Buying a dental practice is a big decision that comes with a lot of risks and rewards. With that said, there are many things you can do to help you mitigate those risks and ensure success.
Consider these options when deciding on which is best for your vision of dentistry and dental practice dream.
A start-up dental practice is one in which you create a new office from scratch and start with no patients.
If you are a new dentist looking to create a new practice, I recommend that you design and construct your office so that you can expand it to meet demand later down the road.
To start, outfit only two or three ops. This keeps your overhead down in the beginning. As your business grows, outfit the remaining ops to accommodate your needs.
If you’re unsure about how big of an office you’ll need, try leasing one first. Leasing an office is practical because it allows you to expand and change your office in the future if needed.
Established Dental Practices
An established practice is usually considered 15 years or old.
When you find a dental practice for sale that is already established, make sure you do your homework before making any decisions.
There are usually three types of established practices for sale:
- The successful practice that is a great buy
- The practice that has leveled off
- The practice that is failing
When the practice has leveled off or is failing, look closely to see why it is not thriving.
The cause(s) of decline could be the result of things that are easy to fix.
A practice may decline due to poor clinical presentation or practices, a worn-out dentist, staff issues, a poor location, ineffective or nonexistent market outreach, or the office appearance and equipment.
Whatever the reason, do your due diligence and ask a lot of questions. Learn as much as you can about the selling dentist, number of active patients, existing practice costs, financial statements, existing systems etc. If you still think you can turn things around, go for it and start to prepare for the sale.
Established dentist with incoming associate
As a owner when considering adding an associate, make sure that you have sufficient work volume and patient flow to add a partner.
Consider hiring a coach or consultant to guide you in your decision making and assist you with the entire process.
When taking on a new associate, there often is a coercive give and take related to future plans and expectations.
I highly recommend that you discuss these in detail, establish agreements, and obtain notarized signatures of the agreements so that both parties will be held accountable.
When a new associate comes onboard, a partnership is created.
Mutual agreement and guidelines must be established for how to manage cash flow, vacations, and debt service.
Other agreements and guidelines are needed for issues like what steps to take with accounts receivables reductions, divorce, or other difficult situations.
Take time to delineate all such aspects carefully. The more you prepare, the greater the likelihood of success. Enact the agreement with the aid of a qualified professional. You will be glad you did!
Buying an existing practice
Buying a dental office that already exists comes in various forms, including buying only the patient base, buying the building, or buying the entire dental clinic.
Buying the entire dental clinic involves taking over the lease, creating a new lease, or purchasing a building.
The landlord must approve of what you are planning, so make sure that they are considered. The different options are determined by what is available. Make sure the opportunities you choose match your objectives and make the most financial sense for you.
There are many ways to buy an existing business. Most often, it involves a specialist dental practice broker to negotiate the practice purchase price and secure mutually beneficial outcomes for both the buyer and seller. This upfront expense can often save a lot of headaches and problems that may arise later had you not used a professional broker.
To make an informed decision clarify exactly the terms of the deal and existing details on the business such as patient count, services offered, upcoming planned purchases, existing employees and the general practice philosophy. The more focus you put into the due diligence process the better idea you have about the business and whether it is a good investment to make.
Another option to proceed with buying an existing practice is to obtain a professional appraisal value of the practice. Then have both dentists hire a CPA and an attorney to represent each of them in the transaction.
All parties then can collectively come to terms about the value and contract of the practice.
Not only is this less expensive, but the value of the practice is estimated more equitable for both sides. Equal representation for both the buyer and seller makes the whole process a smooth transition with a very high success rate.
To learn more about having a successful dental clinic, make sure to download the first chapter of my book DentalEase: The Essential Guide to Building the Stress-Free and Profitable Dental Practice of Your Dreams.
The first chapter is free to download and will give you even more insight into how to grow your dental practice.