There comes a time in the career of a young dentist when it’s time to get your own practice. It’s an exciting time, but it’s also a terrifying one. Eight years of college have made you an expert in caring for teeth, but they haven’t made you an expert in property negotiations, tax accounting, human resources, marketing, inventory control, and all the other indispensable skills of business management.
Fortunately, there’s help. One of our specialties is guiding young dentists who are ready to be in business for themselves. We will help you find the right practice in the right location for the right price. We will help you make the right decisions as you go from employee to business owner. And we will be your financial guides as you look to your future.
Typically you will be buying your practice from an experienced dentist who has decided it’s time to retire. The process begins when that dentist hires a broker who values the practice—real estate, equipment, patient list, etc. Together they set a price and list the practice.
This is where you find out about the practice. Don’t go into these negotiations alone; you will most likely be up against a seasoned broker who has been in the business for decades and will be getting a cut of the sale.
The selling price is not just a single number. It includes equipment, of course, and real estate if the selling dentist owns the property. But it also includes the seller’s patient list—an asset known as “goodwill.” We can do you a world of good without changing the selling price, just by negotiating how the price is divided into these categories.
The details matter. As the buyer, you are looking toward your tax obligations as well as the cost of the practice, so you want to allow as much of that price as possible to equipment and as little as possible to the patient list.
To a very real extent, you will have demographics on your side. Statistics tell us that most dentists will be retiring over the next 12 years as Baby Boomers leave the workforce. That creates a buyer’s market, so there’s no reason to accept a deal that doesn’t work for you.
We will also help you get the best possible terms of financing. Chances are you will need to borrow anywhere from $300,000 to $1.5 million. As a young dentist in residency (or not long out of residency), you will be able to get financing, but the terms can be pretty onerous. One thing Heritage Investors is good at is setting banks against one another to provide the best possible terms. It can be done, but you have to know how to ask.
Once you have the financing nailed down and everyone signs the papers, you’re in business. Congratulations! Now it’s time to get to work.
During the coming year, we will be giving you a crash course in business: budgeting, risk planning, tax planning, strategies for keeping your employees happy and hiring new employees. That first year especially will be very stressful, but don’t worry; we will be there with you.
NEXT STEP: Growing your Business (to Ultimately Sell)