Acquiring a dental practice has its advantages and risks associated with it. With an established dental practice comes the possibility of instant cash flow on acquisition. You need to conduct a thorough evaluation of the practice beforehand to avoid any issues once you are running the practice.
In such scenarios, it is best to take help from professional consultants like HPRG, as they have the experience of dealing with dental practice acquisition. Consider different factors like the area of dentistry, patient base, financial health, facility status, real estate, and funding, among others.
A professional consultant will help you navigate through these factors and get you a viable dental practice available for sale.
Below are things you need to know for a dental practice acquisition.
Knowledge of Dental Practice
What sort of dental practice are you looking to acquire? There are general dentists and specialists like endodontics, orthodontics, pediatrics, prosthodontics, and more. According to the American Dental Association, the average net income for a general dentist in the US is about $204,710 in the private sector. In comparison, a specialist makes an average income of about $343,401. You need to know the stream of dentistry you are trying to acquire.
Evaluating the Financial State of the Practice
Understanding the financial situation of a dental practice is critical to the acquisition process. Sellers usually have the idea their practice is worth more than what the buyer is willing to pay. It is an emotional decision for the seller as they have built the practice over the years, forming connections with the community.
Typically 70% to 90% of what a dental practice made in the last year is considered a reasonable selling price. For this reason, you should objectively evaluate the financial condition of the dental practice and, if possible, get a third party to do so.
Ensuring Real Estate Details
You will be spending about 6% to 9% of your gross income on rent. That is a significant amount to pay, and thus you should do your due diligence when it comes to the property. Where is the dental practice situated? How is the neighborhood? Is the practice location easily accessible by public transport? What state is the facility in?
You also need to go through the lease agreement in place, the clauses involved, and how you will go about renewing the contract. Understanding clauses like tenant improvements, after-hour access, relocation, renewal, anti-kickback are essential for a favorable deal. A dental transition team like HPRG can help negotiate the right real estate deal on your behalf.
Once you have found a dental practice you would be interested in acquiring, you need to secure funding to make the offer and close the deal. Loan structure, interest rate, loan terms are different factors to consider when obtaining financing.
Hire an Experienced Dental Practice Acquisition Consultancy
As seen above, the process of acquiring a dental practice requires due diligence on several fronts. You must have an understanding of dental practice, finance, and real estate. A professional consultancy service like HPRG can help you find the right practice and iron out contract details while you focus on running the dental practice.