What You Need to Know Before Buying a Dental Practice
By Kevin Brady, OMNI Practice Group
Your dental practice will most likely be the most expensive purchase you will ever make. It is a considerable investment, not only financially, but as an investment in your family’s future. Ensuring that you are looking at the right metrics will ensure that you are not setting yourself up for failure before you even step foot in the practice.
Learning about the practice and using experts to help you understand what kind of business you buy and identify any potential red flags that could save you thousands of dollars and a lot of headaches.
Five things to know before buying a dental practice:
- Certified Valuation of the practice has completed. Make sure you review with your buyer broker or CPA to understand the Valuation and the financial methods used to get fair market value. Keys areas are overhead expenses, cash flow, and profitability. Knowing what your projected overhead and profit will allow you to forecast future business and personal expenses.
- Demographic information, understanding the current market demographics and the number of competitors in the area, will help show the practice potential for growth and what marketing expenses will be needed in the future.
- Professional Advisors, having competent and experienced advisors that you can trust and rely on to provide you guidance without any conflicting interest. Do not make one of the most significant business decisions of your career without experts to guide you.
- Transition Plan, developing a detailed checklist, and a strategic plan will help ensure a smoother transition from the selling doctor. Getting your list done before you open the practice will save you a lot of “time, effort, and energy.” We at Omni have developed a “72 point” checklist and are continually adding to it with every transition that is completed.
- Review existing staff benefits, knowing that the typical staff salaries range from around 20 to 25 percent of the annual collections and how this compares to the current staffing expenses. Knowing this information will allow you to have a plan for future benefit negotiations with the existing staff and especially the “highly paid and compensated” staff. Developing an employee handbook and reviewing this with all the staff will help with the transition. If you are going to make any transitions in staff, make sure to first consult your attorney and professional liability carrier for possible recommendations or advice.
Your understanding of these areas and more about the practice will make your decisions to move forward with buying the practice that much easier. Omni Practice group has been helping dentists with selling and buying practices for over 15 years. Omni’s trusted team of experts is here to help you find a successful practice.