I am definitely pro startup. For me, there are advantages for a startup v. purchasing an office. A startup can definitely be cheaper than a practice purchase, but some people may say that you have immediate cash flow coming from the office. While that may be true, we need to look at where that production is coming from. Is it from recalls or treatment? The turnkey part of the office is the recalls which is self-sustaining. I had to lookup one of my old posts, since I can't seem to think clearly right now, but essentially, monthly recall income should be greater than your practice debt servicing, otherwise, you are just working to pay the other guy off. You should have to do virtually nothing at the practice (which is essentially recalls) and still come out even or ahead. Otherwise, you're indirectly working for the dentist who sold you the practice (assuming goodwill = 0). Second, a productive practice would have exhausted most of the treatment in the office already, so you're in an uphill battle either redoing treatment/finding new caries (which patients may find suspicious, especially if they trusted the old doc before) or having to market to a new population. Third, the practice you are purchasing has the old staff there. Old staff usually have bad habits, and depending on the terms of practice transition, you may end up having to get rid of some or all staff if they are stubborn, unable to adapt/improve, or think they are better than you. In some states, that can be difficult due to labor laws, especially if they are older or considered a protected class. What's the point of buying a practice if you have to retrain the staff the way you want to, rather than starting from a blank slate.
Now, what do I consider a bargain? At a minimum, the purchase price should be lower than buying all the equipment and buildout to be considered a bargain (at market value, not new value). Looking at it from a business standpoint, you need equipment and labor. The equipment costs, new or used, vary greatly. When buying an office, the equipment is usually older, and your maintenance costs will be higher and chance of replacement is higher.
As I discussed previous about labor, there are some potential legal issues if you're in a pro-employee state, but even then, getting rid of half the staff can hurt the morale of the remaining staff. Staff morale is important, because they are the sales engine that drives your practice. I would prefer to start with a clean slate, new staff, new/refurbished equipment, cheap buildout.
Last, patient retention with the new owner. A lot of the value comes from the production derived from these patients. If your patient pool drops because of the loyalty and/or distrust of the new dentist, then you're essentially buying a depreciating asset. I know that a lot of dentists will "stick around" to assist with the transition, but that goes back to the potentially complacent and inefficient staff that will feel empowered with the presence of the previous owner. I do assume that everyone has their own practice style, but I find that potential employees that have a lot of experience are a lot harder to train to your style of dentistry.
Anyway, my responses are all over the place, I'm tired, if you can't understand what I said here, I'll be glad to clarify. I'm pro-startup because I see it as a faster way of making money with less capital and more control of your practice variables. Marketing, clinical speed to be able to deliver all the dentistry your marketing brings, and your personality are your major key to success. I don't like the idea of borrowing money to purchase an office, since it feels like I'm just investing in a note/bond that I have to work for. I could do that without having to deal with buying/running an office. I paid for my office with cash though, so my perspective could be different from other startups.
