Practice acquisition is a complex process. Many times a great practice will not be a great practice for you. The practice must be in a desirable location that will fit the lifestyle of you and your family. In addition, the practice will meet your philosophy of practicing dentistry both clinically and from a business perspective. Even though all of this sounds easy many times you must stretch to find the best practice for you based on inventory in the marketplace. This may mean the difference between being patient while looking for a practice and buying the wrong practice simply to escape from your current uncomfortable situation. This process does take time but after a while you will know what is and is not a good opportunity for you.
How do I determine a good buy? When is a practice a turn around and when is it too far gone? When do I know that this is the perfect practice? How much is too much to pay for a perfect practice?
There is no such thing as the perfect practice but great practices located in great locations sell in days and for a premium and very few come available each year. The reality is that each practice has its imperfections. Everyone would like to buy a "perfect practice" with little risk for 50% of last years gross where the seller would like to stay and work for 25% of his production for years to come to mentor you and ensure your success.
Since perfect practices are hard to find buyers should look for practices with good value. This may or may not include practices that have recently gone into distress or are in good areas but have not been worked to their full potential.
The reality is that both of these scenarios have an equal amount of risk. How do you know when a practice is peaking and cannot sustain the current revenues without an influx of new patients? How do you know when a distress practice is too far gone and it will take too much capital to revive the practice? What happens if the practice does not make money for a year? Are you prepared for this?
Our suggestion would be to find a middle of the road practice with good cash flow that matches up with your philosophical views. "A sleeper". Now you are neither fighting to stay at the top or to keep from drowning. If you ever plan to purchase a practice that has no drawbacks or downside, do not buy it. Every practice has both potential and problems.
Look for a practice where you can make improvements and maximize the returns. Do not get too wrapped up in the equipment because with good revenue you can change equipment much easier than changing the philosophy of the practice (converting a Medicaid practice to a Fee For Service practice). Cash is king and if the practice is making good money then you most likely have a good opportunity.
