The Hidden Pitfalls of Dental Practice Acquisition

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Purchasing an established dental practice offers more assurance of steady earnings production and patient traffic. Once a dentist has identified these opportunities, acquiring the practice may seem easy. However, there are challenges when it comes to evaluating the health of the potential practice and closing the acquisition.

Hidden Pitfalls of Dental Practice Acquisition

Below are a few common mistakes that many dentists make when acquiring a new practice:

  • Insufficient Data – Because many dental practices prepare cash basis financial statements, year-to-year comparisons can be skewed. Especially if the collection rate varies. For example, billing problems can cause the financial statements to appear misleading. Many dentists skip the vital step of including an accountant and a lender in the process of acquisition. But this is the best way to evaluate the health of the dental practice.
  • Valuation Expectations – Many dentists assume that purchasing a dental practice will be similar to purchasing real estate. This can lead to unrealistic expectations of a sale price! As a buyer, you need to have a valuation prepared by a third-party expert to make sure the proper factors are applied when determining a qualified value.
  • Information Overload – There is a large amount of paperwork involved in practice sales and acquisitions. This can be especially frustrating if the current practice owner has very little business training or has insufficient time to work on the operational parts of the practice. You may need to adjust your expectations when it comes to timing.

If you’re considering purchasing a dental practice, it’s vital to take the right steps and do your due diligence. Here at CTC Associates, we can help you make all the right decisions when trying to determine if a dental practice is right for you! Give us a call today to learn more.

Posted on Dec 17, 2019

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