One Doctor Explains Why You Should Consider a Rural Dental Office for Sale

We’ve posted an interview with one doctor, Bill Dean, that we assisted with selling his dental practice. We also posted part one of an interview with the buyer, Dr. Kevin Shively, about his experience on the other side of the deal. Here, in part two, Dr. Shively discusses why he was looking for a rural dental office for sale. 

Let’s talk about the benefits of buying a rural dental office for sale. There are a lot of dentists out there that just think a city is where they need to be to have the practice they want. What would you say to people about considering smaller towns? Has it been good for you?

Oh, absolutely. I wholeheartedly support and agree going rural for opening a practice. Trying to make it in the big city, especially as someone new-ish coming out of dental school. “New-ish” being, you know, five to maybe seven years out of school.

Everybody’s business background is going to be different and, for me, being in the military, I never had to worry about the money issue. It was, “Okay, you need a crown. Let’s do a crown,” kind of thing. But trying to make it in a bigger city like Lubbock, or Odessa, Midland, somewhere like that, it’s going to be a lot harder and you’re going to have to look into participating with insurance, figuring out how to do reimbursements, things like that.

So, can you open a practice in a big city like Lubbock just on your own? Yes, you can. But it’s going to be much more difficult. I would wholeheartedly support and suggest looking into rural practices. The people need the treatment. They will come from, in some cases, hundreds of miles away to get the treatment. And at the end of the day, they know how much work went into it and they are so, so appreciative.

When you’re in the military and you have a bunch of 17 and 18-year-old kids, they don’t necessarily really understand how much work goes into things. They’ll say things like, “Yeah, I don’t know what I’m here for today. My leadership told me I had to come for an appointment today.” While they cooperate and do everything, here’s a case where you worked hours and hours on something, and they take a look at it and they’re, like, “Yeah, looks okay, I guess.”

So, you really kind of lose that love and that drive to do dentistry. Within the first week or two being in Floydada, I found that I was loving coming to work. I found that I loved getting to know and interact with my patients, and just having those moments where patients will cry because of how beautiful their teeth look again, and how they’ll fall over themselves to thank me for the work and everything that I’ve done. It really, really helped me reaffirm why I got into dentistry in the first place.

Let’s talk about your hopes for the future. We’ve talked to a lot of retiring dentists, and they have all sorts of plans of all the fun that they’re going to have. But we haven’t talked to a lot on the buying side. What are your hopes for this practice? How you see it playing out throughout your career?

I definitely want to grow the practice. Being out in the rural area, the patients … They understand there’s some procedures they can’t get around going to Lubbock for, but if they can stay in Floydada, they would appreciate it.

I want to grow the practice and ultimately start doing more procedures and make it a true … as much as possible, a true one-stop shop to be able to get everything done. That’s my hope for the future, is to grow the practice to really make it a well-rounded family dentistry practice.

Going back to rural practices, people might be worried about, “How do I market myself? How do I get more patients?” How are you getting patients to your practice?

Well, I would say rural is going to be more word of mouth. Those first few patients are going to be very leery, which mine were as well, because I’m not Dr. Dean and it’s a situation where you have to trust in yourself. You have to know that you’re doing the best for the patient and also treat them as you want to be treated. Treat them with the kindness and respect that you would love to have if you’re the one sitting in the chair. If you do that, it will come back to you a thousand-fold.

I do a little bit of marketing on Facebook. Dr. Dean, one of his main marketing ploys was, he would … There was a local restaurant in Floydada. He would frequent it, and if he noticed that one of his patients were sitting somewhere in the restaurant, when he went to pay he would also pay for that patient, as a sign of goodwill and “Thank you for your patronage with my practice.”

Because it’s such a wide area that you pull from, you’d want to have some face recognition. Word of mouth obviously would be huge.

We do have a website that we’re starting. It’s still a work in progress. But I want to, for those patients that are, let’s say, 45-50 miles away that are looking for a dentist, I’d like for them to be able to look at the website and look at what the practice looks like. And get to know our staff a little bit more, and what we can and can’t do for them, before having them make that trip out there.

There was also a transition letter that was sent out to all the active patients from the last five years. ddsmatch helped with that, but Dr. Dean and myself crafted it and then we sent it out to all the patients. So that was, I think, the biggest initial marketing plan that we had.

Looking for a Rural Dental Office for Sale? ddsmatch Can Help!

If you are considering a rural dental practice, here at ddsmatch Southwest, we have several available dental offices for sale in Texas and New Mexico, as well as across the country. Check out our listings online. Contact us today for more information— it starts with a conversation.

From the Other Side: A Doctor Discusses Buying a Dental Practice

We recently posted an interview with one doctor, Bill Dean, that we assisted with selling his dental practice. To shed light on the other side of the transaction, here is part one of an interview with the buying doctor, Kevin Shively, about working with ddsmatch Southwest, dental practice transition specialists, and his experience with buying a dental practice.

Could you please talk a little bit about your background and how you came to hear about ddsmatch?

My name is Dr. Kevin Shively. I’m originally from Louisville, Kentucky. How I came upon ddsmatch was, I was serving on active duty in the military in Germany and was contemplating my next step. I had found a job opportunity in Lubbock, Texas, that wasn’t everything that I was hoping it would be.

I had heard about ddsmatch when I was in dental school and it was a company that had interested me, and, ultimately, I knew that I was going to own my own practice one day. When I reached out to ddsmatch, they helped make that dream become a reality for me.

Can you just talk us through how the process went for you, from the time you first got in contact and how it proceeded?

Yes, absolutely. I accessed the ddsmatch website, the Contact Us portion, and put in some information, some basic information, name, things like that, email address. I was promptly called, I believe, within 48 hours by Andy. He started getting some background information on me, and trying to figure out exactly what I was looking for, and things like that. Because they don’t just help match up people wanting to buy practices, they also help find associateships and things like that. So, he was finding the best fit for me based on all those questions and everything. Going forward, we looked into some practices and went from there.

How long did the process of buying a dental practice take, from when you first started looking until you finally found a seller?

Well, it’s a little misleading, because I was dragging my feet. I had a little bit of cold feet in making such a big purchase. But all in all, I would say from the first conversation I had with Andy until the closing of the practice, no longer than about seven, eight months.

Did you look at several practices or did you find the right one early on?

Based on what my criteria were that I gave Andy, we found two that were the best fit for what I was looking for. At the time, with ddsmatch, there were several practices, but not within the Lubbock, Texas, area. And being that I had just moved halfway across the world, I wanted to stay in one place.

What were the major factors for you? What were the things that you felt were important to you in finding a match?

Well, you always have to trust your gut and your instinct on things … I toured both practices. I enjoyed and liked both practices, but I had a strong sense of one practice, which ultimately was the practice that I ended up purchasing. Once I started going through the numbers and doing the due diligence, it just further bolstered my decision to want to proceed with that practice.

Did you have any “deal-breakers” that you were looking out for?

I don’t really know if I had a whole lot of deal-breakers, this being my first time purchasing a practice. I had things that I really wanted in a practice which, going forward, if I were to do this again, they probably would have been deal-breakers. But with the practice that I ended up acquiring, it was, again, like the stars kind of aligned for me for that practice.

If someone were where you were a year ago, do you have any words of advice?

I would say it is a big step. There are a lot of unknowns, but it is a wonderful path to walk down. It is challenging work, but at the end of the day it’s extremely rewarding, and it really affirms my love for dentistry, with having patients that are extremely appreciative, and just doing what I love.

In terms of staff, do you have any thoughts on the experience of coming into a completely staffed-out and ready-to-go office? Has it been challenging?

Not so much. I learned early on in the military that a lot of change right out of the gate usually backfires on you. So, that was a lesson that I learned and implemented with this practice. I acquired all the staff from the outgoing doctor, and they were very, very hesitant and leery of the transition because change is hard for everyone. I think taking incremental steps in making changes has been very well received by the staff.

What has been your experience with the patients as they’ve come in and had a chance to meet you? What’s been your approach to making sure that you hold onto those patients?

Well, it is a small town practice. The city is only 3,000 people, but I pull from about 30 miles in any direction. Every day is a wonderful experience, in that the patients are so thankful. They are very appreciative. It’s very heartfelt. Here’s someone they don’t even know. I’m introducing myself, and the first thing out of their mouth is, “We are so glad you’re here.” And it’s such a rewarding thing to hear that.

Let’s back up a bit to the process of buying a dental practice itself. What did ddsmatch bring to the table to make the process easier for you?

As far as making the process easier, I could not have done it without ddsmatch. It’s one of those situations where you just don’t know what you don’t know, so Andy and Randy were absolutely instrumental in getting this whole thing going, as far as helping with going through the numbers, the due diligence, and they went beyond the scope of what they normally do to help.

They’re more than willing to do whatever they can to help. They’ll be the first to tell you, “Hey, this isn’t my area of expertise. Here’s my opinion, but I’m going to introduce you to so-and-so, who is the absolute expert in this.” Not only do they give you their advice, they set you up with professionals that have done this several times in the past and can guide you every step of the way. So, it couldn’t have been any easier using ddsmatch.

If someone else is in your shoes, and they’re trying to make the same similar decisions, trying to decide if they want to go with ddsmatch, what would be the selling points?

Well, my main advice with using ddsmatch is, they will guide you. They will help you in doing everything in the correct order … [If] you don’t have a strong business background, they can set you up with a CPA, with a business manager. If you’re wanting to change staff, they have connections with local dental assisting schools and hygiene colleges. If you need help going through the due diligence … It’s any and everything that you could need, they help you with. And if they can’t, they know the people that can help you with it.

Trust is a big deal. For anybody who feels like, “it’s just really hard for me to trust somebody in this situation,” what would be your thoughts for them?

The reputation of ddsmatch, in my opinion, is what can help bridge that trust gap, in that they’ve been around. There’s been, in my estimation, hundreds, if not thousands, of successful transactions and acquisitions using ddsmatch. The proof really is in the pudding, and it’s by far worked out for the vast majority of clients.

It sounds like you really felt like they had your best interests at heart.

Yes, absolutely.

With regard to the outgoing doctor, what was your timing in terms of transitioning him out and you in?

Well, mine was a little abnormal, in that I’m still in the army reserves. Uncle Sam said, you know, “You need to go to Hattiesburg, Mississippi, for 30 weeks,” right in the middle of my transition. It was a little bit of a hiccup and, admittedly, it threw the process off a little bit.

But Andy and Randy were awesome at communicating between myself and Dr. Dean, the outgoing doctor, and working out an agreement to where Dr. Dean would be an associate for me while I was serving my country. Again, it was a wrinkle in everything, but without ddsmatch I would not have been able to get the agreement in place, and get everything situated and done to allow me to go on that mission.

In conclusion, what would be the bottom line for your advice to a dentist in your situation?

The bottom line I would give anyone is, yes, purchasing and acquiring a practice can be scary, it can be a very daunting task. There will be pitfalls in areas where you can get tripped up very easily, but that happens with everything. If you buy a car, if you buy a house, things like that can occur.

ddsmatch knows where those pitfalls can occur, and they can help you navigate around them. They can help you network with other local dentists. They can help you network with people to help grow your practice, and help you to make it as smooth a transition as possible. Ultimately, ddsmatch will make your life so much easier in acquiring a practice.

Looking at buying a dental practice? Ddsmatch Has Practices for Sale

If you are considering buying a dental practice, we have several dental practices for sale in Texas and New Mexico, as well as across the country. Check out our listings online. Contact us today for more information— it starts with a conversation.

Hot Trends in Dentistry for Anyone Buying or Selling a Dental Practice

Wherever you are at in your career—whether you are looking at buying a dental practice, selling a dental practice, or somewhere in between—it’s a good idea to stay informed about dental practice and industry trends. If you are just starting out, you want your practice to be up-to-date. If you closer to the end of your career, you may want to boost the value of your practice by making it attractive to younger doctors who may be more aware of current trends. And at any time, it’s smart to see how you can improve your practice—either with tools that boost efficiencies, new technology, or ways to provide better patient care. To help out, we’re going to discuss some of the hot trends for dental offices in 2019.

3D Printers

3D printer technology is a major innovation that can have a huge impact for dentists. They can slash the time and money that you have to spend on the production of aligners, veneers, crowns, and tooth replacements. Owning your own 3D printer will allow you to manage production of these things on your own, without having to pay a third-party lab, which keeps more money in your pocket. You may need to hire someone experienced with the technology to operate the printer, but, in the long run, you may save thousands of dollars by being able to keep the production in house.

Additionally, by being able to produce items in-house, you will be measuring wait times in terms of minutes rather than days. A patient can have treatment completed in a single appointment whereas, if you rely on an outside lab, they will need to reschedule another appointment. This will be better for the patient and for your practice. It improves patient satisfaction and reduces your administrative costs.

If you are buying a dental practice, this is a great piece of equipment that you should consider acquiring.

Natural Products

More than ever, people are concerned about the materials they use, especially those they put into their mouths. Products like bamboo toothbrushes and charcoal toothpastes are becoming more popular. Consequently, practices that have integrated natural product options will attract patients for which these things are important. It’s a simple, low-cost change, and can easily be added to your existing marketing techniques. 

Even if you don’t want to fully commit to this, it’s a good idea to review the products you do have for the inclusion of unnecessary chemicals and see whether there are better options for your patients. Consider whether you can provide options that are healthier and more sustainable. 

Digital Impressions

Any dentist with experience knows the frustration of dealing with cracked and deteriorating casts. You don’t have to put up with this. Computer-aided design (CAD) and computer-aided manufacturing (CAM) software can be used to create more reliable impressions. The fact is, this is the way the industry is going, it’s simply a matter of whether you are coming along. New doctors are going to want this technology, so if you are looking to add a dental associate or considering selling a dental practice, you should consider this upgrade. It will make your practice more attractive. 

Laser Technology

Laser technology is a growing trend and for good reason. It’s a technology that has a major impact on the quality of patient care you can provide and its benefits are readily apparent to the patients. For this reason, it’s a good thing to consider if you are looking to add value before you sell a dental practice, if you are looking to expand your practice, and if you are looking for ways to add value after buying a dental practice. 

Among the many uses of laser technology, you can whiten teeth, remove tooth decay, repair enamel before filing, reshape gums, remove bacteria during root canals, and eradicate lesions. All of this makes your job easier and reduces the amount of time you have to spend on a patient. Less time in the chair also makes for more satisfied patients. Other patient benefits include less sutures, less reliance on anesthesia, reducing infections, less damage to gums for faster healing times, and less blood loss.

Group Practices

You don’t need to be told that consolidation of practices has been on the rise. However, the impending death of the individual practice has been greatly overstated. Group practices can be good for reducing costs but what makes you a good doctor may be lost in a more rigid corporate model.

That said, if you like the treatment side but hate the business end, you may want to consider selling your dental practice to a group practice. You can have a regular paycheck and lose the headache of running a business.

If you have an entrepreneurial spirit, however, you probably will still be best suited by buying a dental practice that you run on your own. 

Automated Patient Tracking and Management Software

Chances are you’ve already experienced this—getting appointment confirmation notices by text, pre-recorded follow-up calls, online portals for patients to schedule appointments and send and receive messages with your office, and using handheld tablets to complete forms. These things reduce the workload on your staff and, thereby, save you money. It also allows patients to manage their appointments and treatment on their own schedule, which is appreciated in an increasingly busy world.

ddsmatch Southwest Can Help You Know What is Best for Your Dental Practice

Here at ddsmatch Southwest, we are dental practice transition specialists and our nationwide organization has experience with hundreds of successful transitions from around the country. For ten years we have been advising doctors on how to best prepare for transition. If you are considering selling a dental practice in the next five years, we offer a free, no-obligation Practice Transition Assessment, part of which is helping identify areas of investment that will add value to your practice. Contact us today to find out how we can help you—it starts with a conversation.

Ten Steps to Buying a Dental Practice for Sale in Texas or New Mexico

This is the second in our series of articles about how to best be prepared to purchase a dental practice for sale in Texas or New Mexico. In this article, we’ll go through the major steps of a dental practice transition. While the process can seem overwhelming, once you’ve reviewed these steps, you may find it’s not as difficult as you think, especially once you’ve enlisted a team of trusted advisors.

Before we get into the details, however, we’ll briefly address the question of why to buy a dental practice for sale in Texas or New Mexico as opposed to starting a new practice. The main answer is because of the existing patient base. A successful practice that is up and running has a steady stream of patients, which means you have cash flow from day one. If you start a practice, you have to build it yourself. And if you start a practice in an area where there is already a dental practice on the market, someone else is going to buy it and you will be competing with them and their built in patient base. Depending on your career goals, you might not want to have to deal with the headaches of building a practice from the ground up, especially if you are a new doctor without an established reputation.

Step One: Put Together a Team of Trusted Advisors

As a doctor, you no doubt are a smart and capable person with a strong skill set. That said, no one person has all of the knowledge and experience to manage every detail of a dental practice transition. You need professional advisors who can help you make what is likely the most important (and complicated) decision in your career. You will need the following specialists:

  • Dental Attorney: you will need an attorney with experience in dental practice transitions. There are issues, and potential liabilities, that are unique to dental practices, so do not assume that a general practice or general business attorney will have the expertise. If they have to get up to speed, it will slow down the process, cost you more money, and you still won’t be certain that they aren’t overlooking important details. Find an attorney, with solid recommendations, that has counseled other doctors in the sale of dental practices. 
  • Dental CPA: as with the dental attorney, you need an accountant who understands the specifics of dental practice finances. You will need to rely on this accountant to understand the financial records they are reviewing in advance of making an offer and closing the deal. You need to know that they won’t misunderstand any details that may not be apparent to an accountant without dental practice experience.  
  • Dental Practice Transition Specialist: a practice transition specialist can be extremely useful for consulting on matters such as employee management and patient retention.
  • Dental Banker: dental practices are somewhat unique among business from a banking point of view. They require a lot of capital but are also very good investments for banks. A banker without experience with this type of business may not offer as favorable terms, failing to understand the particulars of dental practice valuations, where “goodwill” accounts for the bulk of the value. 

Step Two: Make an Offer with a Letter of Intent

This is your formal offer to buy a dental practice for sale. Before you make the offer, you should have reviewed the practice’s financial disclosures with your advisors and be comfortable with what is being offered. A letter of intent is non-binding, but it is a strong signal to the seller that you are serious about this deal. The letter should specify: 

  • The assets to be included in the sale
  • The assets to be excluded from the sale
  • The price offered for the practice
  • The closing date for the sale

Any item not addressed in the letter of intent should be negotiated and reduced to a written agreement before the closing date.

Step Three: Apply for a Practice Purchase Loan

Ask your dental CPA or dental practice transition specialists for recommendations to banks with professional practice lenders that have dental practice experience. You should submit applications to multiple banks so you can choose the terms that will be most favorable for your deal. The earlier you get started on this process, the better, so there is no holdup on your end in closing the deal. 

Step Four: Insurance Policies

What insurance you will need will depend in part on the other parties. If you have a landlord, they may have business liability insurance requirements you have to meet. The seller may have their own requirements, as will the bank. Generally, when you buy a dental practice for sale in Texas or New Mexico, you will likely need:  

  • Malpractice insurance
  • Life insurance
  • Disability insurance
  • General business liability insurance
  • Personal property insurance

The application processes for these may take some time, so, again, the earlier you get started, the better. Your team of advisors can also help you know what you should be looking at and may recommend some insurance companies to go to for coverage.

Step Five: Establish a Business Organization

If you haven’t already, you will need to set up a company. What kind of company you organize will vary from state to state, as local laws will govern what kinds of business organizations can operate what kinds of businesses. You’ll also want to consider how you will be personally liable for taxes or liability in lawsuits with each organization. Discuss your options with your attorney and CPA and pick the type of organization best suited for your situation. These are typically pretty easy to set up yourself and it can often be done online through the state government website. 

Step Six: Have Your Dental Attorney Review the Practice Purchase Agreement

This is the document that details the terms of the purchase. If a detail is not in this document, it is not a part of the deal and, therefore, not enforceable. Review this document closely and have your dental attorney explain its provisions, making sure you understand each part. This document should address:

  • The seller and buyer’s respective representations and warranties
  • The assets that are included in, or excluded from, the sale
  • Who will control the patient records
  • The scope of the non-compete covenant (time and geographic distance)
  • The collecting of the seller’s accounts receivable and patient credits
  • Procedure for handling any repair of defective dentistry
  • Allocation of the purchase price for tax purposes
  • Ongoing contractual obligations or liabilities
  • The firing and hiring of staff
  • The transition letter notifying patients that the practice has been sold

Step Seven: Office Space

If you are buying an existing practice, the selling dentist is either leasing the office space or owns it. You will be either taking over the lease, buying the space, or leasing it from the seller. In any of these circumstances, these are details that need to be worked out with your dental attorney and are separate from the practice purchase agreement. It is important to understand that the purchase of the practice does not include any rights to the office space. That needs to be negotiated on its own.

Whether you want to lease or buy the office space will depend on the practice, the location, and your goals for the practice. Discuss these matters with your attorney, CPA, and practice transition specialist. They can each help you understand that benefits and drawbacks of your options.

Step Eight: Sign the Documents and Take Ownership

Once all of the details are solidified and you are in agreement with the terms of the deal with the buyer, you sign the documents and submit them to your lender. Once the bank has the signed documents, they can finalize the lending process and transfer funds to the seller. When that happens, you can take ownership of the practice. 

It’s not uncommon for the sale to remain confidential to this point. Therefore, after this point, you can have a meeting with the dental office staff and start the process of taking over the practice. 

Step Nine: Send a Transition Letter to Patients

As mentioned above, a major advantage of buying a dental practice for sale is having a built-in patient base. Once the sale has closed, that is the time to let patients know that the dental practice will have a new doctor. This is the opportunity for the selling doctor—who has the trust and confidence of the patients—to endorse you as the new doctor. This letter can be drafted and agreed to before the deal closes, which may be a good idea so there is no conflict when it comes time to send the letter. Your dental practice transition specialists can provide guidance and advise as to how to compose the letter and its contents.

Step Ten: Staffing, Billing, and Licenses 

Once the deal is closed, all of the things owned and controlled by the seller’s company have to be transferred to yours. This means the seller will terminate his employees and you will hire them to your company. Utilities and other service contracts will have to be assigned and decisions made about pro rata payments, if necessary. You will need to make sure that you are in compliance with all local, state, and federal licensing and registration requirements. Again, your dental attorney and practice transition specialist can help you identify these details.

ddsmatch Has Dental Practices for Sale in Texas and New Mexico

If you are looking to buy a dental practice for sale in Texas or New Mexico, ddsmatch Southwest has several appealing options. Check out our available matches online. If you are considering transitioning your practice in the next five years, contact us today for a free, no-obligation Practice Transition Assessment and find out what we can do for you.

Prepare to Buy a Dental Practice for Sale: First Steps

At ddsmatch Southwest, we are dental practice transition specialists who focus on matching the right buyer for doctors who have placed a dental practice for sale in Texas or New Mexico. We believe that the right match is important because a successful practice transition is one where the practice continues to thrive, protecting the legacy of the selling doctor and providing the buying doctor with a solid foundation on which to build their own legacy. Because of this, we believe it is important for the buyers in the practice transitions we facilitate to be well prepared and well informed, with everything they need to have confidence in both the practice they are buying and the fairness of the transaction. 

To this end, we will be posting a short series of articles about how to best be prepared to purchase a dental practice for sale in Texas or New Mexico. In this article, we will provide a brief overview of the first steps of the dental practice transition process, from the buyers point of view, and some general principles to keep in mind. 

Assemble a Team of Advisors

After you have decided the time is right for you to buy a dental practice, and have an idea of where you would like that practice to be, you should identify and retain a small group of trusted advisors to counsel you through the process. This should include, at least, a dental CPA, a dental attorney, and a banker with experience lending for dental practice purchases. You may also want your own dental practice broker.

You may wonder why you can’t use your family member who is a respected attorney or a friend who is a CPA. While these types of contacts may be great for general purposes, you need advisors who understand the particulars of dental practices and the accounting and legal issues that are unique to your industry. You don’t want something important overlooked because your CPA didn’t recognize its significance. And you don’t want to pay an attorney’s hourly rate while they get themselves up to speed on an issue. You’ll save money and time by retaining specialists with experience.

Before you get anything but the most cursory information about a dental practice for sale, you will be required to sign a non-disclosure agreement. This agreement will protect your personal and financial information, as well as the selling doctor’s, and will protect the dental practice from staff and patient concerns if knowledge of a transition is leaked too soon. It’s a good idea to have your own dental broker or attorney to help you review and understand the agreement.

Have a Realistic Idea of What You Can Afford (and Need the Practice to Earn)

In 2018, the average dental student graduated with over $285,000 of student loan debt. When you are buying a dental practice, you have to consider both what you can afford to buy and what you are going to need to earn to cover the practice’s expenses, pay off the practice loan, keep paying on your student loans, and still have enough for your personal expenses and savings.

Depending on the practice, you may need some operating capital to keep things going in the early days after the transition. You may also need to compensate the selling dentist if you both agree it will be mutually advantageous to keep the doctor on for a period. A dental CPA and a dental practice broker can help you better understand how to look at a dental practice for sale and see its potential—or its problems. A banker with dental practice experience can also discuss with you how much you might expect to be lent for the practices you are considering.

Know the Value of the Existing Dental Practice Staff

When you are buying a dental practice, you are also getting the existing employees: hygienists, billing staff, receptions, etc. Although you will be the doctor, they are the ones that really know the patients and how the practice runs. Their institutional knowledge will be invaluable to you, both during and after the transition, to keep the operation running smoothly and help the patients feel comfortable with you, the new doctor. It is imperative to show them respect to help the transition be as smooth as possible. It’s a big change for them as well!

See It for Yourself

Every dental practice is different. You won’t really know what the practice is like until you can experience it in person. You also will want to look closely at details indicating the health of the practice: how many patients have visited the office over the past 18 months, whether the practice is appropriately staffed, patient flow, and cash flow. Those last two items, in particular, can show you whether a practice is growing, stable or shrinking. If the practice is underperforming, there may be some untapped opportunities for growth.

Look Closely at the Practice’s Financials

The asking price may not reflect the actual value. Many people tend to overvalue their assets because of their emotional attachment to them. Dentists are no different. The price of a dental dental practice for sale in Texas or New Mexico should be a reflection of its value based on sound accounting and valuation methods, not a reflection of what a doctor has put into the practice. Have your team of trusted advisors review the financial information with you to help you understand what it really says about the practice and whether its in line with what a business of its type should be doing.

Understand What Is and Isn’t Part of the Deal

If a selling doctor is asking $750,000 for a practice, you need to understand what you get for that amount. That may not include the equipment. It probably won’t include the accounts receivable. If the doctor owns the building, and you want the building as part of the deal, that can be a separate transaction and will definitely be a cost in addition to the practice sale price. If you have to purchase a lease, that will also have to be negotiated.

The selling price is a good place to start, though. If you and the selling doctor can reach an agreement on the sale price, usually negotiations on the other aspects will be smoother as both parties are motivated to complete the deal.

Be Wary of Owner Financing

Simply stated, a bank is more objective. Banks certainly have an interest in the money they lend—they want it back with a return on that investment. But this means they will perform a thorough due diligence relying on independently verifiable information. In a seller-financed deal, the seller is less likely to have a third-party valuation of the practice and asking price. They are likely looking to finance their retirement out of the sale and want to capture the interest as well as the principle. This can result in them trying to get a certain number rather than the true value of the practice. 

Consider the Value of the Seller Staying On After the Transition

It is common for the selling doctor to remain working in the practice for a period after the transition. This can be useful for helping to ease the transition for the patients, the staff, and the new doctor. It can be an attractive option for a doctor who is not ready to fully retire but wants to be rid of the business responsibilities and just focus on patient care, perhaps with reduced hours, before fully stepping away. Occasionally, however, it can indicate a seller who wants to have their cake and eat it too: sell the practice but not really have to give it up. Discuss this with your advisors. But be wary of a doctor who is proposing a period in terms of years, rather than weeks or a few months.

We Have Available Dental Practices for Sale in Texas and New Mexico

As stated, as ddsmatch Southwest, we focus on finding the right buyer for dental practices we have available for sale in Texas and New Mexico. If you are ready to make your move into practice ownership, check out our listings. If you see any your are interested in, or have any questions, please contact us— it starts with a conversation.

Should I Sell My Accounts Receivable when Selling a Dental Practice?

When selling a dental practice, there are a lot of things to consider and details to manage. Among those are how to value your practice. However, one thing that is generally not factored into the selling price is the accounts receivables. Accounts receivable are the amounts owed by patients who have been provided service but either they or their insurance (or some combination of the two) have not yet remitted payment. Accounts receivable are generally handled as a separate item as a transitioning dentist may or may not want to make them part of the deal.

Similarly, when buying a dental practice, the buyer might not want to buy the accounts receivable because they can impose an unwanted administrative burden and cost. Typically, however, it may be to the advantage of a buyer to try and get them. They are usually sold at a discounted rate (for reasons explained below) and can provide a source of operating capital from day one as opposed to borrowing additional funds from a bank.

In this article we’ll discuss the three basic options you have when and the advantages and drawbacks of each. Whether you ultimately decide to sell or not sell your accounts receivable will depend largely on the particulars of your practice and, importantly, the counsel of your financial adviser and dental practice transition specialist.

Sell the Accounts Receivable

If you include the accounts receivable when selling a dental practice, you are doing two things. First, you are releasing any claim you have on payment for work you did prior to the sale. It now belongs to the buyer. Second, you are also getting rid of the responsibility of trying to collect those outstanding payments. Under this scenario, you get to walk away with no further responsibility with regard to the accounts (except having to possibly endorse some checks over to the buyer).

As mentioned, this can be advantageous for the buyer who can use the funds as operating capital. If your buyer has reached the limit of their borrowing capacity, this can be a good way for them to make sure they have funds to keep the practice operating in those early days after the dental practice transition. If they need the accounts receivable for this reason, it may also be to your advantage to sell them, to ensure that the sale closes.

And while you will receive some compensation for the sale of the accounts, it will not reflect their full face value. This is for two reasons. First, simply stated, an agreement by a patient or insurance company to pay for your services is not the same as cash in hand. There will always be risk involved in collecting payment and this risk is reflected in the discounted rate. If you use dental accounting software, you probably know that it groups your accounts receivable into different categories, 0-30 days outstanding, 31-days days, 61-90 days, and so on. The longer the account is outstanding, the less likely you are to collect, and the more expensive it will be to do so. So a buyer may offer 85% for accounts that are due in 30 days or less, 75% for 31-60 days, 50% for 61-90 days, and so on.

The second reason, acknowledged above, is that there are costs involved with collections, costs which increase with each billing cycle. This will be discussed in more detail below.

Don’t Sell the Accounts Receivable and Have the Buyer Collect Them

If, when selling a dental practice, you and the buyer choose to not make accounts receivable part of the overall deal, you still have to have someone collect on those accounts. Basically, this can be either you or the buyer. Administratively, this is a more complicated option, but it means you get to keep the payment for the work you actually did.

Two things have to be considered. One, how the buyer will keep your accounts separate, making sure you get the funds that belong to you. The administrative staff will have to keep track of your accounts and the new doctor’s accounts separately. This will become increasingly complex for patients with ongoing treatment that you started and that the buyer is completing.

Second, when buying a dental practice, the buyer may not relish the idea of running a collection and accounting office for a retired doctor. The new doctor will be incurring the costs of collections and will rightly expect you to compensate the practice for this work out of the money being collected. Some of the expenses (in terms of either employee time or actual money spent) may include: electronic statements or paper statements, electronic claims (or in rare cases manual insurance claims), postage, labor, phone calls, secondary insurance submission, and communication time with patients or account holders. These costs can take between 5-12% of the revenue being collected, with an additional 5% convenience fee (that is, you are paying for your convenience and the practice’s inconvenience), and an uncollectable debt percentage of 3%. Therefore, you could reasonably expect about 83-85% of the money that is actually collected.

Whether this is more advantageous than simply selling the accounts receivable along with the dental practice will depend on how much you have outstanding, how long its been outstanding, and who is obligated to pay (insurance companies likely being more reliable than individual patients).

Keep the Accounts Receivable and the Responsibility for Collecting

Under this option, your only costs are your own and you get to keep everything that ultimately gets paid out, less whatever administrative costs you incur. This option is really only best in circumstances where you have a minimal amount of accounts receivable and from sources that are likely to pay.

Resources are also a factor. You may be able to do it all yourself. You may also be better off just paying your (former) administrative staff to work on the project on their own time. It is also most easily done in circumstances where the person selling a dental practice is staying on in the practice for a period of time after the dental practice transition.

Get Expert Advice on Selling a Dental Practice 

A big takeaway you should get from this article is that there are a lot of factors particular to your dental practice that will determine whether selling the accounts receivable is the smart move. For help in navigating this decision, you should rely on expert advisors with experience in dental practice transitions who can help you identify and weigh your options. 

Here are ddsmatch Southwest, we are dental practice transition specialists with experience in hundreds of successful practice transitions from across the country. We find out what your goals are for your transition and bring that experience to bear to help you meet those goals. If you are considering transitioning your practice in the next five years, we offer a free, no-obligation Practice Transition Assessment, including advice on how best to prepare your practice. It all starts with a conversation. Give us a call today and find out what we can do to help you. 

Dental Practice in Rural Areas: Better for You and Your Bottom Line

Typically, the plan for a recent dental school graduate is to practice in a suburban area around an urban city. A dental practice in a rural area is seen as less appealing. However, what young doctors are finding out is that these areas are already at or over capacity for dental practices and doctors. This means more competition for jobs and patients, lower salaries, and limited opportunity for growth. More often, practices are resorting to extended and weekend hours to try and capture more patients. Costs of living are higher. Participating in PPO plans may be necessary if the competition is doing it (especially when considering student loan debt, practice loan debt, and overhead and personal expenses).  So while the urban area may appear to offer more in terms of lifestyle, dentists practicing in these areas may not be able to enjoy those supposed benefits as they imagined they would.

Below we discuss some of the advantages of dental practices in rural areas. But don’t just take our word for it, read what a recent satisfied ddsmatch Southwest client has to say about his career in a Texas small town.

Dental Practice in Rural Areas Provide More Economic Opportunities

While high-density areas leave dentists scrambling for jobs and patients, and established dentists may have deferred retirement due to economic conditions, dentists in small towns are experiencing the opposite. Most small town dentists are doing quite well because they don’t have the same kind of competition. In fact, many rural areas are underserved, making patient demand for dental services high in comparison to urban areas. 

Dr. Bill Dean, recently used ddsmatch Southwest’s dental practice transition specialists to help him sell his practice. In a recent interview about his practice transition, he noted this benefit of small town dentistry,

“We’re a town of about 3,500 people, but we’re about 50 miles from Lubbock. It’s the nearest town, large town. And, I have a drawing area of probably 20,000 patients and coming from three or four different counties that don’t have dentists, and it’s hard for young dentists coming up to realize that they can come to a real community and have an instant practice when they start out.”

“Particularly if they’re buying a practice. There’s a ready-made client base that they can go to work from day one and be busy. They don’t have to try to develop a clientele, and they get to know their patients and the patients . . . Once they’ve won a patient over they will tell all their friends, and it just is an ongoing process of good people.”

Small Town Overhead with Urban-Level Fees

Fees charged by dental practices in rural areas are comparable to those charged in suburban and urban areas. But the overhead is much lower. A small town practice typically has its overhead expenses in the 50-55% range. Two major factors are lower wages and lower real estate or lease costs. Combined with less competition (meaning you save in your marketing costs as well), this means higher profits for your practice, and more money in your pocket. The faster you can accumulate wealth, the sooner you can retire, and the easier it will be to do on your own terms.

Dr. Dean also addresses the belief that being in a small town might make you feel isolated. To the contrary, given the realities of transit in sprawling urban areas, his access to larger city amenities wasn’t an issue, and the increased opportunities to earn and own a practice are accelerated by the built-in clientele and lower overhead:

“Lubbock is a town of about 200-and-something-thousand people, Texas Tech University is there, and they’ve got everything you could want. It’s 45 minutes away. If you’re living in Houston you may drive an hour to go eat somewhere and if you’re living in Floydada, you could be anywhere in Lubbock within an hour, and you’ve got anything you want. You got a major airport that’ll get you where you want to go, and, as I said, you’ve got an instant practice the day you open up your doors and in a large city you have to work to get people to come in. Or, go in as an associate and work for five years before you can actually become a partner.”

Student Loan Forgiveness Programs

Because many rural areas are underserved, some state agencies have established loan forgiveness programs based on the number of years a doctor practices in one of the underserved areas. So, in addition to earning more, you can also work to reduce your debt faster than otherwise, accelerating your savings. Some of the programs may require participating in Medicaid. Visit ADA.org for more information.

Small Town Life Style

Many dentists who do practice in more densely populated areas grow tired of the tough economics of urban life, the competition, and the stress. These are factors that are intrinsic to city life. We’ve discussed above how a dental practice in rural areas can increase your income. It can also greatly decrease your stress while increasing job satisfaction. 

The slower pace of life allows to you both be more flexible in your schedule and to get to know your patients better. Creating a personal bond who those to whom you provide care adds an additional dynamic to your work day that can make it more enjoyable, and less of a chore. You also will have more time to enjoy the things that make life worth living, like friends and family, and hobbies and recreation. The ability for better life balance will reduce the likelihood of burnout.

Additionally, you can enjoy the esteem of your community. A dentist is a valued member of the community, providing a valuable service. You can be seen as a respected professional whose advice is valued. Diagnosis and treatment plans are more readily accepted by patients who know and trust you. 

Dr. Dean confirms these benefits. Speaking of the doctor who bought his practice, Dr. Dean noted that he was looking specifically for 

“[s]omeone that would be a part of the community, that was more than just drilling and filling and seeing patients. And, [Dr. Shively, the buyer, has] been with a corporate firm in Lubbock for the last six months and it wasn’t a matter of getting to know the patients, it was a matter of production, and Dr. Shively didn’t like that, didn’t want that. He wanted to be a part of the community. . . .

“He said when he came out there was little league baseball playing, and he said that’s what he’s looking for, and, you know, that’s what I’ve had for the last 27 years. We’ve known for two months . . . that Dr. Shively was taking over, and that I would be leaving. And, the last two months with patients have the most humbling and rewarding of my entire career. The patients just saying, ‘we appreciate you and love you,’ and that’s what dentistry’s all about. It’s getting to know people. . . . 

“Probably half of my patients call me Dr. D., the other half call me Bill, because I go to church with them, or I’m on the school board. I’m just one of them. Particularly for these that, like the Davidsons, where I see their kids and grandkids and great grandkids, they’re really more family than they are patients. And that’s the beauty of working in a small town. When you leave the office you may see them at the grocery store, you’re going to see them at the football game, or the basketball game.”

ddsmatch Southwest Has Rural Practices Available Now

The dental practice transition specialists at ddsmatch Southwest have dental practices in rural areas in Texas and New Mexico ready for buyers. If you are looking to start your career, or are looking for a change of pace where you can own your own practice and enjoy the benefits of that ownership, take a look at our available practices

If you are considering transitioning your practice in the next five years, we offer a free, no-obligation Practice Transition Assessment during which we’ll our experience to work for you, advising on how best to build value and get ready to transition on your terms. Contact us today.

Ten Years of Success in Assisting Doctors with Dental Offices for Sale

2019 marks ten years of ddsmatch providing expert dental transition services. Over that time, we have helped hundreds of doctors all across the country achieve their dental practice transition goals. With each successful dental practice transition, we only get better at providing the kind of care and service ddsmatch has come to be known for as we bring that experience to bear for each new client. Your transition goals are our transition goals and we are never satisfied unless our clients are also. If you are thinking of putting your dental office for sale, you can’t do better than with a ddsmatch dental practice transition specialist.

About ddsmatch

In 2009, our founder, Thad Miller, had a vision of a better way for doctors to transition their dental practices by combining technological advances with the human touch to find the right match for your practice, both on a professional and personal level, to better serve your patients, your staff, and give you the peace of mind that they were being provided for. Each of our dental practice transition specialists, and the outside professionals we refer (such as attorneys and accountants), serve our clients at the highest level.

Our specialty is in connecting those putting a dental office for sale with the right buyer by using a process we call “The Trusted Transition Process,” which focuses on integrating relationship capabilities, supported by our technical platforms, and advise based on our extensive professional expertise.

We can assist you with: 

  • Practice sales
  • Practice mergers
  • Dental partnership agreements
  • Associate placements
  • Dental office appraisals
  • Dental Real Estate sales

We are able to achieve a high level of results with our specialized tools, including:

  • The Trusted Transition Process
  • An in-depth clinical practice analysis created by Dr. Charles Blair & Associates PracticeBooster®
  • Fair, dependable third-party business valuations and practice appraisals supported by accredited professionals
  • An interactive website that allows you to search for a practice buyer or partner for your practice
  • Kolbe testing to better assess the nuances of potential matches between dentists and their associates

About the Trusted Transition Process

The key to our Trusted Transition Process is what we refer to as the Conceptual Transition Experience. This begins with a comprehensive interview with, you, the doctor wanting to put a dental office for sale, in order to determine your financial goals and personal requirements about what kind of match you are seeking to take over your practice, attend to your patients, and work with your staff. We understand that these personal relationships have developed over time and are important considerations—a dental practice transition is not just a financial transaction, it’s also about protecting your legacy.

We work directly with you to set your objectives, identify your transition (based on your individual circumstances), and create a plan to meet your objectives. At every point, you are always in control of the process.

About the Trusted Valuation Analysis

Our appraisal process is designed to determine the most accurate fair market value of your dental office for sale. The analysis is based on the financial and other information you provide about your dental practice, along with the economic conditions of your local market and how those relate to your practice and the dental industry overall. One aspect unique to ddsmatch is that we only rely on Certified Valuation Analysts at Blue & Company to provide the most comprehensive appraisal of your practice. These analysts are all CPAs, specifically trained to evaluate business with a specialization in medical and dental practices. This means you are getting the most industry-specific appraisal possible.

Blue & Company has over 40 years experience in providing business valuations. Their staff are recognized for their skill and are regularly retained as valuation experts in both business transactions and litigation, and are certified as valuation analysts (CVA) and accredited senior appraisers (ASA). They are also business valuation members of the American Society of Appraisers and have specialty designations for business valuators (ABV).

This means the appraisal of your dental practice for sale will be fair, based in fact, and detailed with information on the scope of work performed, how the calculations were completed, and the calculated value. Additionally, our team will provide on-site inventory and valuation of your equipment, and, if necessary, we can arrange for a real estate appraisal though our professional partnerships.

Our aim is to provide you with a fair market evaluation of your dental practice that is both realistic and as thorough as can be, based on the experience and knowledge of trusted and qualified professionals.

About our Clinical Opportunity Blueprint

The more information you have, the better positioned you are to make good decisions that further your dental practice transition goals. As stated above, your goals are our goals. To assist you, we will provide you with a forecast for your practice in the form of a 70-page, customized report detailing your practice opportunities, based on Dr. Charles Blair’s Clinical Treatment Analyzer. The Clinical Treatment Analysis can reveal:

  • Over 50 clinical procedure tendencies of the practice’s procedure mix
  • 15 areas of potential within a hygiene department
  • 12 doctor procedure ratios
  • At least 16 monitors that reflect the dentist’s service mix intensity level

Potential matches for your practice will benefit from this information by:

  • Understanding your practice mix from the beginning
  • Assessing their practice philosophy in relation to yours
  • Identifying areas for potential growth
  • Making a fully educated decision based on the facts of your practice

When you are ready, your practice will be posted on our website. By that time, you will have a thorough understanding of your practice transition options, better enabling you to choose your direction on the best way to proceed for your to meet your transition goals.

ddsmatch Southwest Can Help You Put Your Dental Practice for Sale

ddsmatch Southwest focuses on matching available dental practices in Texas and New Mexico with potential buyers. Our success speaks for itself. One satisfied client said 

“It was a pleasure doing business with [ddsmatch Southwest]. You were able to sell my practice when three other brokers failed . . . Selling one’s dental practice and retiring from 48 years dentistry is not an easy, painless decision, but through your guidance (and a bit of counseling too), you made it happen with a buyer to whom I feel very comfortable turning over my practice . . . Your professionalism was absolutely critical to the successful sale and transition of my dental practice, and I am deeply grateful.”


Bill Wolfe, DDS

Contact ddsmatch Southwest today and find out how we can help you meet your dental practice transition goals.

Don’t Fear Patient Attrition When Buying a Dental Practice

A universal concern that arises in dental practice transitions is patient attrition: how many of the selling doctor’s patients will remain with the buying doctor after the transition. And while it’s smart to think about this, the fears about patient attrition can be out of proportion to the risk. When buying a dental practice, if you work with the selling doctor and take a few simple steps, you can keep nearly all of the existing patient base.

Likewise, when selling a dental practice, a doctor shouldn’t be overly concerned about their personal connection to their patients. While its true that over the course of their career, a doctor has spent a lot of time with the patients—in some cases having treated them and their families for years—a quick review of the circumstances surrounding a dental practice transition show why most patients are not inclined to look for a new treatment provider.

Why Patients Stay with the New Doctor After a Dental Practice Transition

Its well established that most of the value of a dental practice is its goodwill. According to one dental practice transition expert, “Goodwill refers to the intangible assets that either restrict or enhance the future earnings of the practice, and includes patient charts, recall systems, staff longevity, noncompete covenants, and the owner’s reputation within the community.” That is, it’s the patient base and whatever keeps them coming back to the treating doctor. More than anything else, this is the value of a dental practice.

When buying a dental practice, the goodwill is the major factor that can make an existing practice more attractive than starting a new practice from the ground up. In order to start a new practice, a doctor will have to go hundreds of thousands dollars in debt, find space, furnish and equip it, hire staff, and have sufficient capital to pay the staff and themselves, while having no existing patient base. When a new doctor is buying a dental practice, however, they take on a substantial amount of debt to be sure, but they typically get a fully operational office with staff, and a built-in patient base with a quantifiable record of collections. Even if the practice loses 20% of the patient base (an untypically high number), the buying doctor is still retains 80% of the patients, which is a whole lot more than zero, which is what the doctor starting a new practice has.

Consider this from the patient’s point of view. They have been to the office. They know where it is and what the experience is like. They have interacted with the receptionist and other administrative personnel. If they are returning or longtime patients, they have an established trust in the doctor, hygienists, and staff. If the transition is properly explained, the buying doctor gets the benefit of the patients’ trust in the selling doctor. And the patients can continue going to the office that they know and trust, saving them the hassle and uncertainty of finding a new provider. Patients won’t make a change without a compelling reason to do so.

Steps to Minimize Attrition when Buying a Dental Practice

While the risk of patient attrition may be overstated, that is not to say you don’t have to worry about it. It just means that you have to have a sensible plan. Here at ddsmatch Southwest, we are dental practice transition experts and bring the experience of hundreds of successful dental practice transitions from all across the country to bear for our clients. Based on this experience, there are a few, simple steps you can take to ensure you retain as many patients as possible when buying a dental practice.

The goal a seamless practice transition, so  the patient to see no changes in the practice, except for the person doing the dentistry.

1 – Send a Transition Letter and Follow-Up Email

As soon as is appropriate, the selling doctor should send a letter to all of their active patients explaining the practice transition (including the selling doctors reasons for selling, if they are neutral or positive reasons such as retirement or relocation), introducing the new doctor, and, most importantly, giving the new doctor a strong endorsement. This letter is trading on the trust and goodwill that the selling doctor has accumulated and, to whatever extent possible, transferring that to the new doctor. The heart of the message is that the selling doctor has put their trust in the new doctor and so should the patients. It can be helpful to include personal touches in the letter such as a photograph of the new doctor (and perhaps their family) and details about their personal life. It’s also useful to follow up by sending the same information in an email to all active patients, in case the letter is overlooked.

Additionally, staff should be trained on how to discuss the transition with patients. The buying and selling doctor should come up with the language they want used if patients inquire about the transition or new doctor either, over the phone or in person, always with an eye toward instilling confidence in the buying doctor.

In short, if the selling doctor and staff trust the new dentist, the patients will too.

2 – Keep the Office Staff

Losing the selling doctor is enough change for the patients. Also, they have generally spent more time interacting with the front of office staff than the doctor. The receptionist sometimes is the person with the most influence over how patients perceive the new doctor. As addressed above, they need to communicate confidence.Just because patients are putting their trust in a new doctor doesn’t mean that trust can withstand sweeping changes in the office. That may make patients nervous.

There are lots of reasons why it may be smart to keep the staff on. Regardless of your plans for staffing the office, you’d be well served to keep the staff on for at least 90-180 days after buying a dental practice, and to keep them on with the same compensation and benefits package that they’ve had. The staff will have their own concerns about the transition and you need to keep their morale high during this critical period. If patients see more unfamiliar faces in the office, detect a change in previously friendly demeanors, or sense uncertainty from the front office staff or hygienists, you risk spooking them into looking for another doctor.

3 – Maintain or Increase Office Hours and Services

Again, this is about not making too many changes at once. A patient may think that a change in who is performing their dental work is acceptable. That does not mean they will tolerate shorter office hours, which may make scheduling appointments difficult or cause them to wait longer than they are comfortable for treatment, or not being able to get the treatment they are accustomed to. The goal is to make the transition as seamless as possible—to not restrict anything that made them initially choose to get treatment from the office and keeps them coming back.

This doesn’t mean you are locked in the prior doctor’s way of doing things forever. It just means that changes are made gradually, not all at once.

If, however, the changes you want to make include extending hours or expanding services, these changes may be implemented sooner, as they can be seen as positive additions by patients (staff may be a different issue, though, especially with regard to extended hours).

4 – Keep the Same Branding

There are two points here. First, as above, you want the transition to be seamless—you don’t want patients to notice any change other than it’s you on the stool beside them. Second, the public’s perception of the dental office—that is, the goodwill—is bound up with the office’s brand. This is not just about what the existing patients think about the practice, but the community in general. If the selling doctor has done well to establish a good reputation in the community, keeping the same branding will help transfer that reputation to you.

5 – Whether or How Long the Selling Doctor Stays On in the Practice

Having the selling doctor stay on can be useful for in-person introductions to the new doctor and to ensure a smooth transition as the new doctor becomes more familiar with the staff and office practices, policies, and procedures. However, staying on too long can negatively impact the buying doctor being able to establish themselves as the new head of the office. Therefore, when buying a dental practice, if you are considering having the selling doctor stay on, carefully consider how much time is really needed. Some people will say it should be three-to-six months but the truth is that the average time is closer to two-to-four weeks (specialty practices may require more time).

ddsmatch Southwest has Available Dental Practices in Texas and New Mexico

If you are considering buying a dental practice, we have several quality practices available throughout Texas and New Mexico. For more information, contact us today.

Should I Buy the Building when Buying a Dental Practice?

One of the most common questions about buying a dental practice is whether to buy or lease the space. And, as with many things in life, the answer is: it depends. It depends on the real estate market where you are looking to practice, whether the practice space is owned by the selling doctor or not, your plans for growing the practice, whether you foresee moving the practice, whether you want to deal with the additional responsibilities of real estate management, what kinds of risk you are comfortable with, just to name of few considerations.

Most advisors will say you should always buy. Some will say you never should. The fact is, that there is no consistent rule. Some doctors have bought their property and lost their shirts when the property devalued. Some doctors have built lucrative practices in leased space. So, ultimately, the question is really what will be best for you and your practice. Below we discuss some of the factors you should think about.

Return on Investment

When you lease, you are paying for someone else’s investment. When you buy, you are paying for your own. When you lease, your monthly payments will increase over time. If you are buying with a fixed-rate mortgage, your monthly payments will stay the same (unless you refinance or there are other loan terms that impact the payments). If you lease, you will pay rent every month until you someone else buys your dental practice. If you buy, depending on where you are at in your career, you may pay off the building and own it outright.

Conversely, when you lease, your landlord is responsible for maintenance and upkeep. When you buy, these are your expenses. When you lease, you have more flexibility to relocate if you need to expand beyond the available space or there are other reasons to move. When you buy, it’s much harder to relocate and cannot be done as quickly. When you lease, you are insulated from the factors that cause property values to drop. When you own, you take the brunt of any economic downturn.

If you choose to acquire real estate as part of buying a dental practice, you have the option of thinking beyond the needs of your practice. If your practice requires 2,500 square feet but are looking to expand, you can buy a 10,000 square foot building, divide it in half, and rent the other 5,000 square feet to another tenant or two or three. This creates an income stream separate from your practice. But it does mean increased costs in terms of managing the space, dealing with tenants, complaints, and repairs.

Also, when you decide, “it’s time to sell my dental practice,” you can choose to sell or keep the real estate, either getting the equity out of the building or an ongoing income stream as part of your retirement plan.

In the end, however, a lot of this comes down to whether you want the risk and responsibility of real estatement ownership.

Control Over the Property

For an entrepreneurial doctor who is buying a dental practice, buying the building (or constructing a new building) can have some real advantages. First, it gives you much more control over your brand, which is a significant asset. You can make the property look how you want. You get to choose your signage. And you get to choose who you share the property with, if there is space for other tenants. These things can add significant value in unexpected ways.

If you lease space in a medical plaza, you might get your name on small sign along with all of the other tenants. You also might not get a sign at all. If you are in a retail space, you might get a sign over your entrance. Or you might not. And you have no control over who is in the spaces around you. If the property is not managed well, you could end up with questionable business as neighbors, or in a space that has high turnover and frequent vacancies. None of these are good for your brand.

By owning the building you can do something such as install a highly visible LED sign at the street. While this can be a significant outlay, you need to consider what you are buying. If you pay, for instance, $17,000 on a sign, assuming you get ten years out of it, that works out to $1,700 per year for 24-hour a day advertising visible to every person who walks or drives past. Some dentists have reported that these kinds of signs have, on their own, increased their business—simply by being there.

Additionally, if you have space to lease out, you get to choose which kinds of business you rent to. There are opportunities for cross-promotion and strategic partnerships. If, for instance, you have pediatric dental practice, you can look for business that also cater to families and children. If you present the opportunity for cross-promotion (having marketing materials in each other’s locations, splitting costs on advertising, etc.) and the exposure from foot traffic, you can end up with a tenant who feels more like a partner and may be willing to pay over market value for the benefits.

It May Pay to Lease when Buying a Dental Practice

If you are a young doctor at the beginning of your career, you may have ambitions beyond those that the selling doctor had realized. If you see room for growth in your new practice, it might make more sense to start out with a lease, with an eye toward buying or building your own space later on.

It wouldn’t make a lot of sense to buy a dental practice and immediately move its location. The move, along with the change in doctor, could have a negative impact on your patient retention (especially if the landlord ends up leasing to another dentist). Also, the perfect space that you envision might not yet be feasible for the practice. Under these circumstances, you may be better off leasing for the first few years as you establish yourself in the practice—and in the community—and put your effort into planning how to expand and and working toward that goal. Then, when you’re outgrowing your present space, you can begin looking at buying or building a new space.

Another reason to consider leasing is the real estate market in the area you are buying a dental practice. If you are in a dense urban area, property values may be so high that buying real estate is not feasible. Also, if you are in a market where real estate costs are peaking, that’s a bad time to buy, as the market will inevitably correct itself. And while real estate tends to appreciate over time, you don’t want to be the one who bought right before the crash.

Tax and Balance Sheet Implications of Leasing versus Buying

Whether you buy or lease space, either can have a positive impact on your tax liability, but in different ways. Lease payments are generally deductible as an ordinary business expense, however, deduction limits may apply. On a balance sheet, however, lease obligations will appear as liabilities (similar to equipment or other assets that you would finance with a traditional bank loan).

When you buy property, on the other had, Section 179 expensing (referring to the tax code section that allows a taxpayer to elect to deduct the cost of certain types of property on their income taxes as an expense rather than requiring the cost of the property to be capitalized and depreciated) and first-year bonus depreciation can provide a significant tax savings for the first year the property is used by your dental practice. In fact, recent tax code changes have enhanced these tax breaks such that you may be better off buying things you would have previously leased (such as equipment).

Whether it will be better for your particular practice to buy or lease your practice space is a decision that needs to be made with the advice of a qualified tax professional.

ddsmatch Southwest Has Dental Practices for Sale in Texas and New Mexico

If you are looking to buy a dental practice in Texas or New Mexico, here at ddsmatch Southwest, we have several great options for you to consider. If you are considering selling a dental practice, we are dental transition specialists and can help you prepare and sell your practice on your terms, getting the most value out of your practice. Contact us today to find out what we can do for you.