. What are their recommendations? Are they using guys that are, you know, in a good old boys club? Are they actually using some really sound dental specific team members, right? Or is there or is there you know, I've always used this, this is my buddy, you know, and I always use them, we go golfing all the time, and blah, blah, blah, blah, blah. And it really is not, I mean, make sure that they're working with some reputable people, I would say, or dental specific people. So
Chris Webb 41:31
and I love it. I just think to kind of put my own summary on it is you spent, you spent eight plus years going to school to learn your craft. And you've got how many continuing ed hours into building your professionalism up. This is one of your last things that you're going to do in that profession in that career. You're probably only going to do it once, right? You're you're going to buy and then you're going to sell or you're going to start up and you're going to sell just make an educated decision. Know what you're getting into know where you're going and don't just do it based on somebody else's recommendation, understand what you're doing.
Phil Cole 42:13
Yeah, no, I agree. 100%. So, well, I think that we've given quite a bit of information. I want to once again, thanks, Chris, for you know, going back and forth with me on this, we could go for a couple more hours. I know that for a fact. But if anybody has any questions, please reach out to Chris right and go to our website at www.klassolutions.com. And you can find us in the Meet the Team reach out to us, we're always willing to have conversation hopefully this podcast kind of shows you that and that way we just want to make sure that you guys are getting good information. As you know KLAS Solutions, we always our goal is to educate in this try to get you as much information so that you can make good decisions. And so we don't expect that just to be on this podcast if you have some specific questions or would like to talk to us reach out to Chris or I or if you're or anybody that's in your area. So any of our transition guys that are in your your area reach out to them. So if you enjoyed our show, please rate us review us on Apple Spotify or wherever you get your podcast information. So once again, I'm Phil cool. And with my co host Chris Webb, we want to thank you for listening to today's episode.
