Some Common Rewards
- Financial Freedom
- Flexible Schedule
- Sense of Accomplishment
- A Great Lifestyle
Some Common Risks
- Malpractice
- Legal issues with employees
- Bankruptcy
- Burn Out
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
Some Common Risks
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.
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.
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.
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.
Determining the change of control, or transition, is critical for a successful dental practice purchase, including for M&A sales. 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.
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.
The most important factors to consider when buying a dental practice include:
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.
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:
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.
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.
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.
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.
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.
While buying a dental practice can be one of the most exciting and rewarding endeavors you will experience as an entrepreneurial dentist, it comes with challenges, and managing the staff is near the top of the list.
If you’re looking to buy a dental practice and need ideas on how to make your dental practice more profitable, it’s important to take a step back and look at your entire practice from a 10,000-foot view.
Retaining Patients is the most critical concern a buyer tackles after buying a Practice. Successful patient retention requires a business plan to be implemented immediately after closing.
