What should I look for in a dental practice?

Here are eight things to consider before you buy a dental practice.

Seek help early.
Develop a budget.
Don’t forget the value of existing staff.
You’ve got to see it for yourself.
The seller’s asking price may – or may not – reflect the practice’s true value.
Negotiate price first.
Owner-financing may be risky.

How do you evaluate a dental practice cost?

Here’s how they work: Capitalized earnings method—The basis of this valuation method is the practice’s prior year’s (or average of the last few years) net income (EBITDA). This number is divided by a cap rate (industry standard is 25% to 31%) to get the fair market value of a dental practice.

What is a good overhead for a dental practice?

The average American dentist’s overhead is 73 percent. The lab expense is 8 percent and staff overhead is 30 percent.

How much is a successful dental practice worth?

Using a Rule of Thumb for Dental Practice Evaluations The most common Rule of Thumb we hear is, “The practice is worth 70% of gross revenue,” or “The practice is worth one times net income.” Neither of these Rules of Thumb is an accurate representation of the practice value.

How long does it take to buy a dental practice?

How Long Does it Take to Sell a Dental Practice? As you plan to sell your dental practice, it is important to plan for the amount of time the sale could take to be completed. A dental practice can take anywhere from six months to five years to sell.

What is a good Ebitda for a dental practice?

The average EBITDA multiple for dental practices in 2019 was 1.63x.

What does dental overhead include?

For dental practices, every cost not associated with dentist income is considered overhead, including employee compensation, rent or mortgage, supplies, equipment, and utilities.

How much do you make owning a dental practice?

According to ada.org, the average net salary for dental practice owners in the US in 2018 was $197.2k for general dentists and $330.2k for specialist dentists. Ziprecruiter.com states that the average is slightly lower at $178.6k for a dentist running a private practice, with highs of $366.5k and lows of $25.5k.

What should I know about buying a dental practice?

Understanding the process of buying a dental practice will help you protect your investment and shield you from any unnecessary liability. It is also important to keep the announcement of the purchase quiet until the closing.

What do you need to know about dental insurance?

When buying a dental practice, the insurance policies typically include, but may not be limited to: While some policies can be purchased quickly, others will require a physical examination or other tests, which can be time-consuming.

Do you have to sign a lease when buying a dental practice?

Concurrent with reviewing and negotiating the practice purchase agreement, you and your advisers should review the seller’s lease or negotiate to purchase any real estate associated with the practice. It is not uncommon for a commercial lease to require the landlord’s written consent prior to any assignment.

What do I need to get funding for dental practice?

Moreover, every bank has its own set of conditions and documents that you will be required to provide in order to obtain funding. Here is a short list of some of the most common documents that banks requests in the underwriting process: