What Are Some Of The Things You Should Look For When Considering Buying A Specific Practice?

The Balance Sheet should be clean. You shouldn’t buy the seller’s debt.Cash Flow should cover dividends, if any (if incorporated), in addition to your salary, and capital expenditures. If it doesn’t, a practice would have to "dip-in" to an operating line of credit, which is not a sign of good health.Operating Profit Margin or "overhead", is calculated by dividing earnings before interest, taxes and depreciation, (EBITDA), by Gross Revenues, and should not be greater than 60 - 65% in a non-incorporated practice, (one that does not include the Dentist ‘s Salary) or 85 – 90% in an incorporated practice, (where dentist’s salary is included at 25% of Gross Revenues).

If a practice stands out from competing practices by being different, i.e. it has carved a niche market for itself, such as a focus on prevention, restorative, cosmetic, walk-in emergency treatment, extended hours, esthetics etc., then that practice is potentially more attractive than others. A practice that has something special or unique that sets it apart from the crowd should make it more valuable than another.