Buying a Dental Practice


6 Facts You Need To Know
Before You Buy A Practice

By Philip Kempler, DMD, Broker

I am constantly amazed how many dentists call me inquiring about purchasing a dental practice and when I ask them what they are looking for, they answer, “I’m flexible”.  What that tells me is that they really don’t have a clue.  I hope that the following information will give you some ideas on how to clarify the important decisions you need to make before purchasing a dental practice.

First and foremost is location. If you were buying a house, you wouldn’t go to a realtor and ask to see houses in California.  No, you’d break it down to either a city you live in or a city that you’d like to move to.  It’s the same with a practice.  I have had to sell numerous practices for dentists who in a relatively short time were, “sick and tired of commuting an hour back and forth to work.” Look for a practice within 30 minutes of your home or the city you plan to live in. That’s important for several reasons.  One, emergency patients can be a great source of practice builders.  But if you live too far from your office, emergencies will be more of a hassle than an asset. Two, being close to your office gives you more time with your family, reduces your daily stress, and makes it easier to complete paper work back at the office, if need be.  Three, an office close to home saves gas and wear and tear on your car.

Second, pick a practice that you think you would be comfortable working in.  Specifically, if you enjoy a slower paced environment and want to see only a few patients a day, don’t even consider a practice that sees 20 patients a day.  Likewise, if you enjoy the fast pace of being on roller skates all day, you won’t be happy in a small practice. This sounds obvious, but I see it all the time.

Third, choose a practice with the kind of patients you like to treat.  Eye specialists flock to Florida because Florida has an aging population that need and see value in Lasik and cataract eye surgery.   If you enjoy doing implants and cosmetic dentistry, a college town would probably not be a good fit.  If the typical patient is in a lower socioeconomic class and only wants “necessary” dentistry performed, be sure that’s okay with you.  On the other hand, if you want to do ideal dentistry and have a high acceptance rate of your treatment plans, plan accordingly.  Likewise, if the majority of the patients are of a particular ethnic group, make sure that is acceptable to you.

Fourth, dont get hung-up on the price of certain overhead items as long as the entire picture looks good.  I had a buyer all bent out of shape because the rent was $6,500 per month, although the total overhead was only 59% and the dentist was netting $24,000 per month.  Look at the complete financial statement.  A good Broker should be able to help you get an honest evaluation of the anticipated net income if you don’t have an accountant who is familiar with dental practices.

Fifth, don’t get fixated on a maximum or minimum purchase price.  Find the practice that suits you best and once you find it, ask the Broker to show you how the price was determined.    And even if you are sure that you can crank more dentistry out of the patient charts you reviewed, the price should be based solely on the numbers, not on potential.  As far as the appraisal goes, it should be done according to one of the accepted mathematical formulas used today, not simply just a percentage of production, which in today’s dental market, has little or no bearing.   No practice that is priced fairly should be out of your range.   Too many dentists tell me they only want to spend $200,000 on a practice.  But in the next breath they say,  “I want to take home $100,000 per year, have new equipment, and have digital x-rays.”   That is not going to happen.   You have to be realistic and look at a lot of practices.  Don’t be afraid to spend $300,000 or even $400,000 to buy the right practice as long as there is sufficient cash flow to service the debt and provide you with good take-home pay.   An experienced Broker, or good dental accountant, will be able to help you make that determination.

Sixth, all Brokers are not the same.  Just like all dentists are not the same, so too with dental Brokers.  It is important that you get individual attention and talk to the same person each time you call the Broker’s office.  Don’t settle for salespeople.  Be sure your Broker knows not only about selling a practice, but also about Buying a practice.  He or she should have a working knowledge of how a dental office operates and  know the practice inside and out.  You can’t go wrong if you choose a Broker that treats the transaction like it’s his own.

FREE Download – An Interview with Dr. Kempler     

“When I sold my first practice I learned the pitfalls of dealing with a Broker that is NOT also a dentist.  That experience was a costly one.”  Don’t buy or sell a practice until you listen to the informative interview on audio cast below. Paula Thomas, VP of Marketing at Thomas and Fees Accountancy Corporation, and Dr. Kempler discuss the most critical aspects of buying or selling a practice.  Listen  NOW or DOWNLOAD – on your iPhone or Android device.

Philip L. Kempler, D.M.D. is a retired dentist and Broker at Thomas & Fees Practice Sales.  He has over 25 years’ experience.  Because he owned a very successful practice for over 15 years, Dr. Kempler has a unique understanding of the ins and outs of practice purchase and sale.
Philip L.  Kempler, D.M.D., Broker – Phone: Days: (714) 544-4341 – Evening: (949) 362-4749 – Fax: (714) 731-7296 Or visit us on the Web at: E-mail: Mailing Address: Thomas and Fees Practice Sales – P.O. Box 2023 – Tustin, CA 92781-2023

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