If you’re in the market to buy a practice, the first step is to create a dental-specific team of advisors to guide you through the purchase, transition process and the operation of the practice after purchase. Your team should include the following members who each have dental-specific experience in their fields:
- Dental-Specific Attorney: Law school doesn’t necessarily teach lawyers specific expertise in a particular field. After law school, a lawyer essentially becomes an apprentice in a particular field where he or she gains the requisite knowledge of how to protect and advocate for a certain type of client. In your situation, you want an attorney who understands dentistry and also has experience in dental practice purchases, so common issues and terms can be addressed and negotiated in a reasonable manner. The attorneys on each side should not be excessively adversarial, since the Buyer likely needs the Seller’s goodwill after the sale in order to help facilitate the patient transfer. There are certainly issues where the Seller and Buyer have conflicting interests. Each side should have their own attorney.
- Dental-Specific Financial Advisor: Before the purchase of a practice, a dental financial advisor can help put you in the best position to acquire a practice purchase loan. During the purchase process, a financial advisor who also acts as an insurance agent is very helpful in securing all of the different types of insurance required by the bank and by business owners. After you purchase the practice, your financial advisor can help you achieve your financial goals and ultimately map your path to a comfortable retirement.
- Dental-Specific Lender: There are few dental-specific banks that focus on dental practice purchases—usually through dental divisions that are separate departments in much larger banks. This is not the small business administration (SBA) division, rather it is a specific division for dentists. Each area of the county has a representative that will be able to assist you through the approval and underwriting process. A good rule of thumb in the current economic environment is: if a bank requires a down payment by you to purchase the dental practice, then you are likely at the wrong bank or dealing with the wrong division of the bank.
A loan through the dental division is likely cheaper and quicker, which should mean more money in your pocket.
- Dental-Specific Accountant: Your accountant will likely be your most important advisor, as he or she will play many important roles throughout your career. The accountant will be able to appraise and value a potential practice purchase. This negates the need for a more formal appraisal, which would cost a lot more money. In order to ask for a lower price on the practice purchase, you will need a valid reason.
After the purchase, besides preparing your tax returns every year, your accountant will be able to track your collections and expenses and be able to pinpoint areas where you can make your practice more profitable.
~Gary Baumwoll, Esq.
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