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Dental Practice Acquisition or Starting from Scratch?

dental practice acquisition versus starting a new dental practice

The American Dream is ownership. For dentists, that dream or goal is usually owning a dental practice. So, what’s the process, how do you get there, and what do you need to consider first? First, you need to choose between practice acquisition or starting a new small business.

Acquire Existing Practice

Acquiring an existing dental practice comes with several factors to consider. First, some things are already established and in place with an existing small business. The practice’s reputation has been established and the patient base has been developed. The employees, policies, and procedures are set. (However, you still may change some things.) 

This could be good or bad for you. If the practice is struggling in a particular area, you must evaluate how much work is necessary to correct the problem. Will you have to fire employees? Will you have to deal with backlash if you change policies or procedures that have been in place for years? 

On the other hand, the dental practice employees, policies, and procedures could be running smoothly and not require changes. You must evaluate all of this.

Additionally, you need to consider whether accounts receivable will be included in the agreement. If so, how much is the accounts receivable? Assess the current schedule and decide the number of days outstanding accounts receivable you are willing to accept.

Determining how the sales price is allocated among assets is one of the most important pieces of practice acquisition. From a tax perspective, as the buyer, you would benefit by allocating more of the purchase price toward furniture and equipment as they have shorter lives for depreciation purposes. 

Goodwill is an intangible asset that includes the customer list and practice reputation. This has a 15-year lifespan meaning the amount allocated to goodwill is spread out as a deduction over a period of 15 years.

Additionally, you must find out if the selling dentist wants to sell just the dental practice, or the practice and the building and what you want to purchase. Some buyers would rather pay rent than deal with the hassle and responsibilities of owning. Some sellers want to keep the building as a source of income. Deals can even be structured so the buyer rents for a certain number of years and then can purchase the property later. This could be your happy medium. (Check out our blog on leasing versus owning!)

Startup Practice

When you choose to open a new dental practice, you get a fresh start. You establish your own reputation and the environment or atmosphere you want for your staff and patients. You have a choice in the business location, what equipment to use, and how the office should be laid out and designed. You can decide whether to buy or lease the office building. You will need a marketing plan to establish a patient base. You need to hire the appropriate team members. 

A startup dental practice can require more work but the practice will be established as you want it rather than the way an existing practice is operating.

Regardless which path you choose, we hope your dental practice continues to grow! Whether you choose to acquire or start a practice you should have a plan, goals, and a strong team in place to help you succeed.

At LenDRgroup Consulting, our team cares about the long-term success of your dental practice. We offer customized practice financing and business consulting services to meet the needs of your business and your career. 

Our lending platform consists of 300+ dental and healthcare-specific lenders. It was developed with the purpose of helping dentists, veterinarians, and physicians. Let us help you achieve practice ownership and eliminate your practice financing obstacles!

To date, we have helped hundreds of dental professionals like you start, expand, and grow their practices. LenDRgroup Consulting recognizes and understands your business needs and can help you avoid costly mistakes. So, let’s get started.

Contact us today for a consultation.