Buying a Dental Practice Part Four - Found It, Now What?

You found the perfect practice. Now what?

Over the years, we have seen buyers who were successful in their new practice, as well as others who were not. There are several keys to getting into the property practice with the least amount of stress and the greatest chance of success. Understanding the process and following a few simple suggestions can make your property practice as rewarding as you thought it would be.

He decided to focus on a specific area to purchase a practice, determined the type of office he would like, assembled his team of advisors, and received pre-approval for financing from the bank. All the preparation is in place and now you have found the perfect practice. What are you doing now? Check out here more information about this article.

Which is the correct price

All buyers must understand that the value of the practice must be based on cash flow. You are purchasing an income stream that will provide you with income as a new owner. The "rules of thumb" related to sales price as a percentage of gross receipts or takings do not allow for true value comparisons. A practice with very strong revenues may also have very high overhead costs that decrease the owner's income. A smaller practice with low expenses can actually provide a higher income for the new owner.

Evaluate the practice quickly and be prepared to make an offer quickly

If the practice is one that fits your criteria, there's a good chance it will fit several other dentists as well. Plan to evaluate the practice's operations and finances quickly to make a decision about whether this is the right practice for you. Delaying the office visit for a week or not making a reasonable offer quickly can mean the difference between being eligible to buy or not.

Submit a letter of offer with price conditions and contingencies

An offer letter will protect you from having any of the terms changed at the last minute and will detail various details of the sale. The offer letter will have contingencies that the buyer must meet, such as a chart review, approval of financing, and the successful transfer of a lease. Once the contingencies are met, the seller and buyer are on track to compete in the final steps of the sale.

Review the details about the practice.

Once the seller has accepted an offer, the buyer has the opportunity to review any and all practice records. This review is commonly known as due diligence. At this time, the potential buyer has the opportunity to review all patient records and schedules, as well as all financial records, including bank statements. The buyer can also have a technician evaluate the equipment. Due diligence is the last chance a buyer has to make sure the practice is what has been represented.

End financing

Most buyers will need to obtain financing through a bank or other lending source. Know that this may be the most time-consuming part of the process. Be sure to meet and discuss your needs with multiple representatives. There are often significant differences in fees and interest between companies, so be sure to get the betting value for your situation. Know that you will also need to establish a business banking relationship, which will create more incentive for a bank to make the package very attractive to get your other business.