What Every Buyer Should Consider Before Making an Offer
We are often asked by new dentists or dentists new to looking for a practice to buy, what steps they need to take in order to buy a dental practice. A few buyers employ an advisor to help them through the entire process, but most wait until they have found a practice they are seriously interested in before paying someone to help them through the process. Even with the advisement of an attorney or accountant it helps to have a checklist so that you don’t miss any crucial steps or forget to look into any important aspects of a practice. Each buyer and transition is different but below you will find a basic outline of some steps that every buyer should take before finalizing a purchase.
· Identify what geographic areas in which you and your family would like to live and work.
· Decide what size practice you are looking for (certain number of ops, amount of average collections, single practitioner or partner or group practice).
· Are you willing to consider a practice that treats any or a significant number of Medicaid patients?
· How much money do you need to net each month? (Practice Impact has a personal budget form that we recommend filling out to determine this amount)
· Do you have decent credit? Banks love dental deals, but in these times they are looking at your individual credit. Banks understand that young dentists have substantial student loan debts, but if you have a low credit score and a poor debt to equity ratio, there is a chance that you may not qualify for a loan.
· What kind of procedures do you want to perform?
Once you answer these questions you will be ready to begin looking at practices. Contact Practice Impact and find out what practices we have available based on your requirements. Once you have signed a confidentiality agreement we will send you an information booklet on practices that may be of interest of you and can then set up a time for you to see the practice. During this initial visit and a possible second visit you will want to look at or consider the following:
· Practice Location
o Are you happy with the building type (store front, office complex, free-standing building)?
o How is the visibility from the street and how much traffic passes by?
o Is there ample parking?
o How is the signage for the office?
o Are you satisfied with the neighborhood?
o How many competitors are in the vicinity?
o What is the general condition of the office and dental equipment? Does it need a lot of updating or repairs?
o Is the office computerized?
o Do you like the layout of the office and operatories? If not can it easily be altered?
o Is there room for expansion in the future?
o Do you like the décor of the office?
· Patient Charts
o How many active charts are there (patients seen in the last 18 months)? A good rule of thumb is to count the charts under the letter B and multiply by 10. This will give you a good estimate of the total active charts
o Have old charts been taken out or are they mixed with active ones?
o Is there a good recall system in place?
o Examine a few charts to see what type of work is being performed
· Fee Structure
o Where do the fees stand in relation to other practices in the area?
o How often are fees raised?
o Is there an appropriate number of staff members and positions for a practice of this size?
o How much is each staff member being paid?
o What benefits are provided to the staff?
o How does the doctor rate each staff member’s work, customer service and interactions with other staff members?
o Will the staff stay after the transition?
o Does the practice owner lease or own the building?
o Is the building for sale or lease and at what price?
o If you lease the building will the lease include the first right of refusal and option to purchase it?
o If the building is currently leased, will the building owner allow the lease to be assigned to you or let you sign a new lease?
After you have found a practice and are contemplating an offer you should have an accountant look over the practice’s financial information on your behalf. If you do not already have an accountant, Practice Impact will be happy to refer you to a qualified accountant with dental experience. Once you have made the decision to make an offer on a practice you will need to present the offer to Practice Impact either verbally or via email. We will put your offer into a letter of intent and present it to the seller. Once the offer has been accepted Practice Impact will guide you through the rest of the sale process-from obtaining bank financing for you to finalizing all of the sale documents. We will also provide both you and the seller with a detailed checklist of what needs to be completed between the offer being accepted and signing of the closing documents.