As your dental practice grows, you might be ready to seize an opportunity to expand your operations.
If you want to open a new location, you might choose to start from scratch. This involves finding a property, outfitting it for dental services, and hiring new staff.
Or, you might consider acquiring an existing dental practice. Doing so provides a number of compelling advantages.
When you purchase an existing practice, you get a major head start towards opening up operations in your new location. Your acquisition may include a functional facility with working equipment. You may be able to hire some of the current staff and connect with the office’s existing patients.
While acquiring a practice might be the right move, it’s not always a straightforward process.
In this guide, we’ll review how to find and evaluate potential acquisitions for your dental practice.
How Do You Know if a Dentist Is Selling Their Practice?
When a dentist is thinking about selling their practice, they don’t typically stick a “for sale” sign on the lawn. Finding for-sale and potentially-for-sale practices in your region will require some investigation.
These are your best bets for locating potential acquisition targets.
Contact a Dental Broker
Find a dental broker—a real estate broker that specializes in dental practices—that serves your area. You don’t necessarily have to contract with a broker yourself. They may be able to simply provide you with listings at no charge.
Review a Real Estate Directory
Use an online real estate directory to search for local for-sale dental offices. If you don’t have access to the data you need, reach out to a real estate agency or a dental practice advisory team.
Contact Local Practices and Suppliers Directly
If you know of a local dentist who’s nearing retirement, tactfully inquire if their practice is for sale.
Even if they haven’t been actively pursuing a sale, a retiring dentist may be open to the idea. Selling takes work, but is preferable to simply closing down. Knowing that they have an interested buyer might be all the motivation that’s needed to entice a retiring dentist to consider a sale.
You can also reach out to local equipment suppliers and service providers that serve dentists in your region. They interact with other dentists in your area, and may be able to provide you with leads (formally or informally) regarding potential buying opportunities.
How to Identify a Practice That’s Worth Acquiring
When you find a potential acquisition target, take a close look at the following factors to help determine if the practice might be worth purchasing.
You don’t want to purchase a practice that’s being sold due to bankruptcy. If extreme debt is forcing the current owner to sell, you’ll be taking on financial headaches along with a location that lacks a track record of success.
Look for a business that operates profitably and carries manageable debt. At worst, consider a practice that’s only slightly underwater but that could clearly be improved with new ownership.
Experienced and Long-Tenured Staff
Ideally, the existing practice employs a number of capable staff who will be interested in joining your team. If so, opening your new office will require less training. Plus, the existing staff will have insights and knowledge to share regarding your new office’s location, patient base, and equipment.
Well-Located in Relation to Your Own Practice
Your expansion office should be nearby, but not too nearby. If your new office is too close to your current location, you might water down your business by creating too much supply for too little demand.
Typically, it’s best if your new location is at least 10 miles from your current one.
Additionally, there are the standard location factors to consider. Ideally, your new office is in a highly-populated area, a busy downtown, or near a major highway.
Lastly, it’s critical that your potential acquisition practice is valued accurately. The seller should be expecting a price that resembles the business’s true value and that meets your budget. Work with an accountant or financial advisor to help determine the property’s value in relation to your spending power.
Get Help Expanding Your Dental Practice
At Duckett Ladd, we’re a team of growth advisors and accountants. Our sole focus is the dental industry.
If you’re interested in acquiring a new practice, we can assist you every step of the way. Our team of experts can help you determine your buying power and find the best possible opportunities for growing your business.
To learn more, contact Duckett Ladd today.