OK its time to talk practices. So we'll start with practice 1
"The Sure Thing"
Practice 1:
Avg Gross: $583,000
Operative: $450,450
Hygiene: $132,550
Days: Mon-Fri 8-5
Active Pt: 3400 (80% insurance, 20% cash) general dentistry some endo, no ortho
Building: Rent with option to buy. Freestanding
Equipment: Purchased within the past 10 years. Computers w/EagleSoft, no digital x-ray
Price: $429,000 ($394,000 plus $5000 agent fee, $30,000 working capital)
Most of you pegged this one as "The Sure Thing" and you were right. This is an ideal situation to buy into. Mostly regular insurance, no reduced fee plans with the exception of Delta Dental, no medicaid and a fairly health hygiene recall. The practice has been there for decades so it is very well established, the equipment is not brand spanking new but nothing will need replacing for several years. And the price $394,000 is 67% of production which is OK. You could even haggle them down some. You have the option to buy the free standing building which is always a good thing, especially with an established practice.
Now lets look at numbers: The loan for this practice will be $429,000 at 7% for 7 years. So your note per month for the practice will be $ 5465. The practice on average makes $48,583. With a 65% overhead this leaves you with $ 9004 to service your debt. After paying off your monthly practice note you have $3539 for living expenses. But remember of your practice debt $30,000 is just cash for working capital. This is pretty doable and this is assuming that you will only produce the exact same amount for the next 7 years. Chances are as your skill level increases so will your production.
This is a good deal and is a lot like the first practice that I bought. When I bought my first practice in 1995 the yearly average was about $399,000. At the end of my seventh year there the yearly production was about $890,000. If I can do it you can do it too. If one of you were to ask my opinion on a practice like this I would personally drive you to the bank to get the financing going before someone else bought it out from under you. This practice was my first choice until I unearthed the practice that I am currently buying.