A Must-Do for Any Dentist Buying (or Buying Into) a Practice

It's important to get an expert economic projection. This is probably one of the most overlooked steps in the buying process, which is disturbing because it is also one of the most important.

It's one thing to examine the documentary evidence to get a sense of how a practice has performed in the past. But that's not necessarily a reasonable estimation of how it will perform in the future. To get that, you need to have an expert perform a comprehensive economic projection – one that takes into account the unique variables of your transition situation.

This is especially true in cases where you have a young dentist taking over from an older, experienced doctor. The new dentist can't be expected to match the exiting doctor's clinical speed, even with a fully appointed schedule, and that difference in revenue production needs to be factored in.

With new partnerships you also need a reliable forecast of how revenue, expenses and profits will be allocated and distributed among the owners. In my opinion, no transition arrangement is complete without an economic projection that takes you at least to the end of the buyer's first year of ownership.

By the way, banks love to have this kind of information when they are considering financing options. It gives them some real numbers to work with, and the fact that you commissioned the report in the first place demonstrates that you have sound business sense.

A transaction as complex as buying a dental practice is going to have a lot of moving parts, and the goal is always to address as many of the "unknowns" as you can. Getting an expert projection is a great way to account for one of the biggest variables. For the smart buyer, it is not merely a good idea, it is essential.