Dental practice appraisers should NOT be appraising AND selling dental practices. That’s a clear conflict of interest. In the U.S., dental practice appraisers are regulated by the Uniform Standards of Professional Appraisal Practice (a horribly long name that is shortformed to “USPAP“). The “Ethics Rule” of USPAP says (U-8) that an appraiser must not have a compensation arrangement that is contingent on the attainment of a stipulated result OR the occurrence of a subsequent event directly related to the appraiser’s opinion and specific to the assignment’s purpose. In other words: it would be unethical for an appraiser to provide an appraisal and then receive compensation from the sale of a dental practice which relies upon that appraisal. So why is this permitted in Canada? Simply put (and without boring you with the details), it’s because our appraiser industry and standards developed differently than in the U.S., where it is mandatory for appraisers to be regulated and follow USPAP.
So how could it be a Conflict of Interest?
Appraisers have various legal, ethical, and professional obligations to represent your interests. But there’s an inherent conflict when someone represents you and gets paid a commission after the deal closes. Think of it like this: real estate salespeople get paid 10% commissions only when the deal closes. They invest money in advertising, etc. But they want the deal to close fast so they can recoup their initial investment. This can create a conflict of interest because the selling dentist may be pressured into accepting less than what they deserve (or worse terms) just to close the deal.
Are We Conflicted When We Sell a Dental Practice?
No. The Ontario Real Estate and Business Brokers Act, 2002 permits lawyers to be involved in trading in real estate (which includes marketing the sale of businesses like a dental practice) so long as it’s part of them offering legal services (i.e. closing the transaction). We also checked with the Law Society of Upper Canada and the Real Estate Council of Ontario. No Conflict of Interest. Period. And if you think about it: if we are having the practice appraised independently and our fees are not based on the sale price (we don’t charge 10% commissions; we charge fixed fees, depending on the extent of the legal and marketing work required). Finally, we don’t just market a dental practice for sale to our own dentist clients. We follow our client’s instructions – which typically includes marketing the dental practice for sale TO THE PUBLIC (which we do on www.DentalPlace.ca), or limit it to a handful of dentists who have approached the seller and have shown an interest in the practice. Remember: the dentist seller drives the bus; we follow their instructions (that’s what a hired gun is supposed to do).
Get an independent appraisal done. We recommend Matt Bladowski of Dental Strategy (firstname.lastname@example.org). His wife is a dentist and he has been consulting dentists on practice management matters for years. He went to business school with me (MBA at Schulich) and he grew his wife’s start up practice from 0 to over 5,000 patients in 5 years. He understands dental. And he’s been doing appraisals for our clients for the past year. Best part: he’s not conflicted. He only does appraisals and doesn’t get paid based on the sale.
David Mayzel is your legal risk manager. He is a trained courtroom lawyer and has spent many years resolving disputes both in and out of court. He knows how to prepare documents and execute transactions in a way that avoids or mitigates legal risks. He can be reached at 416.528.5280. or email@example.com.
Michael Carabash is your business law adviser. He is an entrepreneur at heart who helps you see the big legal picture. He drafts clear and effective agreements that protect your rights while promoting your interests. He can be reached at 647.680.9530. or firstname.lastname@example.org.
Ljubica Durlovska is your transition lawyer. She helps you with staff and associates, maintaining your corporation, and other business matters. She can be reached at 416.443.9280, extension 206 or email@example.com.
Jonathan Borrelli is your employment lawyer. He helps you with staff and associates matters, including hirings, terminations, switching staff to written contracts and resolving disputes. He can be reached at 416.443.9280, extension 204 or firstname.lastname@example.org.
Benjamin Kong is an experienced business law clerk. He assists David and Michael with corporate matters and purchase / sale transactions. He can be reached at 416.443.9280, extension 207 or email@example.com.
Julie Whitehouse is an experienced business law clerk. She assists David and Michael with corporate matters and purchase / sale transactions. She can be reached at 416.443.9280, extension 203 or firstname.lastname@example.org.
David, Michael, Ljubica, Jonathan, Ben and Julie are a truly dynamic team. Their diverse knowledge, skills, and experiences will help you get the best deal possible while promoting your interests and protecting your rights. You can read dentist testimonials here.