How to Buy a Dental Practice

So, it’s almost a year already and you still haven’t reached a decision. Are you ready to buy a dental practice? Or will it be a move you’ll forever hate yourself for?

Well, good thing you’re here! There’s no need for self-loathing. We’ll gladly guide you every step of the way!


First things first, ask yourself these important questions:

  • Does the selling dentist support my professional vision?
    Will they allow you to attain your professional goals? For instance, if one of your goals is to include wellness services, will they accommodate that?
  • Do the selling dentist and I share the same philosophy in terms of quality of care?
    Transition is much easier when you and the dental practice seller share a common quality of care philosophy. Working with someone you don’t see eye to eye may not be such a great idea.
  • Is the location conducive to my practice goals?
    Location is a crucial factor to consider when you buy a dental practice. You’ll want it to be easily accessible to you and your patients. What’s more, having a short commute to your clinic helps establish you as the go-to dentist during emergencies.
  • Is the selling dentist willing to introduce me to existing patients?
    Before signing the contract, ask the seller if they’ll be introducing you to their patients. That way, you’ll be able to establish rapport and market yourself as early as possible.
  • Will I be offering the same services that were kept in-house?
    For example, your primary patients are kids but the dental practice you’re planning to buy specializes in cosmetic surgery for adults. Would you be willing to extend your practice to adults or just refer them to another specialist?
  • Will I need to replace any medical equipment?
    Whether it’s an x-ray machine or a dental chair, replacing medical equipment can cost you big bucks. Not only will you have to factor in the costs of replacement, but you should also make sure that the existing equipment is up to industry standards.

Pros and Cons of Buying a Dental Practice

Once you have all your answers, don’t dive into a decision yet. There are still upsides and downsides to talk about. It’s really crucial to know what you’re in for before committing.

Here are some of the best benefits to expect when you purchase an existing practice:

  • It improves your odds of turning a profit in the first year.
    Having an existing client base, rather than having to start from scratch, can increase your profits significantly in your first year of dental ownership.
  • You start working with an experienced staff.
    When you buy a dental practice, chances are, the staff will be part of the package. With their years of experience, you won’t have to worry about running an efficient clinic anymore.
  • You have access to existing billing and payroll systems.
    This helps eliminate a lot of hassles as you’re still adapting to having your own dental practice.
  • It saves you money and time in getting new patients.
    The previous dental owner will most likely do you a huge favor of selling you to their existing patients, especially if they like you.
  • It gives you a preview of what your profits will look like in your first year.
    This is possible when you review the profit and loss statement, as well as other financials.

While these perks sure sound exciting, you’d want to learn about the potential downfalls of buying a dental practice, too. Here are the most common ones:

  • There might be unexpected expenses.
    These can be related to updating your equipment, office systems, and dental website.
  • You might have trouble fitting in with the existing dynamics of the staff.
    Although it’s wonderful news that you already have an experienced team working for you, you might find yourself struggling to relate to them, considering that they’ve known each other for years. It might take months for you to adjust to them, and vice versa.
  • Some things about the dental practice might disappoint you.
    The selling dentist will tell you everything to get you to sign the paper. Well, not everything, but you get our point. Just don’t expect too much or you’ll set yourself up for disappointment.
  • You inherit the reputation of the previous dental practitioner.
    Taking over a dentist with a good reputation can be both a blessing and a curse. While people may perceive you as having a good reputation like your predecessor, they may also worry that you won’t be able to live up to the same standard.

Guide to Buying a Dental Practice

If none of those disadvantages bother you at all, and your mind’s 100% fixed on purchasing a dental practice, you may now proceed to the most important part of this article: Your checklist.

If this isn’t your first time opening a new practice, you might already be familiar with some of the steps mentioned below, while others might sound a bit different.

To guarantee a successful sale and transition, be sure to take each step on this checklist seriously. Then again, we already know you will.

1. Determine Your Ideal Location

The location of your dental business is one of the most significant aspects of your decision-making process. Ideally, you’ll want a place that’s easy for your patients to find, as well as one where you’ll enjoy working.

Here are four attributes to consider:

  • Demographics
    Exploring the demographics of a particular area is a great way to find out if it’s the right fit for your dental practice.  For example, if you’re a pediatric dentist, then pick a location that’s close to expanding communities. Cosmetic dental specialists will thrive in places where residents can afford their costly elective services.
  • Ease of Access
    How accessible is the clinic? Is it located in a busy area? Or is the building tucked away out of view? What about the parking lot? Will patients have to circle a couple of times to find a vacant spot?
  • Competition
    Knowing how many dentists you’re up against in the area makes it easier for you to identify the level of market saturation. You can obtain this information from the local Chamber of Commerce.

Knowing how many dentists you’re up against in the area makes it easier for you to identify the level of market saturation. You can obtain this information from the local Chamber of Commerce.

2. Start Looking for a Practice to Buy

After you’ve settled on a location, you may now commence your search for the best dental practice in that area.

Although it’s not necessary to hire a broker, doing so can lessen your burdens. You’ll no longer stress yourself out with all the research work. They’ll gladly do it for you.

Or, if you happen to know any dentists in your target location, you can ask if they know of any dental professional who’s planning to retire.

Another option is to visit dental schools and find listings of dental practices in postings or trade journals.

3. Hire a Transition Team

A dental practice broker isn’t the only professional who will assist you in the appraisal and purchase process. You’ll need a few other people in your team, such as:

  • A transition consultant who will help you analyze the practice, determine how much to offer, secure financing, and finalize the deal.
  • An accountant specialized in healthcare services who will advise you on tax considerations, as well as assist in analyzing the practice.
  • A dental attorney who will go through the sale documents and other agreements, help trademark your practice’s name, and set up your corporation.
  • A financial planner who will manage your wealth and assets.

4. Analyze the Patient and Treatment Information

Inheriting the dental practice means inheriting their existing patients and procedures.

By performing an in-depth assessment, you can decide whether you want to continue serving them as they’re used to. And, you’ll have a better idea of how much revenue you’ll be getting from the patient base.

Aside from patient demographics, here’s what you should analyze:

  • Number of new patients per month
  • Number of active patients (those who’ve had appointments in the last 12 to 18 months)
  • Consistency of patient flow in a month
  • Most popular procedures
  • Highest yielding procedures

5. Do Your Research on the Selling Dentist

Before you buy a dental practice, it’s imperative to know why they’re selling it in the first place. If their reason is anything other than retirement, you’ll need to dig a little deeper.

For instance, they might be leaving due to demographic or profitability problems, which should be your cue to start developing strategies to solve them as early as you can.

Research about the dentist’s treatment philosophy as well. Find out why patients keep coming back to them. We’re not suggesting that you should follow every step of their routine - just take note of their strong points.

Lastly, look into their cash flow and financial information, including:

  • Recent balance sheets
  • Recent profit and loss statements
  • Income tax returns dating back at least three years
  • A breakdown of employee expenses
  • Percentage of revenues used for overhead
  • Revenues broken down by procedure
  • Financial factors like the number of staff and reimbursement structure
  • Production and collection reports for each dentist and hygienist
  • Fee schedule, particularly fees that are relative to industry norms and insurance reimbursements

6. Evaluate the Facility

As with buying a new house, you need to do a site inspection.

Check if the space is appropriate and see if there’s room for expansion in the adjacent space. Learn about the lease terms and possible options to buy the property.

You’ll also need to have an independent vendor performing an equipment evaluation.

7. Make the Offer to Purchase

You’ve completed all your due diligence. You’re super confident that this dental practice is meant for you. What’s next?

Make the offer to buy it.

Or hold on just yet.

Your accountant and transition consultant should discuss first. As soon as both parties agree on a price, that’s the time you can finally give your offer.

8. Get Financing

Your transition consultant will help you secure financing, so you’re in good hands. Also, if you’re working with an accountant who’s had many years of experience, they can refer you to a local bank that offers financing.

9. Sign the Agreement and Lease

Now, here’s the moment you’ve been waiting for: The signing of the Practice Sale Agreement.

Although the agreement’s not a complicated document, you’ll need your attorney to review it thoroughly in case there are surprises.

Additionally, you will be asked to arrange the lease for the dental practice which may or may not include an option to buy.

10. Seal the Deal

Keep in mind that the amount of time it takes for the offer to close will depend on the deal. If the buyer, seller, and lender are living in different states, then it’s going to take longer, for sure.

Once the selling dentist receives the money, you may now consider yourself an owner of a new dental practice.

At the time of closing, you’ll be required to complete some tasks, such as the following:

  • Applying for a tax identification number
  • Transfer insurance policies that require contractual agreements for preferred provider status
  • Open a checking account

Are You Ready to Buy a Dental Practice?

We hope this post has cemented your decision to buy a dental practice.

We also hope that you choose Digital Resource to promote your new business once it’s up and running.

Call us at 561-429-2585 or speak to one of our specialists here to learn more.