Buying a Dental Practice

The most important factors to consider when buying a dental practice include:

• Office location (rural, suburban, or urban)
• Age and quality of the equipment
• Collections vs. production value
• Overhead costs
• Gross production vs. current or expected production level
• New patient flow and the number of active patients

Since the value of all dental practices is different, it is difficult to say exactly how much it will cost to buy a dental practice. However, there are several models for calculating the fair market value of a dental practice. Buyers should consult a professional who understands the current dental practice market conditions for assistance with this critical step in the transition process.

Upon buying a dental practice you become a business owner, which means your expenses are tax-deductible. Deductions may include pension and saving plans, professional dues, insurance, continuing education fees, car leases, travel expenses, entertainment, meals, supplies, and inventory.

Your Practice Broker will provide you with summary information about the practice opportunity you are interested in purchasing. It includes gross sales, lease information, and cash flow. A broker will help you draft an offer based on that information. You are protected by making the offer contingent on your satisfaction with that data upon your full investigation.

A business offer to purchase simply states, “If everything I assume about this practice proves true, this is what I am willing to do.” You, the purchaser, then have the right to proceed, withdraw your offer, or make a new offer based on your investigation. The seller, once he/she has accepted your offer, must stand by those terms unless you, and you alone, choose to alter the terms.

US Dental Transitions is different from other brokers in that we do not charge purchasers a dental practice broker fee for practices that we have listed to sell. The seller pays all brokers to sell his/her practice, and the broker represents the seller in the purchase process.

However, some special situations require a buyer to pay a fee. If a buyer wants the broker to search for a practice opportunity, represent them in negotiations and closing, or assist them in the purchase of a specific practice they have located, there may be a small buyer fee.

To a large extent, the cash flow of the practice dictates how long the purchaser can afford to employ the previous owner. Our advisors help buyers evaluate whether the practice can afford to employ the previous owner and for how long. According to most studies, approximately 95% of the patient base is transferred to the new owner following a well-planned and executed transition.

There are several steps a buyer can take to ensure maximum patient retention after purchase, including the seller introducing the buyer to staff, staff introducing the buyer to patients, and the buyer sending a letter to all current patients introducing themselves. Although the timeframe for introductions is up to the interested parties, it should be done shortly after the sale.

A qualified Practice Transition Consultant can ensure you take the proper steps for maximum patient retention.

Every practice has goodwill unless it closes or is failing. The amount to pay for dental practice goodwill depends on the cash flow of the practice, its general attractiveness, transferability, new patient flow, years in practice, office lease and local economic outlook. In short, it’s a complicated process that every seller and buyer should seek help in determining.

The answer to this question is based on your understanding of what you want in a practice and when you can start working in it. You need to answer these questions to answer your initial question:

• What type of practice do I want?
• What business model is most desirable?
• Do I want to be in an Urban, Suburban, or Rural location?
• How much can I reasonably finance?
• When can I start working?

Closing can take from one to three months, depending on the type of financing. Lenders that specialize in dental practice sales often make 100% loans and can complete the closing within a one-month time frame.

Banks and small mortgage companies not familiar with dental practice acquisitions can take three to four months to close the sale. Our Transition Advisors help facilitate this process and maintain relationships with the most common lenders.

Just as you would not want your personal financial documents made available to the public, practice owners only want serious buyers to have access to such private information.