Considerations for Buying a Dental Practice
Dental Transitions is dedicated to helping dentists who are interested in buying a dental practice. Our company takes a unique approach when it comes to dental practice transitions by matching the philosophies of both the buyer and seller to ensure each side walks away from the table satisfied.
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Choosing the right dental practice buy
First and foremost, you must understand why you want to buy a dental practice. Owning your own practice comes with a lot of risks but also provides excellent rewards. An informed buyer understands what risks to take and knows specifically what rewards to reap from the business.
Some Common Rewards
- Financial Freedom
- Flexible Schedule
- Sense of Accomplishment
- A Great Lifestyle
Some Common Risks
- Malpractice
- Legal issues with employees
- Bankruptcy
- Burn Out
Once you know why you want to buy a dental practice, explore the available options. Understanding your priorities makes searching for the right practice much easier. To create a specific target practice profile, and so we can ensure a perfect fit, here are some of the most common buying factors:
Location -
(Urban, suburban, or rural). This criterion is particularly important if you have a specific lifestyle you wish to lead or require access to specific amenities.
Cash Flow -
Businesses come in all shapes and sizes. You may have very specific ideas about how much gross or net revenue you’d like the practice to be doing before you buy.
Business Model -
Some dental practices are only Fee for Service (FFS), while others mix FFS with Preferred Provider Organizations (PPOs) and Health Maintenance Organizations (HMOs). Some rely on Medicaid for new patients and cash flow. Each has its own pluses and minuses. It is important that you understand them and choose according to your priorities.
Dentists’ Philosophy -
The types of dental and business philosophies range within the industry. It makes sense that you buy a practice that is already operating within your approach. It makes the change in ownership easier on everyone, including your patients. It is also a key factor in practice transferability.
Change of Control -
(aka Transition) It is critical to determine how you want to assume control of the practice after the purchase. This is where a fit between the seller and the buyer is essential. It is common for the selling doctor and buying doctor to overlap work schedules during the transition. The seller could also walk away after the transaction is complete. Consider which situation is right for your employees and patients.
Price -
Price is one additional factor to consider. We recommend that price not be a primary factor in finding a dental practice. Navigate the criteria listed above to best align practice performance with your goals. When qualifying for financing, price is an important factor. So, if you cannot qualify for the required financing, price should be used to eliminate dental practices that may have otherwise been a fit.
One final aspect every buyer should consider is competitive location. If you want the most desirable location, be ready to compete. This means competing on price to purchase it and competing for patients after the transition. You may find that a dental practice located in a unique area actually provides you a better value and more closely aligns with your long-term goals.
