9 Steps To Buy

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Step 1

Before You Buy

You’re probably ready sooner than you think

A lot of dentists say they want to own a practice, but instead of data they talk about their feelings. While understandable, it can be an expensive mistake. Instead of hard data, numbers, or statistics they say things like:

“I don’t feel ready.”

“I feel like I need to practice a little before I settle down into ownership first.”

“I feel like I need to get my student loans under control, and then I’ll be ready to own a practice.”

Feelings are important. I never want to diminish the importance of someone’s feelings. But, let me give you some perspective on what it actually takes to feel ready to own a practice. With some education and additional information, you might feel ready a lot sooner than the average dentist.

Your To-Do List:

  • Have at least one year experience with strong production history
  • Have the required cash
  • Have a clean credit history and a score over 680

Step 2

Find A Practice

Overcome common obstacles with the right tools and find a practice that you are excited about.

Finding a practice for sale is usually the most time-consuming and frustrating part of buying a practice. Hoping that the perfect practice will fall into your lap is not a great strategy. But with dedication and the right techniques, you can position yourself to buy a practice that will give you a long career of stable, lasting income. Use the resources on this page to find out the best way to talk to brokers and use them in your search, and how to build a network of other dentists that will have sellers, who know you want to buy, coming to you first.

Your To-Do List:

  • Know your Perfect Practice Profile
  • Build a Network of Dental Professionals
  • Find a Practice You May Want to Buy

Step 3

Practice Purchase Analysis

Take a deep dive into the dental practice you are considering and assess the opportunity objectively.

Just like in Step 1, numbers are king here. If you know how a practice is doing for its current owner now, you’ll know how well it may do for you in the future. Your analysis should look at everything from collections to staff costs to equipment age, and everything in between. Luckily, you don’t have to do all the hard work. Eventually, a thorough practice analysis requires three parties: you, the broker or agent, and the lending bank. But it starts with you and your accountant giving the practice a hard look.

Of course, there’s more to a practice than its numbers. Use the resources below to learn more about analyzing a practice, both quantitatively and qualitatively.

Your To-Do List:

Step 4

Letter Of Intent

Ready to make an offer? The letter of intent can set the stage for a smooth transition.

The Letter of Intent is a vital part of purchasing a dental practice, because it sets the stage for the rest of the process. Negotiations, and the transition itself, will go more smoothly if the LOI is done right. Use the resources on this page to learn more about what should be included in your Letter of Intent and tips for making it as effective as possible.

Your To-Do List:

  • Submit the Letter of Intent
  • Negotiate Terms

Step 5

Bank Financing

Once your letter of intent is accepted, it’s time to secure financing from a bank.

As it seems to often be the case, dealing with banks is one of the more arcane and difficult parts of the practice purchase process. Navigating documentation requirements, deciphering the language and formatting of loan offers, knowing which banks to talk to, deciding how many banks to approach, it all gets to be a lot to handle. Heck, I have an MBA in finance from a top 5 program and I still find this stuff to be painful.

Luckily there are some ground rules to follow as you start the process of securing a loan for your dental practice. In the resources on this page, I go over the basics of dealing with banks and securing the best loan you can. Ultimately, it pays to have a professional in your corner here, so don’t hesitate to reach out on my contact page if you have any questions about the process.

Your To-Do List:

  • Start the Application Process with Selected Banks
  • Negotiate and Select the Best Loan Offer

Step 6

Due Diligence

Dive deep into the practice, inside and out, to be sure you know what you’re buying.

Buying a dental practice is one of the two biggest purchases you’re likely to make in your entire life, the other being a house. But the two are not as similar as you might hope. When you purchase a house, there are plenty of well-known and well-defined safeguards in place to make sure you know what you’re getting into. When you buy a dental practice, though? Let’s just say that it’s much easier easier for surprises to pop up if you don’t don’t do proper due diligence.

Use the resources on this page to understand what due diligence means, the difference between financial and in-person due diligence, and why you won’t go through the process alone. In fact, navigating due diligence is a big part of what I do as a buyer’s coach, so give me a call if you have any questions about this important step.

Your To-Do List:

  • Visit the Practice for In-Person Due Diligence
  • Complete Financial Due Diligence

Step 7

Legal Documents

Understand the legal documents that will legally transfer the business to you.

Do you really need an attorney when you’re buying a dental practice? Yes. Definitely. Absolutely. And every other word that means “yes.” Having an attorney during a dental practice purchase is about two things: managing risk and managing complexity. As we learned in Step 6, buying a dental practice comes with lots of potential pitfalls. An attorney will help you avoid those.

The natural follow-up question is what kind of attorney you should seek out. Do you really need to hire a dental-specific attorney? Again, the answer is an unequivocal “yes.” The resources on this page will go through a few of the basics of how to choose and how to use an attorney in your practice purchase process.

Your To-Do List:

  • Select a Dental Attorney
  • Open Your Business Entity
  • Negotiate and Finalize Legal Documents

Step 8

Pre-Ownership Checklist

As the closing date approaches, there are many steps needed to prepare for business ownership.

Credentialing. Insurance policies. Your support team. There’s a lot to consider as you prepare to make the transition into ownership. How will you navigate your relationships with the staff — soon to be your staff? As a buyer’s coach, I’ve seen a lot of rough, rocky transitions, as well as many smooth, simple ones. What’s the difference? Use the resources here to learn more about what to do as your prepare for ownership. And if you use me as your transition coach, I’ll ensure that you’re well set up for success.

Your To-Do List:

Step 9

Close On Your Practice

It’s the moment you’ve worked so hard for: walking through the doors of a dental practice that you own.

This is it! You’re there! After all the hard work, the tough decisions, the documents reviewed and signed, you’re ready to take the keys and walk through the door of your very own dental practice. It’s not quite time to rest, though. You’ll need to sign a few more things during closing, including banking and legal documents. You’ll also need to be sure that the finances you need for operation are ready and accessible.

And after all that, once everything is dotted and crossed and signed, there’s still one last thing to do: celebrate. You’ve earned it!

Your To-Do List:

  • Sign Legal Documents
  • Sign Banking Documents
  • Ensure Working Capital Funds Are Accessible
  • Celebrate!

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Read through our articles to learn more about the 9 Steps To Buy.