Buying a dental practice is an exciting business venture. It’s a popular path for dentists who are interested in paying off their student loans quicker or want to own their own business. Starting your own practice or buying one that is already established can be a difficult task without any prior business knowledge. Yes, it will come with an existing patient list, but keeping them is never guaranteed.
Practicing dentistry while in the process of buying your own dental practice can be tricky to master. One day you’ll try to master your skills and the other day you’ll have to focus on business related tasks. You’re going to want to make sure you’re buying a dental practice that meets your aims and goals. Do you and the selling dentist match personally and professionally? There are many questions to ask which are usually taken care of by the selling doctor’s practice transition consultant.
To help you understand what it’s like to buy a dental practice, we’re sharing our helpful tips regarding the business side of this decision. Here are some important factors to consider before you buy a dental practice.
What does your future practice look like? What location is convenient for you? How many operatories do you prefer? These are a few questions to help you get started on the process. It’s important to decide on a few choices you can control. You may not find exactly what you want but keeping your options open is important when searching for the right dental practice.
Once you’ve determined the constants of your plan, you’ll want to reach out dental broker who specializes in practice transitions. They help hundreds of dentists every year who want to sell their practice which means they are always on the search for qualified dentists looking to buy a dental practice.
Once you start working with a dental transition consultant, they will ask you a series of questions to determine what practice meets your personal and professional needs. You will have to sign a confidentiality agreement to gain access to dental practices you are interested in learning more about. This is necessary because it protects both parties’ financial and personal information.
In today’s market, dental practice for sale are going for 90-100% of collections. Why? If you were the selling dentist, you would want the same done for you when you sell in the future. It’s important to determine this early. There are many expenses to factor in such as student loans, living expenses, and more. Your salary will have to cover your loan for the new practice.
It’s common to have the selling dentist stay on for 2-3 years for goodwill. They will help you with the dental transition along with helping to retain patients. You’ll need to determine how you will fit their compensation into your budget. Explore your financial options with a banker. Our transition specialists can refer you to our bankers of choice.
When you buy a dental practice, you may have the urge to change processes, policies, and even employees. This can lead to serious problems within the practice’s everyday flow. When you buy a dental practice, you’re buying everything and everyone that works for it.
Every hygienist, support staff, and billing staff is there to help you transition easily. Keeping them around will also help with retaining patients. They have more knowledge of the business systems used in the practice and they are there to share it with you.
At this point, you’ve gone through a couple practices that sound really great on paper. Now you’re going to want to schedule an office visit when the practice is closed. This will give you a chance to take a tour of the physical plant and meet with the selling dentist.
Ask as many questions as you can regarding, patients, cash flow, and practice growth. Find out what types of cases are popular in that specific practice. Is it what you enjoy practicing most? There are so many detailed questions you can have answered during this visit. You many even find areas that have not been tapped into for growth.
You like a practice and you can really see yourself owning it. Now it’s time to act fast and make an offer. Chances are you’re not the only one with your eye on the prize. If the selling dentist is working with a practice transition consultant, then you’ll have at least 3 other dentists to compete with.
Work with a banking specialist to dig into the details for you. They’ll review financial statements, tax returns, and compare practice finances with national standards. They’ll do everything with your best interest in mind to get you the best result.
It’s common practice for a dentist looking to buy a practice to be approved prior by a bank for lending. Many dental practice brokers require this before speaking further with dentist looking to buy a dental practice. It speeds up the process and lets the selling dentist know you are serious about buying.
Your lender will ask for several documents to qualify you for a loan. They require tax returns, statement of your net worth and a copy of dental license and resume. The lender will also ask for documents provided by the seller which include a practice valuation, tax returns, profit and loss statements, and depreciation details. Other practice business information may be requested to determine the plan, budget, and patient count.
The real estate transaction is separate from the purchase of the practice. Your lender will require a lease with renewal options that equal the term of the loan. If you need help, consult with a practice transition consultant to help you determine your best options. It’s important to involve them early to ensure a successful outcome.
The process of buying a dental practice can be difficult alone, but with the help of professional practice consultants can make it simple and streamlined. Follow the steps recommended by a transition consultant and it can lead you to a successful result. Owning a practice won’t seem as difficult as you thought.
Learn by consulting with an Aptus Advisor. We’re here to help you achieve your professional goals and buy dental office.
You’ve probably been thinking about selling your dental practice, but in a couple years from now. We’re going to walk you through a few steps to get you started or at least knowledgeable about the transition process. Selling a dental practice can be a long road ahead. Each outcome will change depending if you choose to sell a dental practice to a corporate DSO or to a single doctor. That’s why the sale process is tailored to the selling doctor’s end goal.
Pick up the phone and request guidance from a professional. It’s the right thing to do if you have no prior knowledge to selling a practice. If receiving a large offer is important to you then reach out to a practice transition consultant. They can help you determine whether your practice is ready to sell to achieve the financial goal you’re hoping for. You may need to wait 2-3 years while working with a practice consultant to grow your practice.
Do you know what your practice is worth? Have you ever had a practice valuation done? These are important factors in the selling process. When working with a practice broker, they will conduct a practice valuation to determine your practice worth. If the amount is not realistic in fulfilling your future financial goals, it’s time to start growing the practice with the help of a dental consultant.
It’s common to ask the previous practice owner to stay on temporarily after the sale. This helps retain patients and makes for a simple transition. It’s important the buyer and seller have similar work styles and get along well.
