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How to Buy a Dental Practice

Are you interested in expanding or scaling your dental practice? 

Growing your business could involve upgrading your current facility’s footprint, increasing your hours of operation, or opening an entirely new office. 

Or, you can make the bold decision to acquire an existing practice. 

Unlike starting from scratch, purchasing an already-operating business allows you to hit the ground running. You can apply your own branding and methods to the acquired practice without extensive construction or renovation. 

If you’re considering buying a dental practice, here are some tips to guide your research. 

Consider Why You Are Buying a Dental Practice

What is your primary motivation for wanting to acquire another practice?

You might be looking to grow through acquisition if you: 

  • Have a large number of patients traveling from a specific geographic area and you’d like to make services more accessible to them
  • Run an existing location that is at or near capacity and you would like to accommodate a larger number of patients
  • Want to expand to a new geographic region but don’t want to furnish the costs of starting a new office from the ground-up
  • Want to grow your practice by acquiring an existing team of experienced dental professionals
  • Want to relocate your practice and prefer to move into a facility that’s already operating as a dental office

Consider which factors apply to your growth goals. Articulating your needs can help guide your analysis of whether or not an acquisition is a right move for your practice. 

Research Expansion Opportunities in Your Area

Research the practices on your list of potential acquisitions. Will purchasing a certain practice give your business a true growth opportunity, or will you be inheriting a difficult situation?

As you scout your prospects, consider these factors:

Patient Reviews

What do patients think of the practice? 

Seek an objective view of the general perception of the business. Practices that post reviews to their own websites generally present curated 5-star comments. Check third-party sites like Google, Yelp, and Facebook for a more thorough sense of customer satisfaction. 

The Current Owner’s Reputation

Conduct a basic search engine background check on the practice’s current owner. Do any red flags pop up? Causes for concern include:

  • Lawsuits from partners or patients
  • Criminal convictions
  • Negative news stories

If you acquire a practice that has been sued or carries substantial debt, you might inherit some of these financial burdens during a buyout. Financial roadblocks caused by a previous owner’s troubles could be an acquisition dealbreaker. 

Office Size and Equipment

Does the office have enough square footage and patient rooms to meet your needs? Is the equipment modern, in working order, and in line with your preferences? 

Just because a location is currently operational doesn’t mean there won’t be major expenses involved before you can begin practicing there. 

Conduct Due Diligence

Once you feel confident about exploring some acquisition opportunities, reach out to the dentists who are looking to sell their practices. 

During your due diligence phase, you can examine all key information about a practice in its current state. 

Your review of a practice’s financial situation should examine:

  • Debt
  • Revenue
  • Cash flow
  • Accounts receivable
  • Permits
  • Assets

Work with a financial consultant to determine an accurate valuation of the practice based on its finances. During this phase, conduct a formal background check to ensure that there are no outstanding lawsuits or hidden complications. 

Consider Your Financial Options

Calculate the cost of buying the dental practice. Eventually, you’ll need to decide if you can—and should—afford the purchase. 

Key considerations include:

  • Would you finance the purchase or pay full price in a single transaction?
  • How long would it take to clear the practice’s existing debts?
  • What major start-up costs would be required to begin practicing in your new location?

Lean on the expertise of a financial consultant. They can help you to see a comprehensive financial picture of your potential acquisition to determine if the purchase is advisable.  

Get Expert Help With Buying Your New Dental Practice

If you’re considering a dental practice acquisition, Duckett Ladd can assist with every step of the process. We’re a CPA and advisor team devoted 100% to the dental industry. 

Contact Duckett Ladd to discuss the best growth opportunities for your dental practice. 

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