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If you are like most people contemplating a dental transition, you probably have a number of questions about the process. For this reason, we have compiled a list of the most frequently-asked questions we hear from individuals like you. Many of our potential clients ask the same questions to acquire a knowledge base, allowing them to make better decisions. We have learned over the years that the more our clients know, the better we can serve their needs. Another obvious benefit to an educated client is that we can complete a higher quality transition resulting in increased client satisfaction.
Please look over our list of buyer and seller questions. If you have a question that wasn’t included, please visit our Contact Page to get in touch with an experienced transitions consultant. We welcome every inquiry and often place those questions in this FAQ section.
- What is a Dental Practice Appraisal or Dental Practice Valuation?
A dental practice appraisal or valuation is an in-depth analysis of a practice's cash flow. Appraisal of the dental practice reduces the time spent on negotiating the price of the practice. It also helps the purchaser decide if the price is fair and aids financing process; in fact, with a well-documented appraisal, a purchaser can get a 100% loan with only the hard assets of the practice as collateral. Some mortgage companies will pre-approve financing a practice based on a professional valuation.Back to top
- Is a Dental Practice Appraisal necessary when purchasing?
Frankly, yes. A formal appraisal based on cash flow, marketability, transferability, and various other criteria are needed for a buyer to make a knowledgeable purchase offer. In the absence of an appraisal, price often becomes the most controversial issue. Southeast Transitions has been providing formal dental practice appraisals since 1997. Items considered in the appraisal include: location, staff transferability, cash flow, included equipment, office procedures and transferability of patient records. Buyers will need this information for purchasing the practice and mortgage companies and banks routinely require an appraisal to process the loan.Back to top
- If I work in an office as an associate and later purchase the practice, how can I keep from paying the owner for additional value I personally generated?
Appraising the dental practice prior to working in the office is the only way to adequately determine the value of the practice before your contribution. Without this initial appraisal, there would be no way to determine your contribution to the practice value. This initial practice value at least gives you a starting point that is based on the cash flow and practice value prior to your employment, and is often used in future negotiations.Back to top
- When should I start looking for a dental practice to purchase?
The answer to this question depends on location of the dental practice and how focused you are on the type of practice you wish to purchase. If you are just graduating, allow about eight months to locate the practice that fits your ability and style. If you are currently an employee looking for a practice to purchase, you should begin looking at least three months prior to termination of employment. If you start your search too soon, you may be unable to purchase the practice you choose due to contractual obligations. If you start your search too late, you may be unemployed and make a poor decision based only on economic factors. Back to top
- How long does it take to close after I find the right practice?
Closing can take from one to three months, depending on the type of financing. Mortgage companies that specialize in dental practice sales often make 100% loans and can complete the closing within a one-month time frame. Banks and small mortgage companies not familiar with dental practice acquisitions can take three to four months to close the sale.Back to top
- How long should the previous owner work in the officer after the dental purchase is complete?
It depends on your comfort level with the transition process and having the previous owner work in the office. The cash flow of the practice dictates to a large extent how long the purchaser can afford to employ the previous owner. Southeast Transitions helps buyers evaluate whether the practice can afford to employ the previous owner and for how long. According to most studies, approximately 95% of the patient base is transferred to the new owner following a transition. A practice consultant will help you implement guidelines at the time of sale to ensure optimum patient and staff transfer.Back to top
- What is a fair price for a dental practice?
Like any other product, a business is worth whatever a willing buyer will pay a willing seller in a free market. However, the value of most practices is determined by what someone can afford to pay for it. If the practice can earn the income you want and make the note payments, then it's worth the price.Back to top
- What is Goodwill?
Every practice has goodwill unless it is closed down or is failing badly. The amount to pay for dental practice goodwill depends on the cash flow of the practice, its general attractiveness, transferability, new patient flow, years in practice, office lease and local economic outlook.Back to top
- Are there tax benefits in buying a practice?
Usually, you can take a tax deduction for depreciation on the fair market value of all furniture, fixtures, and equipment at a much faster rate than real estate. In addition, the non-compete covenant, goodwill and the value of training are tax deductible. Finally, most practices have deductible expenses that add to the owner's cash flow.Back to top
- Why don't Dental Practice Brokers show practice financial statements before I make an offer?
Just as you would not want your personal financial documents made available to the public, practice owners only want serious buyers to have access to such private information. Your Practice Broker will provide you with summary information including gross sales, lease information, and cash flow. He/she will assist you in drafting an offer based on that information and protect you by making the offer contingent on your satisfaction with that data upon your full investigation. A business offer to purchase simply says, "If everything I assume about this practice proves true, this is what I am willing to do." You, the purchaser, then have the right to proceed, withdraw your offer, or make a new offer based on your investigation. The seller, once he/she has accepted your offer, must stand by those terms unless you and you alone choose to alter them.Back to top
- How much do dental practice brokers charge a purchaser?
Under normal circumstances, a dental practice broker does not charge a purchaser any fee; however some special situations may require a fee. If you would like the broker to perform a buyer search for you, represent you in negotiations and closing, or assist you in the purchase of a specific practice, there may be a small fee. Otherwise, the seller pays a broker to sell his/her practice.Back to top
- I want to be in practice for myself but have no training in practice operation. Do you know of any school I can attend or course I can take to prepare me to buy my first practice?
In most cases, the former owner agrees to train you in the successful operation of that particular practice. If the seller has not already offered training, you can make it part of your offer to purchase. You do not have to be concerned that you will receive outdated or ineffectual information but rather will learn straight from "the horse's mouth." It is important to remember that any owner who offers seller financing has a vested interest in your success. No better classroom exists.Back to top
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Your Company for Dental Practice Sales
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