Purchase/Sell Dental Practice
Whether you’re a recent graduate of dental school or a dentist looking to expand or update your dental practice, you may be considering buying a dental practice. If you are retiring or simply looking to get out of dentistry, you may want to sell your practice. Overall, making any type of business purchase or sale is quite an undertaking. There a lot of variables involved, and if you’re not knowledgeable about the various business components, you could make costly errors.
As a result, it’s important that you properly prepare for such a transition. If you miss out on any crucial steps, you could undervalue your business or buy a practice that isn’t right for your needs – both of which can cause you to lose money. Avoid a mistake by following these checklists.
Buy Dental Practice
- Assemble a team. Buying a practice is not an easy task. Your focus is likely more on dentistry, not business. Therefore, it’s a good idea to gather a team of trusted advisors who can guide you through the legal and financial aspects. Consider an attorney, a CPA and even a transition consultation who can serve as your adviser.
- Make an offer. If you have thoroughly researched the practice and are happy with everything, the next step is to make an offer. A good way to do so is to submit a letter of intent. This document shows the seller that you are serious about making a purchase. The letter of intent should also include information such as what is and what is not included in the sale, the amount you are offering to purchase the dental practice and the closing date.
- Apply for a loan. After submitting your offer, you need to have money ready. Your lawyer or CPA can put you in touch with banks that specialize in lending to medical professionals. Apply to several banks and be sure to provide them with the necessary documents, which include a signed purchase and sale agreement, corporate documents and a lease agreement.
- Get insured. The bank, the selling dentist and/or the landlord may require that you have certain insurance policies in place before the sale can be finalized. Business liability insurance, life insurance, and malpractice insurance are some forms of insurance that may be required.
- Get the purchase agreement reviewed. Do you know what to look for to ensure you are getting a good deal on the purchase? Probably not. That’s why hiring a lawyer is a good decision. A dental attorney can ensure the contract is fair and make sure you understand all the details, such as contractual details, hiring and firing of staff, accounts receivable and patient records.
- Take ownership. If you and the seller have agreed to the terms of the purchase agreement, then it will be signed and you will take ownership. You will then need to tie up loose ends, such as send out a transition letter and update licenses.
Sell Dental Practice
- Review income and expenses. By trimming the fat, you can make your practice more attractive to buyers. If you can pay less for office expenses and services, you certainly should.
- Revisit your lease. This ties into the previous bullet point. Are you paying too much for your lease? If so, find ways to reduce the cost. Have you always paid on time? Have you been a tenant for a decade or longer? As a long-term tenant, your landlord may be willing to offer discounts.
- Keep the practice financially healthy. While you may already be in retirement mode, now is not the time to slow down. Keep the financials healthy until you sign away your rights to the practice. If buyers see declining revenues, they may look elsewhere.
- Redecorate. First impressions count. If your interior is dark or has not been updated in quite some time, give it a fresh touch. Buyers want something that is visually appealing. If interior design is not your strong suit, hire an interior designer. It will be worth the investment.
- Upgrade your equipment. While you may be happy with your hard copy system of patient records, technology has changed a lot in the past decade. Outdated technology is going to turn away potential buyers. Upgrade all your equipment and make sure your practice is using digital radiography. Making these upgrades will be costly, but the purchases are tax write-offs. Plus, they will make your practice more attractive.
Purchase and Sell Dental Practice
Buying or selling a dental practice can be overwhelming. There are many factors to consider to assure a smooth transition. Learn more with Wasilidas & Kulik CPA PC. Our firm is knowledgeable about how to purchase and sell dental practices. Schedule a consultation by calling (508) 458-6789 or fill out the online form.