Buying A Practice – You Don’t Know What You Don’t Know
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