By: Chase Howard
Whether you’ve been in practice for years or you’re just graduating, buying an existing dental practice can be a great way to quickly enter into an already established patient base without the pains of starting up from scratch. While it may seem like a daunting task, the right team can make the purchase transaction flow as smoothly as possible. Here’s a list of important things to consider when negotiating the purchase.
1. Seller Liabilities: You want to make sure that, while you’re buying goodwill, patients, and maybe some hard assets, you are not also buying any of the seller’s liabilities stemming from those items. It’s crucial that the purchase agreement clearly excludes such liabilities and ensures that the seller indemnifies the buyer in any case.
2. Retreatments, Treatments in Progress, Prepaid Work: While there may be a clear date that the parties trade places in the practice, patient care will continue to be on-going. In many cases, patients will either have treatments in progress, prepaid work, or require retreatments. Whether or not the seller will transition the practice by providing professional services, the agreement needs to clearly lay out who is responsible for such work and how the buyer will be compensated, if applicable.
3. Introductions: One of the reasons a seller’s practice is successful is likely due to referral sources or other groups that support the practice is various ways. Ensuring that the seller makes key introductions to these people will ensure that the buyer can hit the ground running as if they have owned the practice for years.
4. Employees: Employees are the backbone of a practice. They have extended interactions with patients and know how the practice operates. Reviewing and keeping on certain key employees will be vital to a successful purchase. In addition, it’s important to determine how to handle the hand-off of Employee benefits, such as retirement accounts, and paid time off.
If you are thinking about buying a practice, it’s important to put a team together to help ensure you secure not just the points listed above, but a fair deal, which protects your investment to the fullest extent. A dental transaction team includes, at the least, a CPA familiar with dental practices, a healthcare lawyer experienced with dental transactions, and financing focused on dental practices.