There are risks and benefits to buying a dental practice. Whether you are new to the business of dentistry, or you have several years of experience, there are a few things to consider before jumping into a dental acquisition. To run your own dental practice successfully, you will need to be fully aware of issues that frequently arise, and how to manage them. This article will discuss risks and benefits to acquiring your own dental practice, as well as some tips to running your practice smoothly and successfully.
What is an Acquisition?
Simply, an acquisition is the purchasing of an existing business or dental practice. This includes the business’ existing cash flow, processes and client base. There are different types of acquisitions. These include a buy-out, a buy-in, associate with a buying option and room to expand. A buy-out may be the most common and involves purchasing 100% of the dental practice from a seller. A buy-in means you would pay 25% or 50% of the practice and buy the rest when the owner retires or moves on.
An owner of a practice may want to hire a quality associate and offer them the option to purchase the practice later on – this is associate with the option to buy. Maybe you have an existing dental practice but are outgrowing your current space. An expand option would be the right dental acquisition type for you. Regardless of the type of acquisition, the risks and benefits are similar.
What are Benefits of an Acquisition?
There are benefits with an acquisition that you may not see with starting up your own practice. One benefit is established cash flow. If the company that you buy out has an abundant cash flow, you are already starting out on a positive footing. Another benefit is an established patient base. Patient retention is important, so your practice broker and seller should assist with the notification of transition in order to maintain client base and avoid disgruntled patients.
Along with established patients comes established insurance contracts. Finally, you will already have established staff in place. Ideally, you will want to retain the existing staff for a while, as they are the face of the dental practice to the patients and those personal connections can be vital. The seller should also help ease the transition by providing notice to employees and an introduction before the change of ownership.
What are the Disadvantages of an Acquisition?
Although there are many benefits to an acquisition, there are some risks as well. When you are thinking of owning your own dental practice, you have your own goals and ideas to implement in mind. You should be aware that when you buy out another practice, you are also buying out that practice’s philosophy, processes, systems and workflow. These are all ideas that can be changed but it will take time.
There is also the risk of losing staff and patients during the transition phase. Keep in mind that you may have to start hiring staff quickly after starting, which may be an investment you were not prepared to make. Another disadvantage may be that the equipment and products used at the practice are not at the standards or modern level you would prefer. If you are wanting more updated equipment or certain brands, this is another costly investment.
How Can I Be Successful with an Acquisition?
When choosing a dental practice that is right for you, it is important to reflect on what is important to you. For example, ask yourself:
- “Does this business’ vision match mine?”
- “Does this practice provide the same quality of care that I want to provide?”
- “Do the existing employees work together seamlessly as a team?”
- “Is this organization open to improvements and advancing technology?”
Do yourself a favor and be choosy upfront when seeking a practice to buy; you could save yourself some hassle later.
One of the most important ways to be successful when buying out an acquisition is to take it slow when making changes. This is especially important when there is no transition phase between the exit of one owner and the entrance of a new one. Patients and employees may suffer some anxiety through the new transition. It is important to keep some familiar faces in the office, as well as introduce new processes slowly.
Another key to success is to surround yourself with advisors. By advisors, I mean consultants, attorneys and lenders that have specific knowledge in the dentistry business. These people will know your market and be able to offer you a perspective and strategy for success. Consultants like PPO Negotiation Solutions can analyze the dynamics of the current staff and make suggestions for hiring or changing systems and processes. They specialize in making a change without stepping on toes.
To learn more about how Strategic Practice Solutions can help your acquisition be a success, contact them today for a consultation.