How to Use a Dental Practice Purchase Checklist?
Dental Practice Purchase Checklist
Dental Practice Purchase Checklist | Even if you have been running a dental practice for years, buying a new practice can feel challenging. It’s an overwhelming experience for new buyers too. You may look to buy a new dental practice for a startup, expansion, merger, or acquisition.
Let us help you understand the process. We have prepared a dental practice purchase checklist for you. It will help you learn the key steps in the process of buying a dental practice.
Reach Out to Professionals
Buying a dental practice involves financial, legal, and managerial aspects. All of these issues require expertise. Seeking help from a relevant professional can make the process easier along with a Dental Practice Purchase Checklist.
Find a dental CPA that offers expertise and experience in handling financials related to buying/selling a dental practice.
Dental Business Broker
Choose a CPA that can offer you the services of a dental business broker as well. Also, consider a Dental Practice Purchase Checklist.
You must also consult a dental attorney to avoid legal complications. You can ask your dental CPA to help you chose the right person too.
Evaluate Options and Make an Offer
Evaluate different options by consulting your partners for the process. Once your team is satisfied with a potential seller, it’s time to make an offer.
Your Dental Business Broker and Dental CPA can work closely to help you make an effective offer and negotiate the price.
Submit a Letter of Intent
A letter of intent will be your formal offer and proposal to the seller. You can agree on some key points here to make the process smoother for both parties.
Here are a few key points you should include in the Letter of Intent (LOI).
- Make the letter of intent “non-binding” except confidentiality and no-shop points.
- Offer to purchase the structure of practice and not the ownership of the seller’s company.
- Price and payment terms.
- Accounts receivables /payables and excluded assets.
- A clause on the post-transition period.
- Confidentiality and exclusivity clauses.
- A clause on contingencies should you fail to obtain bank financing for the transaction.
Apply for a Practice Purchase Loan
You can apply for pre-approval of bank financing for the dental practice purchase. You can seek the help of a professional dental practice lender. Make sure to explore different options here.
Lenders and banks offer different financing rates for different credit scores. Try to secure the best loan deal here as it will have long-term implications for you.
Shop for Practice Insurance Policies
Your lender or bank along with the seller may require different insurance policies. You may also require insurance policies for legal compliance to run the dental practice.
Some key insurance requirements may include:
- General business liability insurance
- Property insurance
- Malpractice insurance
- Life and health insurances
Review the Sale Contract
You can become a buying party as a sole proprietor or as a corporate entity. You should consult the Dental CPA here to evaluate the best possible option for you. Each entity type comes with its pros and cons.
Then, you can consult with the dental practice attorney to review the purchase contract. Make sure the purchase agreement is consistent with the letter of intent.
Sign the Deal and Take Ownership
Once your team has reviewed the purchase agreement, it’s time to sign the deal. In the following phase, you should secure possession of the dental practice property.
At this stage, ensure to review the lease deal with the landlord. However, if the lease is expiring, you should contact the landlord to renew the lease as soon as possible.
Also, ensure to take possession of the property in good condition and specified terms.
Write a Letter of Practice Transition
You should formally inform the landlord, patients, staff, and other stakeholders of the dental practice about the transition.
Furthermore, writing a letter of practice transition can help you formally announce the change.
Post-Closing Transition Period
Your seller might have agreed to work with you for a while in the post-closing transition period. In addition, you can use this period to hire new staff or retain the existing employees.
Also, during this period you can work with the seller to figure out any adjustments for ongoing costs such as lease payments, utilities, supplies, and overhead costs.