Best Business Consultants near Abington, PA

There are numerous ways to find prospects: the internet, professional journals, suppliers, newspapers, referrals from other professionals, brokers, residency programs, and schools. Practice brokerage has become much more common due to the complicated nature of the process. Using an experienced professional is the best way to locate buyers or sellers. If you decide not to use a broker, be aware that finding a prospective buyer or seller is just the first of many steps.

The answer depends on a number of issues. If the situation is a general, solo practice, the answer would be no in most cases. If the dental practice is large enough to support more than one doctor or if it is a specialty dental practice, then the answer might be yes. Successful dental practice transitions can occur without the buyer working in the practice beforehand. If there is going to be an associateship phase, the details of the eventual transaction should be negotiated upfront (preferably even before the associateship begins).

The value of a dental practice has two components: tangible and intangible. The tangible assets include equipment, furniture, supplies and instruments. The intangible portion of the value (commonly referred to as goodwill) is defined as value a buyer is willing to pay over and above the value of the tangible assets. It is based on many factors, but most importantly the cash flow and the desirability of that particular practice. A buyer will evaluate many factors (e.g. location, patient base, staffing, fees, etc.) and the more positive those factors are, the more he will be willing to pay for a cash flow. As a general rule, the intangible portion of the value of a dental practice is about two-thirds to three-quarters of the overall value. Be very careful about trying to use a rule of thumb to value a practice a dental practice. There are many of them and none is sophisticated enough to value all practices in all situations, other than to demonstrate averages rather than specific values. It is advisable to have a professional who is knowledgeable about the dental marketplace do an appraisal of the practice.

The money can come from any or all of three sources: the buyer, the seller or a bank. The seller should decide before the dental practice is put on the market whether or not he wants to finance part of the sale. There are both advantages and disadvantages to seller financing. In cases of a complete sale, sellers are often reluctant to hold a note. If they do, there should be a sufficient down payment along with appropriate legal documents and insurance. In a buy-in, since the risk is significantly less, the majority of the purchase price is frequently paid over time to the original owner. Over the last few years, many banks and finance companies have entered the financing field. Typical terms in a complete dental practice sale are 100% of the purchase price plus working capital, with a seven to ten year payout at prime plus one to plus two. The better financial condition the buyer is in, the better the terms he will get. The two most critical issues the banks review are the credit rating of the buyer and the cash flow of the practice. They need to be sure there is sufficient revenue to pay the overhead, the debt service and the personal needs of the buyer.

Many first time practice owners will have worked for a year or two or more as either an Associate in a solo or group practice or as an Associate for a Dental Service Organization (DSO). Once you have a few years of experience and have a proven level of production banks will be more likely to provide financing even if you still have significant school debt. After you graduate it is never too early to reach out to a broker who has listings in an area you are interested in to get on their mailing list so that you begin receiving listings.