Due Diligence is the process of making sure you’re buying the quality of practice you think you are. It involves lots of analysis, a lot of numbers, and a lot of forms, all with the aim of learning the true story about the health of the practice in question.
Simple, right? I mean, you remember all those courses you took in dental school about business, accounting, and management, right? No, I didn’t think so.
You’re a dentist, not an accountant. So what does Due Diligence mean for you?
Use Your Team
During a practice purchase, you’ll have some folks in your corner. Your accountant, your banker, and your attorney will all do their part to assess the financial and legal aspects of due diligence. They’ll answer questions like, “What is the true profitability of the practice?” “Are the terms of the deal within normal bounds and good for you, the buyer?” And so on.
You’ve hired experts for a reason, and they’ll do their expert thing.
But hang on, because you’re an expert, too.
Use Your Expertise
You didn’t go to school for business or accounting, but you did work your butt off to be an expert in dentistry. So use that! The Due Diligence period is the time for you to really dig into the selling dentist’s claims. Do the treatment plans actually match what the seller says her treatment philosophy is? What about office culture? Does your personality and philosophy match well with what you’re walking into? How does the equipment look? Is it too outdated for you to feel comfortable, or is it up to date enough?
While you should rely on the experts in your corner to tackle questions you can’t answer, remember that you’re an expert too. Use that expertise to your advantage, and learn everything you can about the dentistry side of the practice you’re buying.
When you’re ready to do a deep dive on a potential practice sale, give me a call and I’ll help you navigate the vital Due Diligence step. I’ll make sure you have all the right questions to ask, and help you analyze the answers you come up with.