Every so often, Professional Transition Strategies hosts a webinar for buyers to learn more about the transition process. On February 13, a webinar geared toward buyers detailed the steps and options when considering buying a dental practice. Here are the key takeaways.
Decide where you want to go
The most important decision you can make is to choose a location for your future dental practice since dental practices are hard to move. Your decision should be based on prospects from brokers and demographic reports, as well as building type, such as retail, office condo, high-rise building, hospital, medical/dental complex, or stand-alone building.
Build an advisory team
Based on the type of transition you wish to pursue, a good advisory team will make the whole process painless and help achieve the goal of 99.7 percent success rate for a loan. Start with getting prequalified before submitting all the paperwork needed for approval. A good broker cycles through banks based on location and deals from clients, as well as gives back any kickbacks to the client or local charity.
Practice due diligence
Your advisory team will help guide you through the auditing process, including charts, equipment, technology, and finances, after first completing a prospectus and submitting a letter of intent outlining the purchase price, close date, and details for after the transition. This will then help to calculate the return on your investment.
Know your deal-breakers
After finding the practice of your dream and leveraging your team in the due diligence, auditing, and contract processes, you’ll want to weed through the advice to learn what your deal-breakers are. Fraud being the most obvious, the list goes on to include equipment or technology in disrepair, unacceptable quality of dentistry, and any other aspects that can’t be worked out contractually or financially.
Sign the contracts
A proper attorney will help you sign on the dotted line with confidence while helping you to know what you’re looking for. For example, an asset/stock purchase agreement will include details about a noncompete, rework, liens and liabilities, accounts receivable, and the allocation of purchase price between goodwill and assets. Other paperwork will include an operations agreement, real estate, seller-carried financing, and an employment agreement.
Close the deal
Remaining items include the bank’s final loan approval, setting a closing date, and signing the documents. What’s more, you’ll want to verify that you are credentialled with all insurance companies you want to keep and set up your bank account with a copy of your bill of sale so you can deposit checks
made out to the seller in your account.
Don’t change a thing
It can be easy to get excited and want to overhaul everything to make it your own as soon as you take over a practice, but the best advice is to wait at least six months before making any changes after you’ve had a chance to debrief the transition with your adviser and learn which changes actually need to be made and when.