Author: omniadmin

When you buy a house, there are certain key things you check to make sure it’s a good, solid house.  Those include the condition of the roof, foundation, electrical, plumbing, etc. Well just like buying a house, there are key things to look for when buying a practice.  Here are a few I suggest you look at to make sure you are getting a good practice:

1. Cash Flow – This is how much cash the practice is producing before paying the doctors salary to pay the debt service.  You can look at the tax return and do some simple calculations by adding back the non-operational expenses (think travel, food, etc.,) and doctor’s salary to the net income. This is a critical piece of the decision.
2. Trended Gross Production – Are the numbers going down year over year, or are they going up?  If they’re going up, that’s great – the practice is growing.  If they’re going down, that means either the doctor is getting near retirement and not doing as much work, or there’s a problem.
3. Active Patients – This can be defined as patients that have been in the office the past 12 months, 18 months, or 24 months. No matter what, you should calculate out how many patients have come in the last 12 months.  If it’s a paper practice, you can count the charts to get the number. If it’s a paperless practice, look at the production by procedure and look at the hygiene appointments to get the number.
4. Staff Salaries – Staff salaries should not be higher than 25%, including the payroll taxes and benefits.  If it’s not, don’t panic.  If you see that production can be quickly lifted, that will help get the salaries into a better perspective.   Or, if it’s already producing at a high number, you may have to look at adjusting salaries.  Do some more research here.   I’ve seen a staff member that can do the job of two people and is worth her/his weight in gold.
5. Production by Procedure Report – Make sure you can do all of the procedures the current doctor is doing.  If there are some that you cannot do, can you take a course and quickly learn that procedure, or will it require a longer length of time? Or, if you don’t want to do that procedure, what will be the impact on the numbers?  You can also bring someone in to perform that procedure, for example, if it’s an orthodontist, you can have an orthodontist come in a couple of days per month to perform ortho treatment.
6. The Lease – How much time is left on the lease?  What is the annual lease?  Did they sign the lease at the height of the market and leases in the area are now 20% lower?  Is there a tear down clause in the lease where the landlord can tear down the building with a 12-month notice?  Note, these are not that uncommon in areas that are growing or regentrifying.  Just know that they are in the lease and know what the likelihood of the building being torn down is.  Look at comparable leases in the area and see where they are in terms of price.
7. Treatment Planned – When doing a chart audit, look at treatment planned.  Is it all done, or is there a decent supply of work to keep the production going?  Some doctors will try to do all of the work on their patients before selling so they can get all of the money.   Others will leave treatment for the buyer to help them out.  Just be sure to know how aggressive the selling doctor was with their patients.
8. Insurances Accepted – Understand for which insurances the seller is a preferred provider.  Also, are there plans that they are a provider, but the insurance company is not offering them to new providers?  This is the case with the Delta Premier Plan. All Delta Premier patients are put on the normal Delta PPO when you come on as a new provider.  The result is a 10% to 20% reduction in fee reimbursement.
9. Is the doctor going to stay and work, or are they going to give you the key and run?  If you have enough experience, in running a practice, you may be okay with the seller getting out of there quick.  If it’s a larger practice with some unique procedures, you may want the doctor to stick around and show you the ropes before they going on a six-month safari to Africa, or elsewhere.
10. Is the staff sticking around, or are they retiring as well? If the doctor is in his 70’s and he/she has an assistant and a front desk person in their 70’s, there’s a high likelihood that they may be retiring as well.  It’s not the end of the world, just know what you’re getting yourself into.

These are just a few things to know and understand before you buy a practice.  Just as in a house where a roof, foundation, plumbing, and electrical can all be fixed, so can production, staff salaries, rent, procedures, etc., in a practice.  You just need to know what you’re getting yourself into.

Best of luck looking for a practice! Our Buyer’s program can always help you to make sure you don’t step into something you’re not expecting. For more information, give us a call at (877) 866-6053 or email info@omni-pg.com.

​In my past life, I flipped houses.  I have bought, rehabbed and sold over 30 homes.  Early on when I was flipping houses, I would sell the homes myself.  I had my real estate license, so I put the houses on the market, did the advertising and showed the homes when buyers wanted to look at them.  Some of the house sales that I did went well.  Others did not go well and others didn’t even sell.   Only after listening to a nationally known real estate guru did I realize that I was penny smart and pound foolish. 

TIME – Time is money.  I’m not sure who came up with that quote, but boy is it right.  It’s especially true when selling a practice.  We have done studies and found that it takes over 200 hours to sell a practice.  We have had several practices that took over 500 hours.  This includes doing a valuation, putting together a prospectus, posting ads in various publications, receiving phone calls from prospective buyers, emailing them a non-disclosure agreement, sending them the information on the practice, meeting them at the practice during off-hours, following up with them after the showing, possibly showing it to them a second or third time, helping put together a letter of intent, sitting through due diligence with the buyer for hours, reviewing the purchase agreement, following up again with the buyer, cancelling ads, meeting with staff and finally closing.  Hopefully closing.  Attorneys and bankers that specialize in dental practice sales have told us that when a broker is not involved with the sale of a practice, the transaction is 50% more likely to fall apart prior to closing.  

EXPERTISE – You have to be a jack of all trades to complete a practice sale.  A sale involves understanding legal contracts.  You have to know how to write and post effective ads for your practice. You must also be able to read buyers and talk about the practice in a positive manner discussing the opportunities in the practice. Understanding numbers in your tax return and profit and loss statements is a must.  Buyers and their advisors are always asking detailed questions about the numbers in your tax return and profit and loss statements.  Be a good negotiator, from the price to how long you will help with the transition -these are just two of the terms that are negotiated.  Other items will come up as well.  And, of course, you need to know the practice management system, what the reports are saying and how to interpret them.  A good broker will have some level of expertise in all of these areas.

MEDIATOR – Quite often there will be a dispute that arises.  It may be taking over an advertising contract, working back as an associate, or the final price of the practice.  On occasion, the dispute may get heated and the buyer will get upset with the seller or vice versa.  The broker acts as a buffer in maintaining the peace and diffuse the dispute.  Often the broker will keep things under wraps and dissolve the dispute before it becomes a dispute.  This can save the transaction from falling apart.

TRANSACTION ENGINEER – Everyone involved in practice transitions, from the brokers to the bankers, CPAs, and attorneys will tell you that getting the buyer and seller to harmoniously cross the closing finish line is a difficult task.  The broker keeps everyone on task.  The broker ensures the buyer gets approved by a bank, hires the right dental attorney and CPA.  If something is needed, whether for the buyer or seller, the broker is there to get it done. 

Let us be the time-saver, the expert, the mediator, and the transaction engineer so that the sale of your practice is a success. Contact us today to schedule a no-cost, no-obligation planning meeting. 
 
info@omni-pg.com
877-866-6053

The process of selling a Veterinary practice can be exceptionally challenging for those without experience in practice transitions.  It’s a process that requires the leadership and guidance of an expert in the Veterinary practice field, as well as a comprehensive understanding of the steps involved in a business sale. The experts at OMNI Veterinary Practice group have decades of experience helping practice sellers locate qualified buyers for a seamless business sale, and in this latest article, we explain the cons of completing a sale without a Veterinary practice broker.

The Seller May Not Receive Full Practice Value
A broker can help their client to achieve full value for the money they’ve placed into their business over the long-term. They can then work to obtain viable selling opportunities and to locate qualified buyers within the marketplace. Without this type of guidance, the seller may find their selling opportunities restricted. They may discover that they can only achieve a small proportion of their total Veterinary practice value in the sale.  With corporate buyers in the mix, this can mean losing out on potentially a million dollars or more.

Sellers are unable to Handle the Legal Aspects Alone
The legal aspect of a practice transition is often a critical element within the Veterinary practice sale process. Buyers will have their lawyers review the business’s paperwork and any issues they find must be analyzed closely by experts in the legal field. Brokers often have significant legal experience or have a legal team on their side and can help handle any challenges that arise during the transition process, while keeping the seller’s needs as the foremost consideration.  The broker will be available at any time via phone or email to answer the seller’s or buyer’s questions and move the transaction process along. This can help prevent the seller from making poor choices and becoming embroiled in legal challenges.

The Seller Doesn’t Have Marketing Experience
When bringing a Veterinary practice to the marketplace, the seller must be able to highlight the advantages of their business in a way that attracts qualified buyers.  Brokers are often experts in this area. They can use their experience to craft compelling marketing materials for the seller and use their experience in the marketplace to build target buyer lists and send out high-value content to these buyer lists.

Sellers Cannot Handle Mediation with Buyers Alone
The buyer will likely have a lawyer driving their purchase process. The lawyer will be negotiating with the seller on all elements of the transaction, including the final price. Having a broker on-hand during this process ensures the broker can handle all mediation, negotiating on the seller’s behalf to get the right price and the ideal structure for the purchase.

Working with a qualified broker can help Veterinary practice sellers reduce their transaction challenges and secure a seamless sale. To learn more, speak with our team at OMNI Veterinary Practice Group at 877.866.6053 or visit our business website at www.omnipg-vet.com.

Do you know everything you need to know when you’re looking at buying a practice?  There are so many different things that require expertise to evaluate a practice.  There over 70 things you need to do in order to get the practice ready to close so you can start practicing.  There are an overwhelming amount of decisions to make during the process of buying and setting up a practice.  It can take over one hundred hours to complete everything necessary to get the job done.  Going it alone without any experience can lead to disaster.

Evaluating a practice involves understanding what you’re looking for.  You need to make sure you can do the procedures the current owner is performing.  You also need to look for opportunities to add procedures in order to grow the practice.  Understanding the reports is also important.  If a practice has 50% of its production from the hygienist, is that normal?  Is it because the hygienist is great?  Is it a good thing or a bad thing?   Why are there very few fillings being done and a lot of crowns?  The same for implants.  Why are there no SRP’s being done?  How about the lease?   What do you look for when you are reviewing the lease?

Then there are the financial statements – tax returns, balance sheets, and profit and loss statements.  What do all the numbers mean?  Staff salaries are 25% of revenues, is this too high?  The rent is 20% of revenues and the owner owns the building.  What does this mean?  What’s the depreciation schedule used for?  Do I care?  Why are there travel charges, automobile expense, and clothing charged to the practice?  What are add-backs?  How was the practice price determined?   Who did the valuation, how was it done and is it right?

If there was an associate dentist who worked in the practice and left two months ago, should I ask to see an associate agreement to make sure there is a non-compete provision?  What do I do if there was not an associate agreement?  What do I do if the lease has a teardown clause?  What is a teardown clause?  The seller claims there are 3,000 patients in the practice collecting $525,000 per year.  Does that seem right?  How do you perform due diligence and what do you look for?  What’s a chart audit?

How do you evaluate the staff?  How do you credential for insurance?  Can you continue the seller’s retirement or health plans?  How do I set up a corporation?  What type of corporation should I set up?  What types of business licenses do I need?   How do I get the x-ray heads certified?

The list of questions goes on and on.  The point is if you have never purchased a practice before, or even if you have, there is so much that you don’t know what you don’t know.  Throughout the last 20+ years that we have been assisting in practice transitions, we have developed an expertise in knowing what a good practice looks like and what skeletons in the closet look like.   We also have developed our own 72 point checklist of items to ensure your transition as a buyer into the practice is successful and it goes smooth. We are experts in transitions and have answers to the above questions and more.  Don’t go it alone and hope you get it right.  We can assist -you as a buyer in evaluating the practice and getting it closed.  Whether you are buying a practice from us, from another broker, or directly from the owner dentist, we can help you.   Call us to learn more about our Practice Buyer’s Program – (877) 866-6053

​Upcoming Dental Seminars
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Friday, February 1, 2018 – Seattle Midwinter Practice Transitions Seminar, Bellevue Club in Bellevue, Washington – Register here
Friday, February 8, 2018 – Portland Midwinter Practice Transitions Seminar, MAC Club in Portland, Oregon – Register here