Buying a Practice? Do the Homework!

A dentist would be wise to do some homework on their own to decide which option is best for his/her professional journey by addressing some key questions:

  • Why buy a practice rather than do a start-up? 
  • Why is the practice being sold?
  • How old is the practice? Most practices being sold are typically older ones.
  • Condition of existing equipment and furniture?
  • Is practice technology current?
  • How much money is needed for updating the space?
  • Study the Demographics for the area-has there been a change due to the age of the practice?
  • Disposable Income for oral care – has it decreased, increased, or stayed constant?
  • Appropriate Fee schedule – has it decreased, increased, or stayed constant? Private Pay or Insurance Reimbursement?
  • Is there future growth potential in the area?
  • Are there referral sources in the area?
  • Is the practice near a hospital? 30% of ER visits are due to dental problems.
  • Is there a building purchase along with the practice purchase or is there a building owner/landlord in the mix?

If there is a building purchase along with the practice purchase, understand the common mistake of thinking building equity will increase during practice ownership. It may, or it may not. It’s not a given. Building Equity is only realized by the owner at sale. Economic downturn and negative changes decrease a building’s value, not to mention obsolescence in physical appearance. Building ownership can be a proverbial “noose around the neck” for the practice owner – no one has a crystal ball when it comes to selling a building. If the desire is to keep the location for a long time, a long-term lease with long renewal periods can tie up the property for many years, while allowing for flexibility should the practice owner want to relocate his/her practice in the future.

If purchasing a practice, and there is a lease involved:

From a real estate standpoint, if you plan on purchasing the practice, and there is a lease involved, you’re inheriting the seller’s lease, which is the single most important factor that is overlooked in a purchase. If not otherwise specifically stipulated in the existing seller’s lease agreement, all of the lease provisions will convey to the new owner – and may not be favorable to the (new practice owner) dental tenant.

It is critical that the existing lease be evaluated for sound business protection. In many instances, while the existing lease is valid and enforceable, it doesn’t contain tenant protections and rights, placing the tenant at a future financial disadvantage.

DENTREXX Does What Others Don't.

DENTREXX exclusively represents dental tenants and buyers in selecting strategic locations, negotiating money-saving Letters of Intent, and in negotiating business protective stipulations throughout the dental lease.

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Leave the real estate portion of your dental practice to us.

FOCUS ON CASE ACCEPTANCE.

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Don’t assume the seller’s possible lease headaches.

Renegotiating the existing lease is an option for the practice purchaser; but, generally speaking, it’s never a good idea to renegotiate an aged lease. It is always best for the purchaser to enter into a fresh lease to assure that the business framework provides business protection for present and future business needs. Remember, there is legal protection and business protection – the dental tenant needs both.  

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Consider the cost of purchase vs. the cost of a start-up with a lease in place.

Locking up capital for a purchase may not be the best use of funds in the long run. Flexibility is largely decreased for the possibility of other investments that can facilitate practice growth. Usually, a purchaser will pay top dollar for a good practice, although many times the practice worth is over-valued. Most statistics say that 30% of existing patients drop off with a new dentist. Two reasons: the patient base may be exaggerated by the seller, or patients look elsewhere for another dentist.  

What dental practices don't know can cost them thousands...

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If the dental tenant has no broker, the landlord pays the listing broker the entire agreed-upon fee. If the dental tenant has broker representation, the Landlord’s broker pays a portion of his/her fee to the dental tenant’s broker – and there is no cost to the dental tenant.

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The Value of Well-Defined Dental Office Lease Renewal Options

Dental tenants should never settle for “renewal options at market rate” unless there is an accepted method of determining market value to arrive at a lease rate. Tenants should not sign a lease without the specifics of the renewal right.

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The Age-Old Question: Whether to Lease or Buy Your Dental Office?

There is a fallacy created by most real estate salespeople/brokers or unlicensed consultants, that it’s always best to buy your location rather than lease it, making it seem that a purchase is a guaranteed win for the purchaser. Not so fast, here!

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Buying a Dental Practice? It's Important to do the Homework!

Purchasing a practice is a huge emotional and financial investment and entails lots of moving parts. Dentists shouldn’t embark on such a journey without careful evaluation by a team of professionals who have a solid and longstanding reputation of helping dentists.

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DENTREXX Dental Practice Success Stories - Real Dentists Share Their Personal Experiences

Satisfied DENTREXX clients proudly share their practice's stories of success and the positive impact DENTREXX lease negotiations have had within their practices.

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