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 medical equipment?

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

 

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?
  • The type of dentistry you specialize in
  • Overall demographics and what what they look like
  • Where do you want to live?

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?

  • Lender
  • Dental attorney
  • Accountant
  • Financial planner
  • Practice management consultant

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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

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 

Another thing to factor is whether the practice you are interested in purchasing is the right practice for you! As you zone in a particular practice you should also be able to recognize red flags

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.

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

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

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. When push comes to shove, if you can purchase the commercial real estate then go for it, but if you are not able to, leasing space is not a bad option either.

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

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

Incorporation

Why set up a legal entity?

Similar to purchasing insurance, correctly setting up the legal structure of your practice can help protect you. Also, incorporating can effect how you 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

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

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

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
  • 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
      • Start networking with other area dentists including specialists who could potentially refer patients to you
      • 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.

 

 

Are you ready to open your dental practice?

 

 Contact Us Today for a Complimentary Consultation!

 

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