Thank you so much Greg Jones. This thread is a really good resource!
I was curious on the contracts involved in the transition of a dental practice. Example the letter of intent & purchase agreement. What are the steps involved in a typical dental practice transition. What can I expect?
Thank you again for taking your time to answer our questions.
Sorry to get back to this so late. Busy week.
I can write a novel for a response to this as every situation is unique and different. First off, I would absolutely get an attorney involved that has done closings for dental practices. They are not charging you any more money for being dental specific and they can save you a lot of headaches and time. There are various that we recommend, but regardless just get someone that knows what they're doing involved. We are talking about A LOT of money.
What are the steps of a typical dental practice transition? Simplified version
1. get pre qualified with a lender (bank)! They are many dental specific lenders out there - to name a few: Bank of America, PNC, Wells Fargo, East West, ECT
-Sellers will love to hear that you are on top of your game and are already pre qualified.
2. find practice you like - submit LOI to find reasonable terms to both parties
3. After agreeing upon price and terms, do some research on the practice to make sure everything they are telling you in legitimate. This is called Due Diligence - which is simply an inspection period.
-be sure to pull some charts and look over them. (sign hippa) / google them / look at schedules for the next few months / Look at tax returns last 3 years / look at profit and loss last 3 years / find out their fee schedule / find out their procedural analysis which tells you how many crowns they did, ect.
4. If everything checks out, consult an attorney and have them write it up.
5. AFTER contracts have been signed you can then have the seller doc introduce you to his staff. You have him put together a staff meeting and he can break the news and they can all meet you. The key here is that you NEED them. Assure them that they will all still have the same pay, the same hours, the same vacation time, ect ect. Tell them that you need them!
6. close on the practice
7. After closing you begin to work there and like I said every situation is different but the selling doc should hang around for a month or bit less. He can introduce you to the patients and help answer any questions you may have. The selling doc should write a letter to all his patients telling them that he is leaving and that Dr. Jones will be taking care of you, blah blah blah. This is one of the most important parts! Also, do not change a thing for minimum one year! You may change a few small things, but generally don't change anything! The staff and patients are used to that system. You may want to do things differently but DO NOT.
In conclusion, GUYS please get professionals involved when buying / selling a practice. There is a lot of money and risk involved. For buyers, most brokers do not charge you a penny! It is free to have them help you get a practice of your dreams (some do charge though so be careful!). If you do find a for sale by owner, I would recommend at least having a neutral broker appraise the practice so that you are paying fair market value. I am leaving globs of details out but this is my quick run down. If anyone is currently buying a practice and you want my opinion, message me and I would love to help if I can. When buying or selling you are going to run into some headaches and problems. Stay calm and get it done = )