After nearly a decade helping over 500 dentists buy practices, I’ve learned a thing or two. Here are my top 3 pieces of advice to make your search for a practice, the purchase itself, and your entire career go much more smoothly.
LESSON #1 – Your network is vital to find a practice
Believe me, I can hear the eye-rolls from here. “Not another lecture about networking!” But I’m not talking about glad-handing, shmoozing, or whatever else you may have in mind.
When I say you should “build your network,” all I mean is that there should be lots of other dentists out there who know you, like you, and know that you’re looking to buy a practice. That’s it! How you choose to build that network is up to you. (I’ve got a few suggestions.)
Most of the best practices are bought and sold this way: a dentist is looking to retire, so mentions it to his other dentist buddies and one of them says, “Actually, I met someone a few months ago who’s in the market. I’ll send her your way.” And voila, you’ve got an amazing lead on a (probably) good practice!
And by the way, your network can easily extend beyond just dentists. Dental lawyers and accountants, equipment reps, even experienced dental staff in the area where you’re looking to buy—all of them can help introduce you to someone in the area who may be looking to sell.
LESSON #2 – Buy the good practice, not the bargain one
I keep up with many, many of the dentists I work with as they start their careers as owners. And it’s become glaringly obvious which of them are happier and which are more stressed out.
As a rule, the dentists who bought a “bargain” practice end up as the stressed ones. Why? Because they thought they would buy a struggling or sub-par practice at a low price, then fix it up and watch the money flow in. Not so much.
A good practice, to me, is one that has collections over $800,000 and overhead in the ballpark of 60%. If a single-owner practice has numbers like that, then chances are you’re looking at a well-managed practice with good procedures, good advertising, and good staff. Picking up where that seller left off is a lot easier than going the fixer-upper route.
One last note: If a practice doesn’t meet my general guidelines, it’s not an automatic no! Sometimes there really are diamonds in the rough. They say that if it looks too good to be true then it probably is. Fair enough! But that “probably” tells us something—you could be looking at an exception to the rule.
LESSON #3 – Build the right team for your transition
Lawyer, accountant, banker, buyer’s rep (that’s me). Yep, you’ll have an entire team for your practice purchase. And you want an A-team, so they should each be right for the job.
How do you know someone’s right for your team? My basic criteria here is that they should be dental-specific, and they do more than 50 deals a year—in other words, they don’t dabble. This person knows the ins and outs of the industry and can navigate the common (and less common) pitfalls that could derail your purchase.
Don’t have 10 dental bankers and lawyers in your rolodex already? No problem. Start with a broker or rep like me. They’ll form the basis of your team and they’ll have a short list of the best people to work with.
