Broker vs DSO Direct Offer: Compare Scope and Net Cash

Broker vs DSO direct offer: compare the process you need

A direct offer is a proposal from a prospective buyer. A broker engagement is a service agreement with an adviser. They are different things, so start by defining the work needed to assess and complete the proposed sale. Then decide who should perform that work, what they charge and whose interests they represent.

Receiving a direct offer does not prevent you from seeking advice. Hiring a broker does not guarantee a better price or a completed sale. You still need to review the buyer, the terms and the engagement. The useful comparison is between specific process plans, with all costs and responsibilities visible. Avoid assuming that one route is always best for every seller.

This page addresses a seller who already has, or expects, a DSO approach. It focuses on process choice and comparable economics. The broker versus for-sale-by-owner guide examines how owner time and task coverage differ. The DSO versus private buyer guide addresses the buyer choice itself.

Understand who is on each side of the table

Ask the DSO contact who they work for, who approves the offer and which entity would purchase the practice. A friendly and helpful buyer contact still has a buyer role unless a separate arrangement says otherwise. Do not assume that the person presenting the offer is responsible for protecting your interests or explaining every alternative available to you.

Ask a proposed broker whom they represent, how they are paid and whether another party pays them. Request written terms covering scope, duration, termination, protected buyers and any post-termination fee provisions. Obtain legal advice on those terms before signing. This page does not establish the licensing or securities rules for a proposed engagement; counsel must assess the actual activities and jurisdiction.

The ADA checklist recommends early legal advice and contract review. Include that work in either process. ADA: Sale checklist

Compare the services rather than the job title

Write a scope for each route. A seller may need help organizing earnings, reaching buyers, comparing proposals, managing questions or tracking closing work. Do not assume every broker engagement includes all of those services. Equally, do not assume the direct route eliminates them. Work that a buyer performs for its review may not answer the seller's own decision questions.

Use this table to identify gaps, not to award automatic points. If both plans leave lease review unassigned, both need improvement. If one plan provides a service you do not need, its presence does not prove added value. Ask for deliverables, boundaries and the people who will actually do the work.

The ADA's DSO guide emphasizes the interaction of transaction and related agreements. A broker's commercial comparison does not replace legal review of those documents. ADA: DSO agreements

Use matching definitions for the money comparison

Compare offers as of the same date and on the same basis. State which assets are included, how debt and cash are treated, whether receivables transfer and what adjustments remain. Keep future wages outside purchase proceeds. List uncertain or delayed payments separately instead of adding them to available closing cash at full face value.

The invented example below isolates one question: cash remaining after a stated broker fee. Assume each proposal is all cash at closing, with identical asset scope and no deferred payment. Assume the fee applies to the full stated purchase price. Taxes, legal costs, debt, holdbacks and closing adjustments are excluded. These are teaching assumptions, not customary fee terms or market offers.

Under those assumptions, the second proposal leaves $20,000 more after the modeled fee. It does not leave $100,000 more. It also does not prove a broker caused the difference: these are invented alternatives, not a measured result. Other expenses and terms could change the comparison, and there is no promise that another buyer would offer more.

For the same fictional fee basis, divide $1,500,000 by 0.95 to find the gross price that matches the direct cash amount after the fee. The result is about $1,578,947.37. Check the actual fee base before using that formula. A minimum fee, tiered fee, retainer, expense charge or treatment of rollover could make this simple model inapplicable.

Keep risk and future work beside the cash result

A higher cash result does not settle the decision if the duties differ. Put the employment schedule, transition role, restrictions, closing conditions and unresolved adjustments next to the financial comparison. Ask the seller which differences are acceptable. Do not assign a made-up dollar value to a concern just to make the spreadsheet produce one total.

For rollover, use a separate investment review. The SEC's bulletin warns about private-placement loss, illiquidity and limited disclosure. A projected resale is not cash received at closing. SEC: Investment risks

These questions help you avoid comparing a firm cash proposal with a speculative headline. Keep an open item open until evidence resolves it. A polished buyer presentation or a broker's confidence does not make the missing document appear.

Decide whether broader outreach would answer a real question

If you want to test alternatives, define what you hope to learn. You might need to know whether another buyer offers a role closer to your plans or whether a different structure meets your cash needs. More names on a list are not the objective. The goal is a relevant, permitted process that produces useful choices.

Before contacting anyone, have counsel check existing confidentiality, exclusivity and other duties. Do not assume that an unsigned purchase agreement means you have no restrictions. A broker engagement can also affect an existing direct buyer. Identify that buyer and agree on its treatment in writing before disputes arise over who introduced whom.

Decide how much time and effort the additional process deserves. State the information needed to compare alternatives and the seller's availability to respond. A broad process without prepared records may create work without useful evidence. A narrow process without a clear comparison may leave the seller unsure whether the direct offer fits. Scope the work to the decision.

Keep confidentiality controls under either route

Start outside outreach with a blind description, excluding the seller and practice identity. Require an NDA before identifying disclosure to a potential buyer. If a direct caller already knows the practice, that knowledge is not permission for wider disclosure or unrestricted record access. Agree on appropriate confidentiality controls before releasing further nonpublic information.

Plan staff disclosure with the seller and advisers before calls, visits or document requests create confusion. Some staff may need to assist earlier. Necessary patient care, required notices and other legal duties can change the timing and take priority over commercial secrecy. An NDA does not independently authorize patient-data sharing; obtain a separate privacy and legal review of the actual request.

The FTC cautions against improper premerger sharing of competitively sensitive information. Counsel should assess safeguards when potential competitors are involved. FTC: Information-sharing safeguards

Ask who controls the data room and the release log. Decide who approves each request and who can answer a question about the records. These controls need an owner whether the process is direct or broker-assisted. Neither route should depend on office staff guessing what they may send.

Common mistakes and summary

Avoid treating the absence of a broker fee as the absence of a process cost. Also avoid treating a fee as proof of value. Compare the actual service, the work left with you and the terms you receive. Keep conflicts and compensation visible. Ask for explanations when the engagement language differs from the sales discussion.

Another mistake is comparing gross prices without matching payment forms and duties. Rebuild the cash bridge after a material revision. Preserve earlier versions so the reason for a change can be checked. Your accountant, lawyer and other qualified advisers should each address the questions within their scope; none should be assumed to cover every issue.

Choose a direct or broker-assisted path because it provides the work and evidence you need at a cost you accept. You may seek limited advice on an existing offer or decide that a wider sale process is worthwhile. The right next step is a defined engagement and a clear comparison, not a universal claim that one route always wins.