How much do you know about buying a dental practice? Whether you are ready to start the buying process or you are still in dental school it makes sense to familiarize yourself how dental practice transitions work. Unlike buying a house or a car, there are no for sale signs in front of dental practices or big stickers advertising the price on the windows. For access to the best resources and information about available practices, you need a dental practice transition specialist such as ddsmatch Southwest. The specialists at ddsmatch Southwest typically represent sellers, but there are plenty of helpful resources available on our website for buyers at any stage.
One way buyers benefit from the ddsmatch Southwest website is our flexible search function. You don’t have to be in the market to buy a dental practice to use our database. Available associateships, partnerships, and practices available for merger are also listed. Simply create a profile on our website and you can filter results by location and size, see a practice’s revenue, staff size, number of operatories, advanced equipment, and more. So whether you are buying a dental practice or simply looking for an associateship you can find new opportunities on our database.
In addition, our algorithm tracks the areas you are looking at so when a new opportunity arises you will be in the know. This is beneficial to individuals who want to stay up to date with current market trends and industry conditions.
If you’re starting to consider buying a practice read our helpful tips below. Learn more about the buying process, and how to determine which practice is the right fit.
Types of Dental Practices
Before you start searching for a dental practice to buy you need to think about the type of practice you are looking for. Do you want to take over a practice from an individual? Are you interested in buying into a partnership? Do you want to become an associate? Before you start the process of buying a dental practice think about the following:
- Atmosphere. Every office has a different vibe, which is typically dictated by the owner. The staff and patients are affected by the way the office feels. This vibe informs the flow of the office and attracts new patients.
- Insurance. The business model you choose informs your client base, so it is important to consider how you plan to process payments and insurance. You may choose to base your payment plans as a fee for service, PPO, Medicaid, or HMO. It is important to note that if you choose to change your billing practices after taking over an existing office you will likely lose patients up front.
If you are fretting over whether you should acquire real estate when buying a dental practice you should know that the decision does not matter as much as you think. According to Thad Miller, founder and president of ddsmatch, owning real estate is more a matter of where you live. “In Indiana and Louisville . . . there’s a lot of dentists who own their own building,” says Miller “. . . Whereas maybe [in] Los Angeles, Chicago, some of the bigger cities, Atlanta, they may not own their building as much and . . . you’ve got to weigh what does that real estate do for you?”
Before purchasing real estate for your practice, you should research the tax benefits versus the upfront costs. Additionally, do not assume that every selling doctor wants to sell their real estate along with their practice. Many decide to keep the property as an investment, or sell it later as part of a separate transaction.
Location, Location, Location
Buying a dental practice is not something you will do often, so it makes sense to think carefully about the location of your practice. You probably have a general idea of the area you want to buy in, but you can narrow down your choices by thinking about the following factors:
- Your Personal Home. If you own a home, or are planning to buy one before you buy a practice think about how close you want to live to your practice. How far are you willing to commute? Would you be willing to move your personal residence closer to your practice?
- Your Lifestyle. What kind of lifestyle do you envision for yourself? Do you enjoy living in rural communities, or do you want access to the amenities of a city? If you plan to have children think about the neighborhood you want to live in and the school district they will attend. Buying a dental practice will affect your family as well as yourself, so it is important to think about these things even if they are years down the road.
- Expanding Your Practice. Even if you are only looking to buy a practice with one location try to imagine your future wants. Your practice’s location may limit your expansion opportunities. If you think you will want to add another location or two in the future think about where these locations would be, and if traveling between them would be feasible.
The location of your practice should match the way you want to practice. Urban, suburban, and rural practices have significant differences not only in atmosphere but in overhead costs, profitability, and patient base. Thad Miller explains “there are more profitable practices in rural parts of the States because it’s a percentage of dentists per patient, correct? So with these DSOs not setting up in these rural areas, there’s less competition.”
According to Miller, younger doctors should consider their thresholds when it comes to things like commutes and workdays before buying a dental practice, “if they can handle a 45 minute drive there and back, would they rather sit in traffic or they would rather drive straight there and drive straight home. It just depends.”
However, just because the selling dentist ran their practice a certain way, doesn’t mean the buying dentist has to run everything exactly the same. Miller continues, “…say they buy a rural practice, they don’t have to run it exactly the way the rural dentist ran it. If they want to go from 6:30 in the morning until 3:00, two days a week and they’re home by 5:00, they can do that. You own your business. You can make those changes. If you want to see your son’s tee-ball practice on Wednesdays, don’t work Wednesdays. Work Fridays or just go from, like I said, 6:00 A.M. to noon. That’s what’s great about dentistry, you can do it a little differently than other people and still be very profitable. You just got to weigh how many patients you’re working on.”
Buying a Dental Practice With Financing
When you start your search for available dental practices remember that you are limited by how much financing you qualify for. If you create an online profile just to keep an eye on market trends, as many users do, you may not want to filter available options by price. But if you are planning to buy a practice in the next few years you should find out how much you can afford to spend, and familiarize yourself with how dental practices are valued. Visit this post on Dental Economics to learn the basics of dental practice valuation.
Both buyers and sellers are concerned with fair pricing during a dental transition. That is why ddsmatch Southwest uses a trusted, third-party accounting firm to perform dental practice valuations. In addition to a reliable business valuation we offer clinical appraisals using Dr. Charles Blair’s Clinical Treatment Analyzer. This appraisal looks at untapped revenue opportunities within a practice so the buyer knows where he or she can expand. As a buyer, it is important to review these details so you can make the right choice.
ddsmatch Southwest can also help individuals buying a dental practice by referring them to local dental practice lenders. As Miller explains, our brokers “have relationships in every area . . . so they’re going to actually work with these individual buyers and banks. If it’s national banks, if it’s regional banks or if it’s local banks, we do a lot of that in our process.”
If you are worried about qualifying for financing you should know it is easier than it seems. Historically, dental practice lending has been a favorable investment with low default rates. Even during the economic uncertainty of 2020 dental practice lending has remained steady.
However, like any loan, the lending bank will want assurance that the buying doctor can keep up with payments by maintaining production levels at their new practice. According to Dr. Howard Farran, of Dentaltown, “the big banks are telling the graduates who just walked out of school . . . that you needed at least a year’s experience before they’ll even talk to you” about buying a dental practice. Farran notes that, for banks, that year of experience is an important indicator of future production. He continues that banks are not “as concerned about the debt as they are with the speed of the dentist keeping up with the practice, being able to do the procedures that the selling dentist has. If they work for a year, that usually gets them over the hump to where they can keep up with the hygiene schedule. They can do the restorative and be able to keep up with the schedule. That’s their biggest concern. It’s not necessarily the debt as much as it is the speed.”
Understanding the Transition Process
There is more than one way to transition into a dental practice after a sale. Some selling doctors are ready to move on and leave as soon as the paperwork is done. Others stick around and work at the practice for a certain amount of time while the new doctor transitions into his or her role. There is no one “right way” to go about a transition, as long as there is clear communication on both sides. Before you start the process of buying a dental practice you should understand what is involved with each of these scenarios and be open to discussing them with the selling doctor.
Turn to Transition Experts When You’re Ready to Buy
Is it possible to go through a dental practice transition without expert help? Yes. However, just like in any legal or real estate transaction buyer representation is important if you want to get the most out of your experience. Thad Miller elaborates:
Buying a dental practice is not something you do every day. It is a large investment, and determines the path your career will take. That is why you need an expert team like the one at ddsmatch Southwest. The complicated financial and legal processes need careful attention by someone familiar with the specifics of dental practice transitions. Your team should be able to advise you along the way so you can avoid pitfalls and take advantage of opportunities you may not have known were present. At the end of the transition, you should be able to say you did your due diligence at every step, understood the information presented to you, and made informed decisions.
Search Available Practices from ddsmatch Southwest
When we find the right buyer for our clients, everyone wins. So, while we typically represent selling doctors, we have an interest in finding buyers who are not only qualified, but will thrive once they take over a practice. The selling doctor has spent their career building up their legacy and solidifying their practice’s place in the community. That is why, when buying a dental practice, you are buying much more than the equipment or the real estate. You are committing to continue to grow and thrive in an established practice.
After years in the industry, we know that successful transitions are only possible when both sides are fair and transparent. Clients trust ddsmatch Southwest to provide up-to-date information and reliable resources so they can be sure they are making wise decisions. Our experts are ready to help you, too.