Considering A Practice Acquisition? Here’s What You Should Know Before You Buy!
Whether you’re a new dentist or you’re just looking to expand your current practice, acquiring a dental practice can be a really great way to build your business and save lots of time and money compared to building a new practice from scratch.
But before you invest in a new practice, you’ll want to do your homework. What should you be thinking about before you acquire a dental practice? In this blog from dental accountants Tooth & Coin, we’ll go over five top factors that you should keep in mind.
1. Location, Location, Location
On the business side of things, you’ll want to consider the location of the practice. What’s around it? Does it get lots of foot traffic? How does the neighborhood look? Are there lots of competing dental practices? What are the lease terms, and is there an option to purchase the property? Is the current building well-maintained?
And on the personal side of things, you’ll be spending a lot of time at your new practice, or even living nearby, in some cases. So you’ll also want to consider nearby amenities, commute time, cost of living, and schools, depending on your situation.
2. Current Clientele And Growth Potential
It’s a good idea to learn more about a practice’s current clientele and growth potential before an acquisition. You may want to learn more about things such as:
- The average age of patients and other demographics (income, education, etc.)
- The most popular and profitable procedures at the practice
- Patient retention rate
- Average number of patients and/or procedures per month
- Past performance and anticipated future growth potential
3. Financial Information And Documentation
Generally speaking, you only want to acquire a practice if it will be profitable. So it’s important to do a deep dive into the practice’s financials before you invest your hard-earned money into acquiring it.
A dental accounting team like Tooth & Coin can help you learn more about the finances of a practice during the acquisition process. Looking at documents like tax returns, balance sheets, profit and loss statements, and other financial statements will help you get a better idea of how the practice is performing financially.
4. Dental Equipment And Technology
One of the perks of acquiring a dental office is that you will also get all of the equipment and dental technology that the practice is currently using. Because of this, it’s a good idea to make a list of everything that will come with the practice, such as dental chairs, x-ray machines, dental units, computers, software, and more.
This will help you get a better idea of the value of these assets, and identify areas where you may want to make improvements and upgrades in the future.
5. Front Office And Dental Staff
In most cases, there will be some turnover when you acquire a new dental practice. There may be some people who don’t like the way you do things, or who simply will leave after the old dentist sells the business.
But for the most part, it should be possible to keep most of the team at your new practice. And this is a good thing. They already know the practice intimately, and will be able to help during the transition to new ownership.
So for these reasons, it’s also a good idea to meet the team at a practice before you acquire it. They can give you more details about the practice, and you can learn more about each member of the team, their experience, and what they bring to the office.
Make Sure The Numbers Add Up Before Acquiring A New Practice – Work With Us!
If you’re thinking of acquiring a practice, keeping the above things in mind is sure to be helpful. But above all else, it’s critical to make sure that you’re acquiring new practices responsibly, and that they have the potential to remain (or become) profitable.
So don’t wait. If you need help with the financial side of practice acquisition, Tooth & Coin is here to help. Our team of dental accountants specialize in helping dentists expand their businesses sustainably. Contact us by phone at (877) 265-2121 or schedule a consultation with Jonathan VanHorn today, and see how we can help you grow your business.