Going through a practice buy-in is very complex. You need to work with a team of advisors who understands the dental industry and who has experience in dental practice buy-ins. The proper due diligence must be done thoroughly to ensure it’s the right decision for you. Regardless of how well you know the individual or how “good” you feel about the practice, don’t underestimate the amount of due diligence that should be performed prior to going into any practice buy-in/partnership. There are many operational, financial and tax implications that could impact you long-term if you rush into a decision.
There are a number of items that will be needed in order to perform your due diligence on the practice you are contemplating buying into, but your initial due diligence steps will include these items:
- Meeting with the senior dentist to ensure they have met with their team of advisors and they are prepared for future changes that may occur (change in compensation, entity structure, tax implications, etc.).
Before you as the buyer spend the money and time with your team, you should make sure the senior doctor is fully on board and is prepared financially. You should also ask them what their long-term plans are… do they plan on bringing in more partners? When do they want to retire? Do they want to have multiple practices?
- Having an initial meeting with your team of advisors to confirm you absolutely want to be in a partnership and it is the right fit.
Are you prepared to make every decision in your practice with another dentist? And is this dentist someone with whom you see yourself working and can make decisions? It’s best if your team of advisors initially consists of at least a CPA/consultant and an attorney.
- Thinking about your “ideal” practice.
Does this opportunity meet your needs and wants? Consider any deal breakers. Are there things in this practice that you would consider a deal breaker? Make sure to think about your desired compensation and production, hours of operation, fee for service vs. PPO vs. Medicaid, staffing preferences, location, procedure mix, patient age, treatment styles, etc. Does this practice meet what you are looking for in your ideal practice?
- Preparing yourself for financing.
Are you financially ready to buy into a practice? When was the last time you checked your credit score? Do you have a co-signer available if you would need one? Do you have any personal savings? What action steps need to happen to make sure you can get a loan?
Once you have identified and completed these items listed above, you are ready to move forward with your team of advisors on performing the due diligence of the practice. This is a very detailed process but should provide you with the information to move forward with your decision with confidence and further your knowledge of the practice clinically, operationally and financially.