Selling a Business Independently, with Dr. Grace Yum

There really is no substitute for experience and that’s been the focus of this series. We’re taking time to speak with experts who are actively involved in the business sales process. I recently had the pleasure of speaking with Dr. Grace Yum, a business owner who has just gone through the sale process. In this interview, Dr. Yum shares valuable insights gained from selling her business independently. Therefore, I really encourage you to listen to the full podcast so you’ll hear all she has to say. But until then, you can follow along as I review what selling your business independently is really like.

Follow Along With The Financially Simple Podcast!

TIME INDEX:

• 00:42 – Selling Your Business Yourself, with Dr. Grace Yum
• 03:46 – Backstory: Education, Experience, Development
• 09:30 – Exiting
• 12:04 – Seeking Guidance
• 13:38 – Leaving a Legacy
• 15:57 – Doing it Yourself
• 19:27 – The Buyer
• 21:16 – The Process
• 23:25 – Crossing the Finish Line
• 25:40 – The Next Step
• 31:01 – Recommend Reading
• 31:50 – A Nugget of Wisdom
• 32:54 – Summary

Getting to Know Dr. Grace Yum

Dr. Yum is a graduate of Northwestern University. She entered the field of dentistry as a part-time employee, trying to earn extra cash while she was in school. It wasn’t until she received some prompting from her employer that she began to view dentistry as a possible career choice. After graduating, Dr. Yum went out on her own to launch her own pediatric dental practice right in the heart of Chicago, where she served the “Four Seasons crowd,” in 2008.

Another unique aspect of Dr. Yum’s practice was that she opened her practice as fee-only practice. Why is this unique? Well, many dental entrepreneurs begin their practices by working with specific insurance providers. This creates a sort of built-in client base. Dr. Yum decided that she knew exactly who her target market was and she decided to not work with an insurance provider. She was told by a consultant that she would never reach her goal of becoming a million-dollar practice with this business model. However, Dr. Yum chose to listen to the office managers that had worked in the industry throughout their careers instead.

Despite being told she couldn’t do it, Dr. Yum started her practice as a fee-only practice. She did end up negotiating with an insurance provider, but it was on her terms. She wouldn’t accept anything less than her fee. As a result, she got the benefits of working with an insurance provider without making the sacrifices often associated with doing so. The bottom line is this… like many entrepreneurs, anytime someone has told Dr. Yum that she couldn’t do something, she’s responded with, “Watch me!”

What Led to the Decision to Exit

Dr. Yum reached a point in her career where she felt that she had already accomplished all that she wanted. She began her practice with just two employees and by the time she decided to sell, she had seven associate doctors and a team of around fifteen employees. She had done what so many said she couldn’t and created a valuable business that produced an income that allowed her to live the lifestyle she and her husband chose to live.

In addition, Dr. Yum had started a second practice. Having built such a successful and scalable practice, Dr. Yum realized her dream of creating a dental practice that operated on her terms. She found herself at the helm of a large business and entering into the turmoil or “whitewater” phase of the business cycle. Perhaps you’re finding yourself in a similar position. But Dr. Yum was faced with a decision. She could continue in her business, exit, or even downsize. So, who do you speak to when you’re faced with such a decision and you don’t want to involve a broker? Dr. Yum consulted her husband, her parents, and a close friend who happens to be a dental consultant. Each of the people Dr. Yum consulted are entrepreneurs themselves, but more importantly, they were people she trusted.

By consulting the people she trusted, Dr. Yum was able to get an idea of what she was overlooking. As a business owner, you often don’t know what you don’t know. That can be scary. We understand that we don’t know everything but what if there’s something we don’t know we’re overlooking? That’s where your advisors are so valuable. Together, you can work through each area of the business and find its weaknesses or areas where it’s open to risk.

The DIY Approach to Selling a Business

Oftentimes, the first step a business owner takes when they’ve made the decision to sell their business is to contact a broker. However, Dr. Yum decided she was going to take a different approach. But what should you do to prepare when selling a business independently? Dr. Yum did a ton of research. She asked lots of questions and ultimately, decided selling her business independently was the way to go. Why? For one, she felt she was smart enough to do so. But more than that, everything she has accomplished in her life, she had to work for. She had to negotiate her terms every step of the way, and she found that she actually enjoyed doing it.

One thing that many business owners struggle with is understanding the true value of their businesses. You pour your blood, sweat, and tears into your company and that can cause you to have an inflated view of its value. Dr. Yum understood this and researched how each area added to or detracted from her practice’s value. She wanted to find a price that she would allow her practices to go for and, if she couldn’t find a buyer willing to pay that price, she would simply continue as the owner. She realized that she wasn’t in a position where she must sell. Therefore, she could get what she wanted from the sale or just continue in her role until a later time. But how did Dr. Yum find her number?

Setting a Value

Dr. Yum began by having her CPA provide an informal valuation for her practice. When she had the number from her CPA, she knew that she would get more than a 1x multiplier. She then looked at that number and considered what she would pay for her business if she were an outside buyer. This can be a risky method, however. I mean, what if you could get more with a broker? Dr. Yum safeguarded herself by interviewing several brokers, all of whom told her she would never get the price she was asking. Had she found a broker whose interests and mindset were aligned with her own, Dr. Yum said she would have worked with them.

As it played out, Dr. Yum went about selling a business independently and found a buyer within her own list of colleagues. They were business partners who specialized in pediatric dentistry and were very familiar with Dr. Yum’s systems and practice model. This gave them the expansion they were looking for while providing Dr. Yum with the peace of mind that her practice would continue serving its clients well.

The Process of Selling a Business Independently

The length of the process is going to look a little different depending on your business. However, Dr. Yum took about nine months from the time she decided she wanted to sell her practice, through the business transfer. Once the buyer and seller had agreed to each other’s terms, it took around three months to close the deal. However, even when working with a broker, there are often things that can get overlooked or just don’t go as smoothly as you might hope.

In Dr. Yum’s case, she owned the real estate that her practice was located on. In her mind, she was going to sell the entire lot (two businesses with separate entities and the commercial lot with its own entity) in one fell swoop. The buyers were interested in this as well. However, the sale had to go through each party’s attorneys and the commercial real estate threw a major wrench in things. To expedite the process, Dr. Yum decided to hold on to the real estate, leasing it to the buyers for one year. At the end of the term, they had the option to purchase.

When the deal was done and the money had transferred, Dr. Yum describes the overwhelming emotion as what it must feel like to be an Olympic Gold Medalist. You work your entire life, battling through every hardship, just to make your business as good as it can possibly be. At the end of the business sale process, your diligent efforts are finally rewarded.

Wrapping Up…

Folks, owning a business is perhaps, the hardest job anyone could have. However, it offers the potential for great rewards. If you’re a business owner who has sold a business, you know how great of an impact that can have on your life. If you’ve never sold a business, keep working on your business to maximize its value. But the traditional route of hiring a business broker isn’t the only way to sell your business. As Dr. Grace Yum has shown, selling a business independently is possible and you could end up selling for just as much. The decision should be one made with patience, research, and sound advice from trusted advisors.

Look, I know life is hard. There’s all kinds of craziness in the world right now. But life is good. Selling a business is frustrating but it doesn’t have to be. By working to increase your multiplier and conducting your due diligence, you can make selling your business at least financially simple. Let’s go out and make it a great day!

Want to know more about how to grow the value multiplier for your business or the process of selling a business independently? Reach out to us. The Financially Simple team is always ready to help small business owners realize their dreams.