If you’re thinking about buying a dental practice, you may be wondering “where do I start?” Dentists don’t put “For Sale” signs in their front window, so how can you know which practices are for sale, how much they cost, and what the transition process will be like? The best place to start is with a dental practice transition specialist, such as DDSmatch, where you can view available practices and get a sense of the opportunities in the areas you are interested in. While DDSmatch represents sellers, we have a number of helpful resources that potential buyers can benefit from.
For instance, our search functions offer flexibility. You can search by associateships, partnerships, practices available for merger, or dental practices for sale. You can search by location and size. If you are logged in under your profile, you can see location, revenue, number of operatories, staff size, if they have digital radiography, if they have cone beam imaging, information on the local area, and other information to help you know whether a particular practice meets your needs.
Our algorithms will track what areas you are looking at and keep you informed of available opportunities in those areas. This means that even if you are still a dental student you can stay in touch with different opportunities and the industry conditions in your desired area(s).
If you’re starting out and not sure what you’re looking for, read our tips below to help you get started thinking about what kind of practice will best fit you.
What Type of Practice are You Looking For?
First, you need to consider what type of practice you are interested in. Are you looking as an individual buyer, to buy into a partnership, or to become an associate? Whatever situation you are in, DDSmatch Mid-Atlantic can help you find the perfect fit in Maryland, Washington, D.C., and Virginia. Here are some other things to keep in mind as you look at different dental offices.
- Specialty. Clearly, your transition will be easier and you will retain more patients if you buy within your current specialty. In addition, a general dentist with specialty skills may choose to seek out practices where their skills can add greater revenue that won’t be factored into the initial purchase price.
- Insurance. Consider insurance types and how they will affect your dental practice. Whether you process payments as a fee for service, PPO, HMO, or Medicaid, your business model is important and could determine who your patients are. If you are taking over an existing practice and plan to change how your patients pay for services, be aware that this may cause you to lose patients up front.
- Atmosphere. Each dental practice has its own atmosphere. The personality of the current owner and their staff will greatly affect the feel of the office, how well it flows, and the patients it attracts.
Sometimes younger dentists get overly concerned about the real estate aspect of buying a dental practice. In a recent interview with Dr. Howard Farran, founder of Dentaltown, Thad Miller, the founder and president of DDSmatch, explained why real estate might not matter as much as you think. “In Indiana and Louisville . . . there’s a lot of dentists who own their own building . . . 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?”
While there are certain tax benefits that can come with owning the real estate, it also creates a significant additional upfront cost. Also, just because a selling doctor is transitioning their practice, this doesn’t mean they also want to sell their real estate. That might be a separate deal that comes along after the practice transition.
Where Do You Want to Live After Buying a Dental Practice?
Big city or small town? Urban area or suburbs? You probably have an idea of the general area you want to buy a dental practice in, but try narrowing down your search based on the following criteria:
- Personal Residence: if you already own a home, or are planning on buying one, consider the commute you would be comfortable with. Owning a home that is an hour away from your practice means you could be in for a lot of time in the car. If you’re not open to that kind of commute, you may want to consider moving closer to your practice.
- Lifestyle: if you want to keep your commute to a minimum, consider the amenities you want around you. Do you like living in a rural area or do you want to be close to new restaurants and concert venues? If you have kids or plan on having kids, do you want to be in a good school district? Buying a dental practice is not something you will do often, so it will benefit you and your family to plan very carefully.
- Expansion Opportunity: if you think you may want to expand your offices to two or more locations, start thinking about that now. Buying a practice in a small town may limit your options for expansion without extensive travel obligations.
Thad Miller explains that where a doctor wants to practice needs “to be a match for how they want to practice, too.” There are significant differences between urban, suburban, and rural practices, in terms of overhead costs, potential patient base, and profitability. He elaborates that “there are more profitable practices in rural parts of the States because of the percentage of dentists per patient,…? So with DSOs not setting up in these rural areas, there’s less competition.”
Miller advises young doctors to consider “if they can handle a 45 minute drive there and back, would they rather sit in traffic or would they rather drive straight there and drive straight home. It just depends. But, 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 have to weigh how many patients you’re working on.”
How Much Financing Do You Qualify For?
Just like buying a car or a house, you are limited by financing when you buy a dental practice. Find out how much you can afford to spend and that will help narrow down your search. How are dental practices valued? Dental Economics has an excellent blog post explaining the basics of practice valuation, this is a good place to start.
Our team at DDSmatch Mid-Atlantic offers trusted, certified dental practice valuations conducted by a top-rated, third-party accounting firm. In addition to this practice valuation, we also offer a clinical appraisal through Dr. Charles Blair’s Clinical Treatment Analyzer that helps identify opportunities to increase revenue that the selling doctor may not be currently maximizing. To perform your due diligence as a buyer, you must review all of this information carefully and gather all the information available.
Although we don’t represent buyers, we can help refer you to trustworthy dental practice lenders. Miller explains that DDSmatch 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.”
In addition, Dental practice lending has historically been regarded as a favorable investment by knowledgeable lenders due to extraordinarily low default rates. There’s at least one thing that hasn’t changed, despite the upheaval in 2020.
However, banks will still want to know that the buying doctor can keep up with the production schedule necessary to cover the costs of the practice and service the loan. Dr. Howard Farran of Dentaltown, observes that “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.” Miller elaborated that the 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.”
When you are buying a dental practice, one key thing to keep in mind is how you will transition into your new role. This is different for each doctor, associate, or employee. For instance, the doctor who is transitioning out of the practice may stay on after the buyer takes over so they can help with the transition. Other doctors decide to leave as soon as the papers are signed. Each type of transition has pros and cons that you should think through before beginning your purchase. A clearly communicated transition process is key to the ongoing success of a transitioned dental practice.
Buying a Dental Practice is Easier With Expert Help
While it is possible to complete a purchase without the help of a transition representative, it can be a common area of regret. Miller insists that “the buyer needs a team of advisors” just as one would have in a legal or real estate transaction. He explains:
“It’s important to build your team. And most of the people that I encourage them to work with, they’ll sit down with [the potential buyer] in advance and they won’t charge them to talk about how they do things. They don’t need them until there’s an opportunity . . . Even if they’re not ready to buy right now, they need to build their team.
“I had a great practice that was in high demand, we had six or seven people that wanted to buy this practice. And the dentist who took my advice—that had a team—he sat down with the selling dentist who needed to sell. He was actually ill, he had cancer and he needed to sell, but he had a great practice and he wanted it to go to the right person.
“The person who sat down and said, “I’ve got an attorney in place, I’ve got an accountant in place, and I’ve got my bank financing in place. I would love to buy your practice,” that’s what sold my seller . . . Because they were ready. Because he knew he could move quickly, he knew he wasn’t just kicking tires, he knew he was ready.”
Buying a dental practice is a complicated transaction, and this kind of support is exactly why DDSmatch Mid-Atlantic clients enjoy such a positive process. There are many complex financial and legal aspects that require the close attention of an experienced specialist. These advisors will be able to identify potential problems, and opportunities, that you won’t see on your own. They’ll be able to guide you on how to be thorough in your due diligence so that you can be certain that you have all of the information you need, and properly understand it, to make an informed decision. In the end, you avoid costly oversights and errors that are commonly missed.
DDSmatch Mid-Atlantic Has Available Practices Right Now
While our primary responsibility is to our clients, the selling doctors, our goal is that when the transition process is complete, everyone is happy with the outcome and the buying doctor is thriving in their practice. Remember, you aren’t just buying office space, equipment, and files. You are buying a legacy that the selling doctor has worked hard over a lifetime to build. It means a lot to our clients to see their practices continue to be an important part of their community, and even to grow beyond what they built themselves.
The best way to achieve that kind of success is to be fair and transparent, and to find the right match between a buyer and seller. Here at DDSmatch Mid-Atlantic, the buyers we talk to trust us to give them the information and resources they need to make the right choice about what practice to buy. We’d love to help you, too.