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"The Experienced, Personalized Service Dental Broker"

"BUYING A DENTAL PRACTICE"

BY PAUL MAIMONE M.B.A.

REASON’S FOR OWNERSHIP

There are three main reasons to own: (1) take control of your own destiny (2) Business ownership tax advantages & (3) personal satisfaction of owning a successful business.

This article addresses: ownership options, defining your ideal practice, practice identification, what to look for, purchase contingencies, and finally a listing of helpful professionals..

START FROM SCRATCH OR PURCHASE

There are two routes to own: (1) Start from scratch or (2) Purchase. This article addresses Purchase. Before you proceed with your practice search, first considered and answer questions such as: (1) Where do I want to practice? (2) What kind of practice do I wish to own? (3) How large of an office do I want? (4) How many ops? (5) What type of office location? Shopping Center? Professional Building? (6) Lease or own the building? (7) How to finance?

Once defined, it is time to start your practice search. You will find practices for sale via: (1) "For Sale By Owners" (FSBO’s). Sellers who sell their practice directly to Buyers (2) Practice Brokers. Practices listed with Brokers are exclusive listings & only the listing Broker is authorized to sell the listing; so contact several (3) Consider the practice you work at. If it’s your type, then ask the Owner if they will sell it. If their response is positive you can: (1) Buy In (2) Purchase it out right (3) Purchase at a defined future date or (4) Become Partners.


WHAT TO LOOK FOR

Once you have located a practice that fits your criteria, look over the following before making an offer. (1) Gross Collections/Net Income and the Overhead (2) Equipment inventory and condition (3) Is the staff willing to stay? (4) Status of the Account Receivables (A/R’s) including amount, age and if included in the sale. (5) Lease status (6) Are current provider contracts transferable? (7) Practice Trends. These and other pertinent questions need to be addressed. If positive, write offer.

PURCHASE CONTINGENCIES

Any offer should include the following (4) contingencies which will help protect you. (1) Acceptable Loan (2) Acceptable Lease (3) Due Diligence - Book Check & (4) Mutually Acceptable Buy-Sell Agreement, Covenant Not To Compete, Purchase Price Allocation. Should one of your contingencies not be met, you can cancel the transaction and get your ernest deposit check back.

PROFESSIONAL HELP

There are several professional disciplines available to the Buyer, who can make the process less risky and more manageable. They include: Dental Practice Brokers, CPAs/Accountants, Practice Consultants, and Dental Attorneys.

Paul Maimone M.B.A. is the Principal and Broker of D&M Practice Sales and Leasing, a San Fernando Valley based Dental Practice Brokerage. Mr. Maimone is a Licensed CA. Real Estate Broker and he has been involved in more than 200 practice sales and more than 500 practice appraisals. He can be reached via email @ DRPAULDMD@SBCGLOBAL.NET or @ (818) 591-1401.

Article first appeared in Dental Dimensions, Fall, 2004, the quarterly Journal of The San Fernando Valley Dental Society Chapter of the California Dental Association