Finding a Practice

Why NOW Is (probably) the Right Time to Buy | How to Find a Dental Practice to Buy

Posted on by Brian Hanks

Q: “I want to own my own practice, but is now the right time?”

A: Now is probably the best time to buy a practice for most of you! Most dentists wait too long and after they own, wish they’d done it sooner. The three most common concerns tend to be 1) “I don’t have the money,” 2) “It’s not the right time in my career,” and 3) “The market is too high / too low.”
Let’s look at each of these.

“I don’t have the money”

Generally, banks are willing to lend 100+% of the practice purchase. You need some cash to show that you’re responsible. To secure funding, the bank will usually want you to have on hand 10% of the purchase price, or $50,000, whichever is lesser. If you don’t have the money to purchase, the power to change that is in your hands. If you have some cash, there’s no need to wait.

“It’s not the right time in my career”

If you’re a year out of school with strong with strong production, you’re good to proceed! You mainly need a production history showing you can keep up with 80% of the seller’s production and can handle the money-making procedures already done. If you’re fresh out of school, you’ll likely only need a year to increase your speed. If you’ve been out longer, the “right time” to buy was probably a few years ago, which makes the second-best “right time” … right about now!

“The market is too high / too low”

Markets fluctuate and you can’t predict when this will happen… doesn’t matter. Dental practice prices typically fluctuate no more than 5%. If the market is high, you may pay more, but the money you make as an owner means saving, investing, and putting practices in place to ensure that you’ll be in a safe place, no matter what. If the market is low, you may have lower-than-average collections for a time. But the due diligence process will give you a reasonable degree of assurance that you’re buying a practice that will make it through the tough times.

Read More:

Due Diligence Timing in Dental Practice Transitions

How Much Does a Dental Practice Owner Make?

5 Things You Need to Have to Be Ready to Own a Dental Practice

 

Brian Hanks

Brian Hanks is an author, advisor, certified financial planner specializing in helping dentists evaluate and acquire a dental practice of their own. Brian developed his dental practice acquisition framework to help dentists navigate the complex and overwhelming process. Brian's book, How to Buy a Dental Practice: Find, Analyze, Negotiate, and Purchase the Right Dental Practice for You, details the basic pitfalls that new dentists often make, and lays a roadmap for a successful acquisition. His consultancy, Dental Buyer Advocates, provides hands-on guidance and expertise for evaluating practices, negotiating with sellers, closing on a practice, financing, transitioning a practice from the seller to the new buyer's management, and much more. Brian has a business management degree from BYU, a finance MBA from University of Michigan, and a CFP certification from Northwestern University. He lives in Salt Lake City, Utah with his family and serves dentists nationwide. See Brian's 27-point dental practice acquisition checklist: https://www.dentalbuyeradvocates.com/dental-practice-acquisition-checklist/ Learn all about the process of buying a practice: https://www.dentalbuyeradvocates.com/buying-a-dental-practice/