Buying a Dental Practice

Buying a dental practice is probably one of the biggest decisions you will ever make in your career. Whether you’re a recent dental school graduate looking to establish your career or a seasoned dentist with dreams of relocating, it’s important to have an experienced dental practice broker by your side as you navigate through the process.

Consult the Experts

Choosing the Right Dental Practice to 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:

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Area Demographics

Is this practice in an urban, suburban, or rural environment? Location could influence both future revenue streams and access to specific amenities you may require. This is particularly important if you have a specific lifestyle you wish to lead.

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Cash Flow

Businesses come in all shapes and sizes. If you have specific ideas about how much gross or net revenue you’d like the practice to be at before you buy, paying attention to current and future revenue streams will influence your purchasing decision.

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Business Model

There are several business models for dental practices, and they all have their pros and cons. Some practices are Fee for Service only, others mix FFS with PPOs and HMOs, and others rely on Medicaid for new patients and cash flow. It’s important that you understand these various business models and choose wisely.

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Dentistry Philosophy

There are many schools of thought and specializations in dentistry. It’s a practical choice to buy a practice that is already operating under the philosophy you subscribe to. This makes change in ownership easier on everyone — including your new patients.

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Transition Process

Determining the change of control, or transition, is critical for a successful dental practice purchase. That’s why US Dental Transitions works to ensure there’s a good fit between the selling dentist and the buying dentist. After you purchase the practice, how will you want to assume control? Sometimes, the selling doctor will stay on staff, working for the buying doctor for a period of time. There are other instances where the selling doctor walks away once the transaction is complete. Each has benefits and drawbacks.

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Price

Price is a major consideration when it comes to how much financing you qualify for. The criteria above will be what drives the decision based on the goals for your practice. Price should be used to screen out dental practices that may have otherwise been a fit if you cannot qualify for the required financing.

We have some excellent dental practices for sale right now. Visit our Dental Practice Listings page. If you do not see a practice that meets your specific needs, contact us and we’ll discuss finding a practice that is right for you.

Buying Dental Practices FAQs

What factors are most important when 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

What is a fair cost to buy a dental practice?

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.

What are the tax advantages/disadvantages in buying a dental practice?

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.

What can I do to retain current patients after purchasing a dental practice?

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.

What is goodwill?

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.

When should I start looking for a dental practice to purchase?

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?

When should I make an offer?

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.

How long does it take before closing after I find the right practice?

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.

How much do Transition Advisors & Dental Practice Brokers charge a purchaser in fees?

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.

Why won’t your Transition Advisors show practice financial statements before you are pre-qualified?

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.

How long should the previous owner work in the office after the dental purchase is complete?

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.

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  • Start Here
  • Buyer Contacts USDT
  • After Non-Disclosure
  • Communicating with the Buyer
  • Bank Pre-Qualification
  • Location Tour & Buyer/Seller
    Introduction
  • Closing & Transitioning

USDT ROADMAP
TO SUCCESS

Our Story

After practicing dentistry for 25 years, Dr. Bill Adams founded Southeast Transitions almost 20 years ago to help his fellow dentists transition their practices to other dentists who share similar values and philosophies. The company has grown from a regional company to a national company, and we’re now US Dental Transitions. We’ve consulted with over 6,000 dentists and we’re seeing the best seller’s market in years.

Buyer Contacts USDT

When the buyer contacts US Dental Transitions to request practice information, the buyer must sign a non-disclosure. Confidentiality is a key value of US Dental Transitions. The non-disclosure allows the Transition Advisor to understand what the buyer is looking for and it includes background information about the buyer to share with the seller. Information may include schools attended, degrees held, etc.

After Non-disclosure

After the non-disclosure is returned, the administrative staff at US Dental Transitions will send the buyer the initial practice information, along with contact information for the Transition Advisor for that specific practice listing.

Communicating with the Buyer

Although US Dental Transitions does not charge the buyer to purchase a practice, we do require an open line of communication. Even if a practice opportunity does not fit your needs or desires, communication will allow us to understand exactly what you are looking for.

Bank Pre-Qualification

Every buyer must be pre-qualified with a bank prior to meeting with a seller. Pre-qualification is an informal process – the bank believes the buyer is credit worthy. Pre-qualification is not a formal bank approval.

Location Tour & Buyer/Seller
Introduction

The buyer will tour the office and discuss practice philosophy with the seller. If the buyer is interested, a Letter of Intent (LOI) is created and presented to the seller. Included in the LOI is the closing date. If the LOI is accepted, the buyer’s due diligence period begins. Simultaneously, there is a contract term agreement, formal bank approval, and other steps to close the sale.

Closing & Transitioning

Every practice transition is different, so your Transition Advisor will work with you to make recommendations based on your specific transition. Your Advisor will guide you through this process with suggestions on how to build relationships with staff and patients.

Learn what steps you should take to prepare for selling a dental practice!
Check out our dental practice sellers’ checklist!

View Sellers Checklist
  View Dental Practices For Sale
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