Practice Purchase

Please note: This list is for your informational use and not intended to replace the advice of professional advisors and specialists, including, but not limited to, attorneys and certified public accountants.

General Requirements

• DDS or DMD degree
• Completion of a postdoctorate program in orthodontics
• State dental license
• Résumé/CV, cover letter, references or letters of recommendation
• Practice location
• Practice valuation
• Business/transition plan
• Funding
• Purchase and sale agreement
• Business accounts
• Business permit
• Employer identification number (EIN)
• National provider identification (NPI)
• Local occupancy, zoning, and building permits
• Equipment and supplies
• Hardware and software systems
• Office policies and procedures
• Regulatory compliance
• Personnel
• Insurance – malpractice, life, health, long-term disability, property, commercial general liability, practice interruption, office overhead expense, worker’s compensation

Arrangements

• May purchase outright or include associate agreement with phased buy-out option (the associate purchases partial interest over a predetermined period of time until the practice is completely sold)
• Can be structured as an asset purchase or stock purchase
• Seller can work for the buyer as an employee to ease the transition after the purchase is complete

Financial Risk

• High financial risk to invest and manage a business
• High acquisition, overhead, and operating costs
• Requires significant investment in an existing practice, which may include current assets and/or liabilities depending on how the purchase is structured
• Financing may be necessary
• Factors such as debt, credit history, experience, the financial strength of the practice purchase, and proof of collateral may affect the ability to obtain financing from a lending institution
• May require other household income (e.g., spouse income or other associate arrangement) to secure financing
• Seller financing may be available
• Disagreements can occur between the buyer and seller due to unreasonable expectations and/or personal biases
• Purchase will likely include functioning facility and operating equipment
• Opportunity to replace a competitor in the area

Income and Other Compensation

• Variable income based on revenue, costs, and expenses
• May receive immediate income and cash flow after transition
• Income potential is greater compared to associate, independent contractor, academic, and military opportunities
• Responsible for benefits such as vacation and sick leave, health insurance, life insurance, disability, retirement plan, professional dues, continuing education reimbursement, liability and malpractice insurance, etc.
• Responsible for payroll, income, sales, and property taxes

Practice Operations

• Requires managerial and administrative responsibilities
• Offers guaranteed autonomy and control over practice decisions
• Must be able to balance patient care and business operations
• Requires awareness and evaluation of market conditions and practice performance
• Opportunity to acquire established patient pool and referral base, practice management systems, and existing experienced staff
• Delegation can be difficult with fewer employees
• May inherit issues that need to be addressed (e.g., office or location, equipment, employees, processes, reputation)
• Immediate changes in practice philosophy, policy, staff, or fee structures can negatively impact staff and patient support

Learning Development Opportunities

• Opportunity to obtain and utilize clinical, technical and practice management skills
• Responsible for seeking out learning and professional growth opportunities
• Potential to learn from an experienced doctor

Legal Considerations

• Must understand and comply with federal, state, and local business laws, regulations, and requirements related to office design, employment, office safety, patient treatment, collections, malpractice, marketing, antitrust, taxation, and more
• Responsible for selecting a business structure and understanding how it affects day-to-day operations, taxes, and personal liability
• Responsible for liability issues such as malpractice claims, customer injuries, and employee activities

Contractual Considerations

• Will enter into several contracts including business loans, consulting agreements, purchase/lease agreements  for real estate and equipment, dental provider agreements, employment and compensation agreements, and more
• Will be responsible for complying with all contractual obligations
• Often includes a purchase and sale agreement outlining basic terms, purchase price, deal structure, and legal issues
• A letter of intent can be prepared prior to the purchase and sale agreement to mitigate disagreements between the buyer and seller
• Choice of sale structure (asset or stock purchase) can have tax and liability implications for both the buyer and seller
• Purchase process may require additional documents to address confidentiality, HIPAA compliance, seller liabilities, repayment obligations for seller financing, transfer of personal property or lease, transfer of contracts, and potential employment of the seller

Work Life Considerations

• Can be difficult to enter certain communities due to market conditions and/or availability of purchase opportunities
• Will have flexibility to set work hours
• Can be difficult to take extended time off