Orthotown March 2021 - 48

" Just as you would hope
a patient would seek you
out as a specialist, enlist
the help of professionals
who are very familiar with
dental practice transitions
to lend their expertise. "
The more time you invest in learning
about practice management and transitions
before you start this process, the better
prepared you will be. Read journal articles
and network with people you know who
have acquired offices recently. Find out what
worked well for them and what they wish
they had done differently. An accountant who
works with dental offices and understands
the way they operate is an essential resource.
Attorneys who are familiar with dental and
small business acquisitions will provide
valuable insights. Just as you would hope a
patient would seek you out as a specialist,
enlist the help of professionals who are very
familiar with dental practice transitions to
lend their expertise.

Understand the movement
of money in the practice
It may seem obvious, but your first
consideration will always be, " Is the practice
profitable? " Your success will depend on
its ability to provide enough income to

cover expenses, pay staff members, invest
in marketing and compensate you as the
owner. Without the basic assurance that
the office can reasonably sustain success,
you must consider other options.
A deep dive into the financial reports is
a critical first step into understanding the
practice's economic health. You'll need access
to tax returns, profit-and-loss statements and
employment records. As you consider the
purchase price for a practice, understanding
the complete picture of owner compensation
is essential.
The great benefit of purchasing an existing business is the potential for immediate
income. This will all be for naught if the cost
of servicing your loan consumes most of your
earnings. There are great resources available
for comparing the average overhead expenditures in individual categories, including staff,
marketing and supplies. Your accountant or
practice management consultant should be
able to provide these for you and help you
break down any bookkeeping. A review of

employment records should highlight the staff
turnover in the practice: If staff are leaving
at a high rate, you'll want to investigate if
this is consistent with industry norms or if
there are specific reasons for the attrition.
As sellers prepare for the sale of the
practice, they will have spent months or
years organizing themselves for an eventual
transition. Review the finances to identify
any reduction in overhead or sudden upticks
in collections in recent years. Sellers will
want to maximize the profitability of their
practice and may make different decisions
than they would in other circumstances.
Scaling back on marketing and equipment
purchases or offering larger discounts for
paid-in-full accounts might be two easy
ways to inflate a practice's value on paper.
It is important to probe the seller and
ask pointed questions. Simply asking the
seller what changes they would make in
the next five years or which equipment
they would upgrade or replace can reveal
valuable insights into the practice's needs
and potential.

Spend time in the office
It is critical to spend time in the office
when patients are being seen. A beautiful,
clean office after hours can be transformed into
chaos with a busy schedule of patients. You'll
want to see the staff in action and observe
their effort and enthusiasm in providing
care. Make sure that the team is following
appropriate infection control and proper
sterilization procedures. The atmosphere of a
practice can swing wildly on the happiness of
the patients, the ability for the team to operate
in a timely fashion and the environment
created by the office leadership.
This is your opportunity to size up the
equipment as well. When you're buying
a house, you flip light switches and turn
on faucets, and an office should be no
different. Check the vacuum and compressor, the radiographic equipment, how

MARCH 2021 // orthotown.com

OT0321_Foley_Buying_MM.indd 48

2/25/21 11:53 AM

http://www.orthotown.com

Orthotown March 2021

Table of Contents for the Digital Edition of Orthotown March 2021