Owning a dental practice can bring a huge number of great benefits. But, setting up an oral care practice from scratch can take a significant amount of time. As an alternative, you can buy a dental practice that already has an existing brand, physical location, and patient flow.
With the above in mind, buying an existing dental practice is not always straightforward. Besides finding a business that’s for sale, you also have to focus on the dental practice transition and ensure that existing patients trust the new ownership.
In this article, we’ll provide the steps needed to purchase an existing dental practice. We’ll also share tips to help you locate dental practices you want to buy and ensure a smooth transition during your takeover.
Does Purchasing a Dental Practice Make Sense?
Before delving into the steps you need to follow on how to buy a dental practice, let’s take a moment to answer one basic question: does it make sense to buy an existing dental office?
The answer to the question above is unequivocal yes. However, it’s worth noting that all practices and dental health professionals are unique. Therefore, you need to work with a knowledgeable business consultant and evaluate all potential considerations before purchasing the practice in question.
With all that said, dental professionals that purchase existing practices need to understand the acquisition process, final closing tasks, cost breakdown, and other variables to ensure a smooth dental practice transition.
Steps to Take Before Buying A Dental Practice
Now that we’ve discussed the basics of purchasing an existing practice, let’s go over the steps you need to take before buying a dental care business.
Securing the funds is a crucial step, but there are many elements you need to consider if you want to purchase a dental practice. Below, we’ll share 8 general steps you should follow to acquire an existing practice.
As we mentioned earlier, every practice owner is different. To be successful, you need to analyze your circumstances, get the best professional assistance, and work with a knowledgeable third party to get the best results.
With that in mind, here are 8 steps you can follow to help you buy a new dental practice.
1. Figure Out What Area You Want to Serve
Before looking for businesses that you may want to purchase, you need to decide on the practice location. The location of your practice will influence the real estate purchase or lease price. That said, every practice owner knows that the area also influences the type of customer being served.
There is no such thing as a “one-size-fits-all” answer. Instead, you need to evaluate your unique circumstances and determine if you want to serve a more affluent community, even if it will increase your operating prices.
2. Identify the Practices that Interest You
Once you have narrowed down an area, it’s time to look at the different dentists and dental practices. The goal in this stage is to select a few practices that interest you. There are many reasons why you may like a specific practice, but some of the main things you should look at include:
- A clear branding strategy
- Well-trained, motivated staff members
- A high number of business accounts
- Mechanisms to retain patients already in place
- Cash flow and overall practice management protocols
- Established ways to acquire new patients
3. Work with a Consultant
Dentists and other oral care specialists have all the technical knowledge to open a practice, but this doesn’t mean that they have the business acumen. A practice broker is a professional that can help ensure a smooth transition by guiding buyers through the entire process.
Practice transitions require a lot more than a simple financial transaction. We strongly advise working with a consultant because this can allow you to hit the ground running.
4. Research the Practices You May Want to Purchase
At this point, you should have a preliminary list of practices that you like the look of. Now, there’s a strong chance that most of these are not up for sale.
Here, you should start researching practices that are available and potentially inquire about prices, availability, and other purchase-oriented elements.
5. Appraise the Facility
The physical dental practice and all of the equipment within will constitute a large portion of the price of the practice. You should find out if it’s a lease or if the property is owned by the business. Then, you should appraise the facility to get a more accurate estimation of the price.
6. Evaluate Patient Flow and Related Data
If you’ve gotten to this point with any potential seller, the interest from both sides is real. You should continue conducting your due diligence by evaluating patient flow and requesting related data. There’s a chance that the seller will avoid sharing financial records, but an interested practitioner will at least provide basic information to help you make a choice.
7. Make an Offer and Sign the Sale Agreement
By now you should have everything you need to know if you’d like to continue with the practice purchase or not. If so, you should make an offer at your earliest convenience and keep open communication lines with the seller.
Once the seller agrees, proceed to sign the sale agreement and start the practice transition tasks.
8. Complete the Purchase
Lastly, you should cover the final closing costs and make sure that the practice is ready to be transferred over. Now, you need to take control of your new practice and make decisions based on cash flow, team member satisfaction, and of course, your patients.
Tips for Buying a Dental Practice
The process of buying a dental practice can take a significant amount of time. But, instead of waiting for the purchase to be completed, you should start setting up different areas of your business to shorten the turnaround time.
For starters, you should get in touch with your future suppliers and tool providers to set up your accounts early on. You should reach out to your membership management solution during this stage, create an account, and find out what you need before you get started.
If you’re not sure where to start, you can contact Membersy and inquire about membership management solutions for your business. Alternatively, you can sign up & register now to get started right away.
Here are a few tips you can follow to improve your results.
- Set a budget and adhere to it
- Consider retaining the existing staff or team
- Arrange an in-person visit to the practice
- Assess the value of the practice with a professional valuator
- Enter official negotiations with a positive attitude
- Determine how you will finance your venture
- Deal with the lease or property purchase separately
We hope that our buying a dental practice guide helps you acquire a new office and ensure a smooth transition for both you and the previous owner.
There is no question that dental practices can be extremely profitable. But, once your due diligence process and practice purchase are completed, you need to focus on attracting more patients. In this case, the success of your dental practice will depend on your dental membership program and other marketing efforts.