Three Questions for Dental Practice Brokers Before You Buy
When approaching a dental practice sale, there’s a lot more to consider than when you’re buying a house. We’re talking about your livelihood, so you need to know the right questions to ask — before negotiating the price — to avoid getting stuck with a dead end practice.
- Ask for detailed financial information.There are a lot of numbers your lender is going to want to see before they give you a loan. This data will also give you an idea of the health of the practice. Ask for at least the previous four years of records including income by month, taxes, rent, payroll, benefits, utilities, and contributions to retirement plans. You’ll also want to see current accounts payable and receivable and pending paid vacation time. Dental practice brokers should have all this information ready by the time they list a practice.
- Are equipment and systems up to date?List price in a dental practice sale ought to reflect the age of equipment as well as the cost of upgrading it. Likewise, if the charting system and other software are outmoded, you need to consider the cost of replacing them and retraining staff on new systems and equipment. Ask the dental practice broker for records on the equipment and programs so you can determine how soon you’ll need to replace them.
- Will there be continuity with patient base, prices, and staff?Taking over a practice is hard enough without rebuilding from the ground up. If the current owner has reduced hours before retirement, it may take time to fill your schedule. If you need to raise prices immediately to get them up to market levels, you’ll have difficulty retaining patients who don’t know you yet. If the staff all leave with the previous owner, who’s going to train new employees, not to mention the new owner?
Ask these questions early so you don’t waste your time in needless negotiation. Hopefully these questions will help you avoid hidden costs in buying a dental practice.
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