When buying a dental practice, this most commonly asked question and one that requires the most effort to answer. While there are many “rules-of-thumb” (e.g., percentage of gross collections or multiple of net income), those historical measures only provide a broad estimate using industry assumptions. We approach each practice appraisal as a unique engagement. We use multiple approaches in combination with our 30 year industry experience to arrive at a valuation that fair and industry consistent.
How long will it take when buying a dental practice?
In general, it typically takes 2 to 4 weeks to review the seller’s appraisal and evaluate the practice, and then it takes 2 to 4 weeks to negotiate the transaction, obtain funding, draft / review closing documents and close the transaction. Much of this is dependent upon third parties, like other brokers, banks and lawyers. However, having an experienced practice broker not only shortens the typical transaction time but more importantly improves the overall process, leading to a more successful transaction.
What are the overall steps in the process?
- Obtaining and reviewing the data / appraisal from the selling dentist (agent) and an on-site visit.
- Determining if the practice is the right fit.
- Negotiating the purchase price and terms.
- Executing an earnest money agreement.
- Due diligence, obtainment of financing and document preparation.
- Closing and funding.
After buying a dental practice, how long should the transition be?
Most often the selling dentist remains with the practice to provide post-closing transition of the staff and patients to you, the purchasing dentist. Typically this time period ranges from one to six months. Longer. However, this is a very, very key point that must be thoroughly vetted and decided pre-closing. The key point is that you have sole discretion of when the selling dentist should leave, or if necessary, how long the selling dentist may contractually remain.