You’re ready to start the dental practice buying process. But how? Before getting the keys turned over to you, there are a few steps you’ll need to follow first. Here’s what you can expect from the transition process.
Providing your net income, stress, and how much debt you can handle to your bank will help gauge your debt-to-equity ratio, debt-to-income ratio, and credit score.
Make an offer
While approval by the bank will be dependent upon the type of practice you are considering, getting pre-qualified before making an offer will give you a ballpark for what you can be backed for financially.
Perform a practice analysis
Allowing adequate time for a practice analysis—sometimes as long as a year—can lead to a better understanding of the type of fit for your qualifications, both personal and financial.
Work with a broker
Present letter of intent
The official offer letter is not actually a legally binding document but rather expresses your intent to follow through with the transaction.
As with any private sale, price, terms, and closing date are all on the table between the two parties.
Initiate due-diligence process
Getting all your advisers in one place to review the financials and various aspects of the transition will leave little room for error in the long run.
Outline asset purchase agreement
In a straight buy-out, it’s important to outline what assets are included in a practice—most notably, the equipment.
Assess operating agreement
In the case of a partnership or merger, it’s important to determine who is going to pay for marketing, any staffing conflicts, and whether the doctors will be paid based off collections or a percentage of the practice.
Complete practice loan
This is where all the terms and conditions that need to happen in order for the purchase and sale to go through, including timeframe of sale and final asking price.