Doctors are naively attempting transactions directly with IDSOs and leaving money on the table, every single time. In this case study, we achieved an extra $2.0 million net for the doctor after eight bidders weighed in on the practiceâ€™s real value.
I had to check on the spelling of NAÃVE as it always confuses me. Checking the spelling, I found the definition from Oxford:
naÂ·ive /nÄ«ËˆÄ“v/ adjective
(of a person or action) showing a lack of experience, wisdom, or judgment. “the rather naive young man had been totally misled”
Wow was that on point! Doctors are far more highly educated than I am. I have my High School diploma framed with pride. Our clients know more about teeth than I can ever imagine. But when it comes to a transaction affecting not only the doctor’s life’s work, but also their livelihood, primary asset and future, I am always shocked that they succumb to the siren songs of smooth talking IDSOs courting their emotions to skip a professional advisor and do a deal directly.
The IDSO will “take care of them” with the best advice and best price. “We are partners, we will treat you right.” This is a LIE! The IDSO executive’s job and compensation is tied directly to how cheaply they can buy great dental practices. This is not that complicated. The lower the price they pay you, the more they make.
When LPS creates bidding contests among multiple IDSOs, LPS forces the IDSO to pay the market price for our clients. As you will see in News Item #7 (link here) we hired an audit firm to confirm our marketing claims. One surprising thing the auditors quantified was that our quoted initial values to prospective clients were exceeded in the final transaction by $113 million in the last three years. Translation: LPS bidding contests created $113 million of value above market value for our clients! Fortunately for our clients this far exceeded LPS fees on these transactions. The LPS fee has been FREE in every deal we have done!
I only embarked on this rant as a prospective client which was about to sign a deal earlier this year at an $8.0 million value, retained LPS and we achieved $11.0 million from the exact same bidder after we put the client through our standard bidding process. The IDSO was not happy with us, but they have partnered with another 20+ clients since then. We caught them red-handed trying to steal a doctor! The doctor eagerly paid us our $1.0 million fee and he netted an extra $2.0 million. The IDSO is on the way to a spectacular recap, so it was a win/win/win for all three of us; doctor, IDSO and LPS. A happy ending.
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