Adding A Practice

We discussed previously the benefits of acquiring an additional practice, adding to your existing. The greatest benefit is increase in your net. For numbers, if you are doing $1M and you purchase a $500K practice, you should be adding 65% of the $500K as net to you if team is at 20%, lab is at 10% and supplies are 5%. I thank you for the many inquiries for help I have received on price, location, value, staff and then asking, “what’s the next step?”

Each city, purchase and selling dentist is a different story and requires different answers. Yet, there are some common questions, which can aid your journey.

In evaluating a practice, find out the patient flow and the cash flow. Least important to you is the building and the facility. Selling Doctors are sensitive to your words on their equipment so make no comments out loud.

How long has the practice been for sale? Does the present staff know Doctor has practice for sale? If staff knows, the whole town knows and his NP numbers will drop. Best if it is kept secret as it is too big a story for team to keep silent.

Find out the seller’s plans. If he is younger than retirement age but seeking a buyer because he needs the money, why would you buy? He could stay indefinitely (think 20 years) and how could there be net for you in a one-person practice?

You need a 12 month profit and loss, three years of personal and business tax returns, a list of the equipment and a copy of the lease.

We have evaluated practices where the owner wants to sell outright and leave town (best scenario). Some selling Doctors are not ready to leave and want the purchase price and ability to stay indefinitely (worst scenario for you). We have even seen practices where selling Doctor is set financially and just wants his patients to have good care. The price can be as much as a hygiene visit (perhaps $150) for each patient who is seen in the purchasing Doctors practice.

Don’t assume you know everything and don’t make any promises until you have all the facts. If the facts (tax returns and P/L statements) are not forthcoming, you may not want to pursue this purchase.

What is the right thing for you? Again, you need someone with dental practice purchase experience to watch out for you and help you find the right purchase.