Are you planning on buying a dental practice? It is a big endeavor and one that can mark the reaching of both a significant personal and business goal you may have had for some time. Of course, careful thought and great consideration should be made before any papers are signed. To help guide you on this exciting journey, here are some questions you should be asking before you purchase a dental practice.
Questions You Should Ask Before Buying a Dental Practice
The first question you need to answer is: why are you buying a dental practice? There could be many different reasons for this and the answer will be carrying a great weight in finding the right practice to purchase. If you are buying a practice because you want to expand your current practice, you may be looking to buy a different dental practice than if you wanted to start your practice in a new location or buy a practice because it has a solid patient base. Why you want to buy a practice will play a large part in successfully searching for and finding the best practice to buy.
Another important question that will come into play once you have found one or more potential practices for purchase will be: what is the dental practice’s value? You want to be sure you are getting a fair sale’s price and a proper valuation of the dental practice you are looking to buy will be important to help make sure that happens. Proper valuation of a dental practice is, however, difficult and can be rather complicated. Most recommend that the best place to start is by reviewing the practice’s past five years in tax returns. This will give you a clearer idea of the recent growth or decline the practice may have experienced.
There will also be a number of logistical questions that will need to be addressed in conjunction with purchasing a dental practice. How will credit balances be handled? While credit balances are not uncommon for a dental practice owner to have, unsuspecting buyers may end up heaped with them should they be missed during due diligence and undisclosed by the seller. Be sure to find out about outstanding credit balances and how they should be handled before or after the selling of the practice. Of course, settling up the balance prior to the practice’s sale is often preferred, but not always workable.
You will also likely need to look into what your own credit score currently sits at. After all, buying a dental practice is a big purchase and it is likely that you will need to apply for financing. Even beyond the actual purchase price of the business you are buying, it is likely that you will also need funds to set things up for yourself such as hiring new staff or upgrading the space or equipment. The better your credit score, the better your financing options are likely to be.
Dental Law Attorneys
Looking to buy a dental practice? Talk to the knowledgeable team at Mahan Dental Law. We can help you find the right dental practice for purchase and help protect your interests throughout the purchase process. Contact us today.