You may feel overwhelmed while buying a dental practice, no matter how numerously you have been through the process. Many moving parts have been involved that need to come together correctly to make the acquisition successful.
However, most things in life, with great works, come with tremendous rewards. Buying an existing dental practice will help the buying dentist by providing immediate access to an established patient base, which will convert into instant cash flow. An Aurora restorative dentist provides the best instruments for any type of dental treatment.
Steps involved in buying a dental practice
Once you know the process of buying a dental practice will help provide a shield from unnecessary liability and protect your investment. Once you find out the practice you are interested in, below are some steps you need to take for a successful dental practice acquisition.
- Organizing a team of specialized dental advisers
Owning a dental practice might be the most important professional and financial decision, requiring in-depth evaluation of various issues. Therefore, you should gather the following team of advisers after finding a practice to buy.
- Professional practice lender
- Dental CPA
- Dental attorney
- Transition consultant
- Make an offer to the seller and submit the Letter of Intent (LOI)
After your advisers are comfortable with the practice’s prospectus, you should submit a signed LOI to the selling dentist. An LOI is a way of communicating to the seller that you have decided to buy their practice. You and your seller should address the following terms in your LOI.
- Assets included in the sale
- Assets excluded in the sale
- The purchase price of the practice
- The date of closing
- Applying for a practice purchase loan from the bank
Once you submit the LOI, the next step will be getting pre-qualified for a practice purchase loan. Your CPA or dental attorney will help you connect with several local banks that lend money to dental or medical professionals.
It is best to submit applications to several banks, as every bank does not have the same interest rates for loans.
- Secure insurance policies
The selling dentist, landlord, or lending institution may require you to obtain various insurance policies to protect your practice and fulfill your obligations to them.
- Setup corporate professional corporation prior to buying a dental practice
You can set up your practice as either a role of a sole proprietorship, in partnership with other dentists, or as a professional corporation. After setting up your practice as a professional corporation, you can limit your personal liability and enjoy the advantages of beneficial tax treatment.