Things to Consider When Buying a Dental Practice

Your first priority as a dentist is to provide the most professional and effective treatment possible for your patients. To do this, she must keep up with the latest technical developments. Of almost equal importance is a working knowledge of the business aspects of the practice. Whether you're considering starting a new practice, buying a practice, or becoming a partner in an existing one, you need to have a working knowledge of the financing options available to you. You also need to align yourself with professionals who can guide you down the right path. Click here to know more information about this article.

DUE DILIGENCE REVIEW

Before you buy a practice, you should thoroughly review all documents provided by the seller. Feel free to ask questions about all areas of the practice: marketing programs, staffing, supply vendors, accounting functions, and review of patient records. With the help of a CPA, you must analyze the tax returns and financial statements of the practice. Perform trend analysis of not only revenue but also patient count. Carefully review the equipment list. Is the equipment up to date or will you need to earmark funds for newer equipment? Is the equipment you are purchasing related to a lease obligation?

FINANCING OPTIONS

How you finance your practice, whether it's a new or existing business, is critical to its long-term success and cash flow. You should carefully examine all the options available to you.

Financing from a specialized financing source:

There are companies in the market that are dedicated to providing financing for the acquisition and start-up of dental practices. These firms, like Ozarks Capital Funding, can offer up to 100% financing for the purchase of a practice. Financial institutions like these will also provide working capital and funds for additional equipment or remodeling costs. Another advantage of working with these types of companies is the knowledge and experience they bring in the way of financing the dental practice.

Seller financing

When a practice is for sale, the owner will often agree to provide financing. This can be a great fix for several reasons:

1. Flexibility: The seller is likely to be more flexible about payment arrangements than a bank. For example, you could agree to an interest-only payment structure for the first few years as you get on your feet.

2. Low or no down payment: As motivation to sell the practice quickly, the seller may not require a large down payment. This allows you to use your capital reserve for other needs.

3. Seller Consultation and Assistance: It goes without saying that the seller will have a vested interest in the success of the practice after the sale. Therefore, it will probably provide the best possible support to new owners in terms of inquiries and operations.

Bank financing

The banking industry is highly competitive, not only in terms of national institutions like Bank of America but also local banks. Banks generally view dentists as having good credit and will go to great lengths to provide the financing they need. If you choose this route, a down payment equal to 20% of the purchase price will be required. Also, if you are buying an existing practice, a bank will likely require that the old entity be dissolved and a new one created. The loan would then be in the name of the new entity.

Buying an internship can be one of the most rewarding experiences of your career. You should make the effort to conduct a thorough review of the asset you are purchasing. Choosing the right financing option can be just as important.