Introduction

Purchasing a dental practice can be a complicated endeavor but we are here for you every step of the way! By considering the steps we have lined out below, you will be on your way to a rewarding career as a practice owner. 

Before you start the process, you should consider a number of factors while also asking yourself some questions below:

  • Does the practice reflect my professional vision?
  • Is the selling dentist willing to help introduce me to existing patients?
  • Is the practice compatible with my practice goals?
  • Do the seller and I share the same quality of care philosophy?
  • Will I be able to offer the same specialty services that were kept in-house?
  • Will I need to add or replace any equipment?

So after many considerations, you have sights set on purchasing your ideal practice. The next step in the process is to consider locations while also conducting a demographics report.

Location and Demographics

Location

When you are ready to purchase a practice, one of the most significant aspect of your new business is the location of where you'll practice. You will want a location that is easy for your patients to find and ideally, a location that will do some of your advertising for you. 

Key attributes to consider:

  • Settling on a wider geographic location
  • Analyzing the concentration of dentists in the area
  • Shopping center vs. dental/medical building
  • Choosing the ideal property

If you would like to continue learning about the tips to selecting the ideal location for your dental practice, read our blog on How to Find and Select the Ideal Location for Your New Dental Practice. Next, we will explore the importance of demographics in aiding your ideal location.

 

Demographics

Another important aspect not to be overlooked is the demographics of the area you are interested in. By putting together a comprehensive demographics report, you can gain a better understanding of your targeted area and the patients your office would be looking to treat.

Elements to consider:

  • How many dentists are in the area?
  • What does the general population look like? Make sure those demographics fit with your plans for your practice.
  • Overall demographics and what what they look like
  • Where do you want to live?

For an in-depth look at what to consider while conducting your demographics report, read our blog, How Demographics Impact Your Dental Practice Location

After analyzing locations and conducting a demographics report, your next step is to hire your advising team.

Advising Team

Where to Start?

Purchasing a dental practice can be a lengthy process and you will want a team of advisors that will help you through every step of the process. They will also help guide you in making wise financial and legal decisions to help protect you from potential roadblocks and compliance issues. 

Who do we suggest you hire?

  • Dental attorney
    • To advise you on your letter of intent and purchase agreement
    • To negotiate your lease or help with your real estate purchase
    • To set up your corporation
    • To help trademark your practice's name
  • Accountant
    • To review your financials and the finances of the seller
  • Financial planner
    • To manage your wealth and assets
  • Practice management consultant
    • To successfully guide you through all aspects of practice management

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To learn more about the team of advisors we advise hiring, continue reading our in-depth article on Selecting Your Advising Team When Buying a Dental Practice.

Your next step in the practice purchase process is your letter of intent.

Letter of Intent

What is a Letter of Intent?

The letter of intent is one of the first documents you will be need in order to start the process of purchasing a dental practice, as it details your interest in buying the practice and sets out some of the basic business and economic terms.

Items to consider in your letter of intent:

  • Purchase price
  • Assets
  • Accounts receivable
  • Property - rent or purchase?
  • Transition process
  • Re-treatment
  • Staff
  • Restrictive covenants

For more of an in-depth read on the important of a letter of intent, continue reading our blog on Key Things to Consider When Drafting a Letter of Intent.

After submitting your letter of intent, you next step is to do your due diligence. Conducting your due diligence is important to confirm that the expectations of the proposed purchase are in line with what is actually being sold.

Due Diligence

The Three Aspects of Due Diligence

Upon acceptance of your letter intent, it is your responsibility to make sure that you are reviewing every aspect of the practice before you purchase it. 

The three types of due diligence are:

  • Financial due diligence
  • Legal due diligence 
  • Practice management due diligence 

To continue reading about due diligence and what it entails, read our blog on Due Diligence When Purchasing a Dental Practice.

Another thing to factor is whether the practice you are interested in purchasing is the right practice for you. As you identify a particular practice you should also look out for red flags

Upon reviewing your due diligence evaluation, your next step is draft and submit a purchase agreement.

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Purchase Agreement

Why is a Purchase Agreement Important?

After submitting a letter of intent and doing your due diligence, the next step to finalizing your purchase is to submit a purchase agreement. A purchase agreement is important because it ensures what both parties agreed to is included in the agreement.

Other items to consider that wasn't mentioned in the letter of intent:

  • Allocation of purchase price
  • Contingencies
  • Warranties and representations
  • Incorporation

For further reading, consider reading our blog, Purchase Agreements: More than Meets the Eye.

Upon submitting the purchase agreement, you should have a good idea on whether you're assuming the seller's lease or purchasing their property outright. With that in mind, we dive into leasing and real estate.

Lease Negotiation or Real Estate Purchase

Should You Buy or Lease Commercial Space?

With any tough decision, there are advantages and disadvantages to every option. The same can be said when determining whether you should buy or lease commercial space for your dental practice. Other factors to keep in mind is whether the seller owns their space and if they do, are they willing to sell their space along with the practice itself. If you can purchase the commercial real estate for your practice then go for it, but if you are not able to, leasing space is a great option as well.

Lease Negotiation

Securing a lease with beneficial terms is critical. The five tips to a successful lease negotiation are:

  • Do you homework before you negotiate
  • Make sure you cover the basics
  • Begins the research process in advance
  • Ask good questions regarding the landlord
  • The option to buy

To continue reading about the lease negotiation process, read our article on The 5 Tips to a Successful Lease Negotiation

If you are considering purchasing commercial real estate instead of leasing, read our section on real estate below. If not, you can skip to the next section which is corporate formation.

Real Estate Purchase

Purchasing real estate has more advantages than disadvantages but here are few things to consider: 

  • Do you have the capital to purchase both the practice and the commercial space?
  • You need to be aware of the tax implications regarding purchasing these assets
  • Understand the potential liabilities that come with being a landlord

To learn more about purchasing real estate, read our article on here.

Your next step in the process is incorporation. Incorporating will help separate yourself from your practice.

Incorporation

Why Set Up a Legal Entity?

Correctly setting up the legal structure of your practice can help protect you by separating yourself from your dental practice. Also, incorporating can affect your tax structure.

Things to consider when setting up your legal entity:

  • Separating your business credit from your personal credit is key
  • Your legal entity provides you with personal legal protection from both sides
  • Creating a legal entity makes it easier to the business's accounts

For more of an in-depth read on corporate formation, read our article on The Legal Requirements of Starting Your Dental Practice.

After setting up your legal entity, your next step is to obtain insurance for your dental practice.

Obtain Insurance

Securing the Right Types of Coverage

Before opening your dental practice, you need obtain several types of insurance to safeguard you and your practice.

Below you will find the types of coverage you will need:

  • Disability Insurance
  • Life Insurance
  • Business Property Coverage
  • General Liability Coverage
  • Worker's Compensation Coverage
  • Property Insurance
  • Employment Practices Liability Insurance
  • Malpractice Insurance

To learn more about the types of insurance coverage you will need, continue reading our blog, Obtaining Insurance for Your New Dental Practice.

Now that you have been covered for an insurance standpoint, your next step is dental credentialing.

Dental Credentialing

Credentials with Dental Insurance Companies

Before you start seeing patients, you need to start your dental credentialing by enrolling with dental insurance companies.

What are the steps to enroll?

  • Do some research to decide which insurance companies you would like to enroll with
  • Contact the companies to request a provider application
  • Negotiate fees
  • Complete and submit the provider application
  • Follow up on any discrepancies
  • The process is complete once you have received your acceptance letter

Upon getting certified by dental insurance companies, you should now hire your team members.

Hiring Your Team Members

To Hire or Not to Hire?

Depending on the situation you are in, you may choose to hire the existing team members of a practice you are purchasing or you many want to completely hire your own.

In most aspects, it is in your best interest to hire on the team members of the practice you are purchasing for a number of reasons, such as to ensure a smooth transition, familiarity with the processes, and the bond shared with patients. However, it is possible not all team members might be a good fit. To gain a better understanding of evaluating team members, you can view the 7 Tips to Successfully Transitioning Team Members After a Dental Practice Purchase. In addition, we've listed a couple of the tips below:

  • Start by being transparent and honest with the team members
  • Show some leadership and implement your own employee handbook
  • Determine whether you should hire or terminate

To assemble a winning team for your practice, consider these tips:

  • Allow yourself plenty of time to hire and train
  • Determine how many team members you need
  • Outline the team member qualities that will help your practice thrive
  • Prepare detailed job descriptions
  • Hire top-quality front office staff

For more of an in-depth read on assembling a winning team for your practice, read our blog.

Upon hiring your team, it is wise to implement your own employee handbook. The handbook should identify any new changes to office guidelines and practices, as it's important to note if anything has changed for the current team members and to have new hires be aware of what's expected of them.

Implement an Employee Handbook

Don't let employment law impede on your future success. The time is now to implement an employee handbook which can protect your practice from employment related disputes. The handbook should also contain clear guidelines as to workplace rules and regulations, disciplinary measures, state and federal laws, among other items. It should also be noted to revise the handbook yearly and to have each team member sign the handbook every year.

Among the top 5 policies that every employee handbook should have include:

  • Anti-harassment/Anti-retaliation
  • At-will employment
  • Meal and rest breaks

Learn more about employee handbooks and how it can protect you from lawsuits by reading our article, Employee Handbooks: First Line of Defense to Avoid a Lawsuit.

After hiring your team members, your next step is to communicate the transition to your new patients.

Communicating with Patients

Give Patients the Option

Upon purchasing a practice, you will inherit the seller's patient base. However, chances are not all of the patients will carry over and see you. That is why it is up to you to make a good first impression by introducing yourself whether by email, mail or in person. While you can't assume the selling dentist notified his or her patients ahead or after the closing date, it's in your best interest to communicate any logistics during the transition.

What to communicate with the patients:

  • Introducing yourself, your education and your family
  • How you (or the selling dentist) will handle fixing any problems or finish up work

To learn more about how to communicate the transition to team members and patients, read our article Communicating Dental Practice Transitions to Your Team and Patients.

After communicating the transition to your patients, all of you have to do is take care of a few final closing tasks.

Final Closing Tasks

You're Almost There! 

Before opening your dental practice, there a few final tasks you need to complete.

  • Acquire city business license
  • File appropriate documents with the dental board
  • Trademark your practice's name
  • Work with vendors
  • Put your marketing plan into action!
    • Consider these 5 Actionable Methods to Find New Patients for Your Dental Practice 
    • Other marketing aspects to consider implementing:
      • Updating the old website or implementing a completely new one
      • Claiming social media accounts from the original practice or starting fresh and creating new social media accounts
      • Sending out mailers to certain demographics in the area, potentially with a discount to drive traffic to your office
      • Host an open-house party to bring attention to your practice
      • Join study clubs, dental societies and industry associations to help spread the word and build your brand
      • Make yourself known in the community by sponsoring teams, clubs, attending community events, etc.
      • Implement a newsletter for patients and or referral sources for extra PR
      • Start networking and having lunches with other area dentists including specialists who could potentially refer patients to you and vice versa

 

 

Are you ready to open your dental practice?

 

 Contact Us Today for a Complimentary Consultation!

 

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