How to Find a Dental Practice for Sale
Finding a dental practice for sale is simple, but it’s not necessarily easy. Sort of like getting in great physical shape. You’ve got to put in the work, but the work is fairly basic.
contact us Work with UsFinding a dental practice for sale is simple, but it’s not necessarily easy. Sort of like getting in great physical shape. You’ve got to put in the work, but the work is fairly basic.
contact us Work with UsLast week, we got a call from a dentist in Houston. The conversation went something like this:
Dentist: There are no practices for sale in this entire city. I’m fed up with looking and thinking about doing a startup from scratch
Brian Hanks: Hold up. You said Houston?
Dentist: Yeah.
Brian Hanks: Houston, as in, the fifth largest city in the US.? Population six-and-a-half million?
Dentist: …Yeah?
Brian Hanks: Oh, there are plenty of practices for sale. What have you done to try to find them?
After some prodding, Brian learned that the dentist had done two Google searches, browsed a couple of broker sites, and that was it. He had no network of dentists to talk to, hadn’t found a broker who would help, and was totally stumped.
He thought that others had done this work already, and that there would be a handy list online where he could peruse dozens of potential practices to buy. No such luck; that list doesn’t exist.
Let’s dive in and look at how to find the perfect dental practice. Once you find it, if you want help with due diligence, negotiation, valuation, financing, or closing on it, our experts are here to make the process quick and seamless.
Let’s get into what’s involved.
Buying a dental practice could be one of the best decisions you ever make. Owning your own practice can lead to independence, control over your destiny, and big rewards.
Before you take on more debt and responsibility, it’s important to fully understand what your personal goals are and to get your finances in order.
FYI, you may find our 27-point dental practice acquisition checklist handy.
Before buying a dental practice, carefully assess your financial situation. Seek guidance from a personal financial planner or a dental practice purchase consultant to strike a balance between your personal goals (e.g., buying a home, paying off student loans) and your professional aspirations.
Here’s what you need to do to get your finances in order before looking for a dental practice for sale:
A great dental practice is not just about advanced equipment or top-notch service. It’s also about being in the right place at the right time. Do you want a dental practice located in a busy, central location or in the quiet suburbs?
Here’s what you should consider in a dental practice location.
First, we have easy accessibility. You want your patients to find your practice without any hassle. If your patients have to navigate a maze to find you, it’s likely they will take a wrong turn and end up somewhere else. Accessibility isn’t just about being easy to find; it’s also about parking, proximity to public transportation, and overall convenience for your patients.
Second, we have excellent visibility. Ever heard of the saying “out of sight, out of mind”? It applies to dental practices, too. Your practice needs to be visible to passers-by, almost like a beacon, attracting new patients and reminding existing patients that it’s time for their next visit.
Think of your practice as a lighthouse and your patients as ships. In the ocean of bustling city streets or sprawling suburbs, your lighthouse needs to shine brightly enough to guide the ships safely to harbor.
By strategically choosing the location of your dental practice, you can position yourself for a larger patient base and long-term success in the industry. Close proximity to other healthcare facilities, schools, or business centers can provide an excellent opportunity for growth.
Analyzing factors such as population size, age distribution, income levels, and oral health trends can help gauge the demand for dental services and identify target patient groups. Assessing the competition and what they offer can also help differentiate your practice and cater to unmet needs in the market.
A modernized office space located in an area with high demand and limited competition can attract patients seeking convenience and quality care. By aligning the patient demographics with market demand and ensuring the practice is located in a strategic area, you can position yourself for a thriving dental practice with a steady influx of patients.
Brian helps buyers like you navigate a proven process to get it ight
When looking for practices that might be for sale, you have two routes you can take.
You can sometimes get connected with a good deal through a broker, but we recommend you spend only 20% of your time talking to brokers (see the next section for where you should be spending 80% of your time).
Here’s what you should look for in a dental practice broker:
Remember to trust your instincts and choose a broker who demonstrates professionalism, expertise, and a genuine interest in helping you achieve your goals. And, if you need help parsing through offers, Dental Buyer Advocates is here for you.
When looking for dental practices to buy, brokers represent a small percentage of available deals. The number of dentists thinking of retiring–but who haven’t listed with a broker–is just so much more than the number of dentists who have officially put their business up for sale.
Snagging one of these “off-market” deals opens the world up to you. But it’s also a lot of work.
Reaching out respectfully to dentists is as simple as emailing, networking, sending mailers, or speaking to them one-on-one. Instead of going straight for the kill and asking the current owner if their practice is available for purchase (this won’t work, I promise), try to make a genuine connection.
There are a lot of ways to make a connection with dentists, and it doesn’t really matter which you use. The goal is the same for all of them: make a genuine connection with older dentists who are nearing retirement. Here are some ways to do that.
The most common ways to do this sort of outreach are with mass mailers and targeted mailers. Mass mailers are typically letters or postcards with a picture and information about the potential buyer sent to as many (usually hundreds or even thousands) dentists as possible in a specific geographic area. Ask, “Any chance you’re looking to sell your practice?”
Targeted mailers are close to the same thing, with a more personal touch added to what is usually a much smaller group of dentists. Keep track of where you’ve sent the mailers and who has responded.
Do your best to make a personal connection with other dentists through sincere compliments and genuine questions rather than simply asking if their private practice is for sale.
Consider the following approaches:
Which version would you be more likely to respond to? Most dentists would respond to the former.
The dental profession is very much like a large, interconnected family. You know each other. You talk. You share. This can be a gold mine when you’re in the market for a dental practice.
Now, when I say “in-person networking,” I’m not just talking about formal networking events, although those can certainly be beneficial. I’m also talking about being an active participant in your dental community. Attend study clubs, society meetings, conventions, and CE courses. Don’t forget to mingle at social events. Be open about your desire to buy a practice and see how the information starts flowing your way.
When you network, don’t just focus on other dentists. Reach out to dental reps, bankers, brokers, equipment vendors, or anyone with a finger on the pulse of the local dental scene. These folks often know which local dentists are considering retirement and may even be friends with those dentists. Don’t hesitate to ask for an introduction.
Check out our guide on what to say to dental professionals at a networking event for some great ideas on how to connect.
So get out there and start shaking hands and having conversations. In-person networking can not only help you find the right practice to buy, but it also helps build the relationships you’ll need to make that practice thrive. Always remember, the more people who know you’re looking, the more leads you’re likely to get. And that’s just smart business, no matter how you drill it.
Emails are a powerhouse tool when it comes to digging up opportunities in the dental practice market. It might seem a bit old-school with all this social media jazz around, but I assure you, it’s a top-notch strategy if you’re out to buy a dental practice.
Use the same approach as with mailers. In fact, think of these as—wait for it—electronic mailers. Personalization and warmth are the way to go here. Don’t just send a generic templated email to every dentist.
Picking up the phone can feel like a throwback in our digital age, but it’s one of the most effective tools in your arsenal for uncovering opportunities to buy a dental practice.
Starting a conversation can be as easy as, “Hello, my name is [Your Name], and I’m on the hunt for a dental practice to buy. Do you have any insights or leads you could share?” But remember, the key here is to be professional, respectful, and listen more than you talk. You’re building a relationship, not just asking for a favor.
Who should you call? Dental brokers and consultants are top on the list. They’re in the business of connecting buyers with sellers and can provide valuable insights about available practices. Be clear about your needs, and they’ll likely keep you in mind for future opportunities.
Don’t overlook other professionals in the industry either. Supply reps, technicians, practice transition consultants, accountants – they all have extensive networks and can be excellent resources.
Reach out to your contacts in the dental community, too. Professors, classmates, mentors, and other dentists might have leads or advice that can point you in the right direction.
Now, it can be a bit nerve-wracking to pick up the phone, I get it. Just remember, the worst thing they can do is say ‘no’. But hey, they might also say ‘yes’, or point you to someone who can. Don’t be shy, pick up that phone, and get dialing. This could be the call that gets you your dream practice!
Let’s say you’ve finally found the dental practice that you want to call your own. You can almost picture your name on the sign out front, and you’re ready to hand over the check.
There are some important steps between finding a good practice and actually owning it.
Whether you’re talking directly to dental practice owners or you’re analyzing a practice a broker has listed for sale, you need some actual facts about the practice in order to evaluate whether it’s a good deal. This is all part of the due diligence process.
You want to get a clear picture of the practice’s gross income, profitability, and growth potential, so that you can determine what price you’re willing to pay for it.
Here is a standard document list you should ask for in order for the practice appraisal to be effective:
It’s important to make both quantitative and qualitative valuations of the dentistry practice. Learn more about this process on our dental practice valuations guide.
Before buying a practice, you have to take a good look under the hood. It’s not all about shiny equipment and modern decor.
Imagine that you’re about to perform a root canal. You wouldn’t just start drilling without taking an X-ray first, right? The same goes for buying a practice. You need to see what’s happening under the surface.
Here’s your X-ray checklist for assessing a dental practice:
First, evaluating the practice’s average net income is crucial, as it determines whether there is enough cash flow generated to justify the investment. A practice grossing above $800,000, preferably over $1 million, is what you want to shoot for.
You hope to see low overhead costs along with high revenue. A profit margin of at least 40% ensures that the practice generates sufficient income after deducting doctor-specific expenses.
The lab fees and dental equipment ratio should be between 10% and 14% of collections and is a significant indicator of financial prudence. Practices with well-managed expenses in these areas tend to excel in overall business management.
Finally, projecting cash flows is crucial to determining if the practice can support your personal financial goals. This involves considering monthly student loan payments, home expenses, insurance, savings, and debt pay-down objectives.
Qualitative factors are a bit harder to pin down, but are important nonetheless.
Patient referrals indicate the practice’s reputation and ability to attract new patients. Practices with a robust and diverse patient referral base may have a higher potential for growth and sustained success.
Understanding the values, clinical approach, and ethics of the selling dentist is also essential, as it impacts the continuity of patient care and the overall practice culture. For instance, in a pediatric dentistry practice, aligning with the selling doctor’s approach to working with children and their families is vital for maintaining a seamless transition and retaining existing patients.
Assessing the facility and equipment is another crucial aspect of the analysis. Having the right equipment is crucial for an orthodontic practice that offers specialty procedures, particularly in the fields of maxillofacial surgery and other forms of oral surgery, as well as pediatric dentistry. A well-maintained and properly equipped practice can enhance efficiency, patient satisfaction, and the delivery of quality care.
Evaluating the dynamics of the practice team is also important. The staff’s experience, tenure, and ability to align with the new owner’s vision can significantly impact the practice’s success. Understanding the staff’s goals, their receptiveness to change, and their commitment to providing high-quality care is essential for a smooth transition.
Lastly, reviewing the production and chart audit provides insights into the practice’s treatment plans and revenue streams. Assessing the breakdown of patients by payment methods (fee for service practice, PPO, HMO, Medicaid) and understanding the balance between general and specialized procedures is crucial for financial analysis and long-term planning.
Once you’ve placed a value on a practice and the owner is interested in selling it, you’re ready for the next big step, the Letter of Intent or LOI.
An LOI is a non-binding agreement that sets the stage for serious negotiations. It outlines the basic terms and conditions of the purchase, including the purchase price, terms of payment, and timeline for due diligence.
Here are the key points every letter of intent should cover:
A skilled lawyer, accountant, or dental practice purchase consultant can help you draft a foolproof letter of intent and come out ahead during the dental practice negotiation process.
In negotiations: the person with the most options usually comes out ahead. And unfortunately for you as a buyer, that’s typically the seller. Why? Because a seller usually has more potential buyers lined up, and they always have the option to delay selling the practice. So, your “take-it-or-leave-it” demands might not cut it.
But hold on, don’t let that dampen your spirits! Most buyers don’t know how to negotiate effectively, and you, my friend, are going to learn to do it right.
Here’s what you need to know: Every seller is different. Some might want to boast about the high sale price at the golf club. Others might prioritize the money they pocket after taxes, or perhaps they’re concerned about who they’re passing their life’s work onto.
Your advantage is in understanding that you’re buying an income stream, not a perishable item like a phone. This isn’t about snagging the lowest price. A dental practice is an investment that will fill your pockets for years to come.
Here’s what you should negotiate before purchasing the dental practice of your dreams:
We can advise you on the best strategies and ensure you don’t pay more than you should. We also know when to push for better terms and when to back off.
Let’s kick off one of the most important chapters in your journey to owning your own dental practice: getting bank financing. Before you dive headfirst into the world of banking, I want to share a few ground rules that I’ve picked up in my time helping dentists.
Quick proposals from lenders might be tempting, but remember, these haven’t been through underwriting yet. They’re educated guesses on loan terms, not final offers. An approval, on the other hand, has been through the wringer. It’s underwritten, ironclad, and while it might take a few extra days to get, it gives you certainty.
You wouldn’t put all your eggs in one basket elsewhere, so why do it here? Engage with a couple of banks, keep them in the loop, and you might just find that you secure more favorable terms by playing the field.
Your buddy’s loan terms or the ones that random dentists on Facebook scored? They don’t mean squat for your situation. Every practice and every borrower are unique. Lenders weigh up a cocktail of factors, from practice numbers like collections and profitability to your personal creditworthiness. Comparing your terms to others’ is like comparing apples and oranges. Instead, focus on the options in front of you.
Think of it this way, you wouldn’t want a podiatrist performing your root canal, right? Same principle applies here. Dental-specific lenders bring a special kind of expertise to the table that non-dental lenders just can’t match. They can offer you faster loans, often for larger amounts, with insights into the dental industry that can save your bacon.
Financial due diligence involves the verification of financial information provided by the seller or broker, performed by both your dental accountant and the underwriting team of the bank providing you the loan. Sure, you’ve looked at the numbers, but now it’s time to really scrutinize them. You’re looking for any signs of decay that might not be obvious at first glance.
Key areas to be checked and confirmed include tax return verification, accounts receivable analysis, production procedures, work days, lease terms, employee census, active patients, fee analysis, and other relevant financial aspects.
The bank will also conduct a formal review encompassing pay stubs, tax return transcripts, background checks, public records searches, lien searches, license verification, business entity searches, fictitious business name searches, and basic web searches.
Once the letter of intent is signed, but before closing the deal, it is imperative to visit the dental practice in person and do a buyer due diligence check. While brokers or sellers may resist or suggest visits outside of business hours, it is essential to insist on on-site visits during regular business hours.
This visit allows you to observe the practice in action, understand patient-staff interactions, familiarize yourself with business processes, and get to know the staff. What’s the team like? Are they happy, professional, and skilled? Just like in your own practice, a good team is key to success.
So, like a thorough dental exam, due diligence requires a close and careful look at every aspect of the practice. But don’t worry, when you’re ready to move forward, give us a call, and we’ll navigate this due diligence journey together.
Once both you and the seller are happy with the terms submitted in your letter of intent, the negotiations are done, and you’ve performed due diligence, you can purchase the dental practice.
When you make the purchase official, notify your dental practice insurance providers, state agencies, and anyone else that may need to know of the purchase, and introduce yourself to your new staff and patients. You’ll then need to carefully transition the practice from the previous owner’s management to yours. You want to transition smoothly, so you don’t lose staff and customers.
Check out our dental practice closing guide for more information.
I am an accountant and advisor specializing in dental practice acquisition. Whether you’re a recent dental school graduate looking for a first dental practice to buy, or an experienced practitioner looking to expand, I will guide you every step of the way. I am dedicated to helping you find that rare opportunity of a perfect practice that aligns with your goals and aspirations.
You may be wondering, now that I have all of this information, do I even need a consultant?
Do you need an assistant when you’re performing a root canal? You could do it solo, sure, but having an expert by your side can make the process a lot smoother.
Let’s look at it this way:
So, can you go it alone? Sure, just like you could do a root canal without an assistant. But why would you want to? Get an expert on your team. And remember, when you’re ready to make the leap, contact me and I’ll make sure you land on solid ground!
Watch this 15-minute video to understand exactly what to do and say to brokers and how to find off-market practices for sale.
Dental practice profitability depends on location, management style, and practice type, among other factors.
There are many ways that dentists find clients. For example, referrals from existing customers, advertising online, and having an active social media presence are some of the ways a dentist could find new clientele.
A dental practice’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) depends on the size of the practice, its location, the number of dentists, its overhead, and other factors. On average, the EBITDA margin of an established dental practice typically ranges from 15% to 25%.
On average, a dental patient’s lifetime value can range from a few hundred dollars to several thousand dollars.
Dental practices generally have a low failure rate compared to other small businesses. According to the American Dental Association (ADA), the five-year failure rate for dental practices is estimated to be around 2-3%, which is relatively low.
A paperless practice, also known as a digital practice or electronic practice, is a dental practice that has transitioned from traditional paper-based record-keeping systems to dental software. In a paperless practice, patient information, medical records, charts, treatment plans, and other documentation are stored and managed electronically using specialized dental practice management software.
A dental transition refers to the process of transferring ownership or management of a dental practice from one dentist or entity to another.
A fee-for-service practice is a type of dental practice where patients pay directly for the services they receive. It operates on a cash basis, without involving insurance or managed care plans. In fee-for-service established practices, patients typically pay the full amount at the time of service, and the practice is not restricted by insurance contracts or reimbursement rates.
An implant practice is a dental practice that focuses primarily on dental implant procedures. These practices specialize in the placement and restoration of dental implants, offering advanced implant dentistry services to patients who require tooth replacements or full-mouth restorations.
A GP, or general practice opportunity, is an opening for a general practitioner of dentistry.
“Established general practice with FT suites” refers to a dental practice that has been operating for a significant period and has fully equipped treatment rooms (suites) available for use. FT stands for full-time, indicating that the practice has the capacity to accommodate a dentist who wishes to work on a full-time basis.
A professional complex refers to a location where dental practices are often situated. It is a complex or building specifically designed to house various professional offices, including dental practices. Dental practice sales may involve practices located within such professional complexes.
Equipped ops refer to fully equipped operatories or treatment rooms within a dental practice. When a dental practice is listed for sale, “equipped ops” indicates that the treatment rooms are already furnished with dental chairs, instruments, and necessary equipment.
It’s all about the details. A dental office building could be a great long-term investment, offering potential for expansion and increased control over your practice environment. We’re happy to help you analyze the factors every step of the way, from finding a motivated seller to negotiations and signing your contract.
Whether you’re trying to find a practice or have already closed on one, we provide expert guidance for every aspect of the deal. Click any of the links below to learn more.
It all starts with finding the perfect dental practice for you.