1) Population of area = 2,475 (one other part time dentist in town), most of my patients come from surrounding county (outside city limits). I am forty miles from the biggest city in the state, lots of people are starting to move in my direction to get out of the city. The population of the county is around 48,000.
2) The previous owner that retired worked M-Thu from 8:00am-5:30pm and produced $1,022,000 (2016) and had a very low overhead of around 57%. He did well. We are on pace to do $1,450,000 for 2017.I obviously have a practice loan and lease that he didn't have to pay for. But I'm blessed to be still doing well. The way you pay yourself when you get out (so it's to your advantage with student loans, tax write-offs, etc.) is to setup an S-Corporation that owns your practice. Mine is named "Doctor's name, DDS, PA." You can pay yourself as much or as little as you like. To answer your question, my overhead is probably around 62% due to my practice loan, lease payment, etc. I plan to purchase the building soon through my LLC that I formed, so it'll go down with that. My lease is 3k per month, mortgage will be $1,500.
3) To be quite honest, this practice is busting at the seams to grow. There isn't hardly any time to do much besides basic stuff. I only do basic restorative (fillings), extractions (no 3rds--another source of growth possibly), crowns/bridges, dentures, implant (I restore them for now) crowns. I'm planning to go to an implant continuum soon called Engel Institute, supposed to be VERY good. No endo, but I plan to do anterior and premolar endo in the near future. His office wasn't setup for it, so I'm getting set in before I buy more equipment. Molar endo IMO is very difficult and less predictable, and way less profitable...so I refer those out to the endodontist. I plan to start keeping anteriors/premolars in house by this summer.
4) I picked the practice I did because everything lined up for me, I got lucky. I learned to network with the supply reps (Patterson Dental) at my associateship position. As soon as they heard of this doctor retiring, they immediately let me know and the rest is history. Took me around 8 months do all my research, get approval from the banks, setup everything, etc. It's A LOT of work. The things that were very important to me in searching for a practice were:
A) Potential growth-this practice is obviously waiting to explode growth wise
B) Little to no insurance involvement (not in network with lots of insurances)
C) Little competition-which forces you to go rural---BUT as I said, I live 20 minutes from downtown Charlotte, NC and my practice is only 40 miles out of Charlotte.
D) Location-we wanted as close to a big city as possible (airports, wife wants to go back to get her PhD and become a principal), yet in an area where I feel like I have a big impact on the community.
5) I paid around 700k for the practice. That's about 68.5% of gross production of the previous year. They have lots of calculations they do to figure out what's fair...his CPA vs. my CPA. TBH, I didn't get involved that much with negotiations, my CPA did most of the work. We started negotiations at 680k and they started at 775k, if that means anything to you. I played hardball and acted as if I were backing out for a couple weeks, the seller contacted me saying "I'm ready to make a deal." Typically, practices in rural areas sell for around 60 to 70% of the gross production for the past year (the easiest calculation I've come up with). Since this one was so insurance/cash base friendly, it valued out to be a little on the higher end. I've seen some practices in super competitive areas sell for up to 110% of gross, which is absolutely stupid and insane to me (Charleston, SC for example). EVERYONE wants to practice there for some reason... if you move there, you'll be forced to be in network with every insurance known to mankind. My crown fee is $993 and I get every dollar of that. Those dentists in those areas get (if lucky) around $650 for crowns. After a $200 lab fee and impression materials/supplies...there's a lot less room for profit.
I hope this helps a little.