The Cost of Buying a Dental Practice

There’s a lot more that goes into the cost of buying a dental practice than just the sticker price. Dental practices can cost anywhere from a few hundred thousand dollars to over a million dollars depending on size, location, history and a number of other parameters.

A good rule of thumb for determining the expected cost of a dental practice is 60% of the adjusted gross annual production of the practice. But the advertised number doesn’t tell the whole story.

When considering the cost of a dental practice, it’s important to also consider the following four things.

Four Things to Know About the Cost of a Dental Practice

  1. Low price does not equal high value. Just because you can buy a dental practice at a great price does not mean you’ll be set up for financial success. A higher-priced practice with a strong financial history may be the better long-term option, despite the higher initial investment. 
  2. Consider the value of included supplies or the cost of their replacement. It is often standard practice for the seller to include inventory and supplies at a “customary level.” But it’s not always the case, and for implant and orthodontic practices, the cost of supplies can be quite high. Always take into account the value of any included inventory and equipment, and consider the startup costs for anything not included.
  3. The terms of the lease can bring hidden costs. The selling price of the practice might be a great deal, but not if the building rent is well above market value. How has the rent increased over time? What are the taxes and insurance? And if the seller owns the building, the building itself might not convey with the sale of the practice and may require a separate transaction if you wish to take over ownership of the property as well. Some 60 percent of practice owners own their building, which can prove to be a valuable long-term investment, even if the practice itself does not.
  4. You might get a discount for paying in cash. Many sellers will agree to a lower price if you bring cash to the table and do not need any financing. If you have the money upfront, don’t be afraid to use that as negotiating leverage for a dental practice that is just out of your price range.

Wish to learn more about buying a dental practice and even see some dental practices for sale? At Benevis, we assist dentists with the purchasing process and help position them for the best return on their investment. See how we can help you today.

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Sources:

Dental Economics: http://www.dentaleconomics.com/articles/print/volume-89/issue-10/features/to-buy-or-not-to-buy-your-move.html

The Wealthy Dentist: http://thewealthydentist.com/surveyresults/133-dental-practice-leases.htm

Zac Rhinesmith

Zac Rhinesmith

770 710 3042 Email me

Zac joined Benevis as a Manager of Talent Acquisition in 2015. He works to identify dentists who would be interested in ownership opportunities at our affiliated practices across the United States. Zac enjoys really getting to know the dentists he works with so he can help them purchase a practice that perfectly suits their needs. Zac spends his free time with his wife and two dogs. When the weather gets warm, you can usually find him on the lake, at a Braves game, or playing golf.

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