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For many dentists, practice ownership is a long-term goal. One of the fastest ways to get there is by purchasing an existing practice. Instead of starting from scratch, you inherit established patients, scheduling, cash flow, staffing, and working systems. But like any major investment, an acquisition comes with risks and requires careful preparation.
Why Dentists Choose Acquisition
Immediate Revenue
One of the biggest benefits of acquisition is instant cash flow. A healthy practice typically generates 25–40% in seller discretionary earnings (SDE) relative to collections. SDE represents the total financial benefit available to a doctor-owner—it includes salary, perks, and net profits—making it a key measure of what you can actually take home from the practice. If SDE is below 25%, it may be a sign of operational inefficiencies that need further review.
Built-In Infrastructure
When you purchase a practice, you gain more than just equipment:
- Lease/location already in place
- A loyal patient base with ongoing treatment needs
- Staff who already know the systems
- Existing branding, referral networks, and community recognition
- Established scheduling, billing, and insurance processes
This foundation allows you to focus on patient care from day one.
Challenges to Consider
Rising Valuations
In many markets, corporate buyers have driven up practice prices, making it tougher for individual dentists to compete. However, opportunities still exist where corporate buyers are less active—often in areas where they cannot secure doctor-employees to work back in the practice. Since those employees are essential for corporate groups to justify paying a premium, these markets can present favorable entry points for individual buyers.
Equipment & Technology
Practices vary widely in their equipment and technology. Some are fully modernized, others have equipment that is adequate but dated, and older practices may require immediate upgrades after purchase. Understanding the level of post-purchase investment required is critical—not only for your financial planning but also as a potential negotiating lever when setting the purchase price.
Staffing & Culture
Existing staff can be both an asset and a challenge. While an established team with solid systems can make for a smooth transition, compensation that’s above market or misalignment with your management style can create hurdles. Thorough due diligence on staffing and culture will help you anticipate what’s working well and what may need to change.
Patient Retention
One of the biggest risks in an acquisition is losing patients during the transition. Without a thoughtful handoff, patients may use the change in ownership as a reason to switch providers. A clear, transparent transition plan—endorsed by the selling doctor—can reassure patients, build trust, and help you retain the practice’s value from day one.
Financing Options
There are three types of loans you may encounter when exploring financing for your dental practice.
| SBA Loans | Business Loans | Specialty Loans | |
|---|---|---|---|
| Down payment | Possible down payment | Could require 5-25% down | Up to 100% financing |
| Rates | Higher rates/fees | Lower rates versus SBA | Best terms |
| Loan amount | $100,000-$5MM | $50,000-$10MM | $100,000-$5MM |
| Application | Most paperwork | Traditional bank application | Easiest route for approval |
| Approval time | Longest approval time | Average approval time | Fastest approval time |
| Qualification | Easiest to qualify for | Collateral based lending | Easy to qualify for |
| Term | Up to 15-year terms | Up to 7-10-year terms | Up to 15-year terms |
| Collateral | Potential lien on personal residence (depends on available equity) or other personal property. | Loan covenants (strings attached with oversight) |
Specialty lenders often provide 100% financing, with terms such as:
- 15 years for practice loans
- 25 years for real estate loans
- Working capital built into the package
Compared to SBA or traditional bank loans, dental-specific lenders often offer more flexible terms, 100% financing, understand how a dental practice works, and no liens on personal residences or property.
Due Diligence Checklist
Before closing, review:
- Financials: At least 3 years of tax returns and financial statements, AR aging, and production reports
- Operations: Staff compensation, lease terms, equipment condition, insurance contracts
- Legal: Non-competes, asset transfer terms, transition agreements
Building the Right Team
Successful acquisitions don’t happen alone. Surround yourself with professionals who know dentistry and how to build a successful practice:
Key Team:
- Attorney: Dental-specific, experienced in practice transitions
- CPA: Skilled in analyzing tax benefits and projections
- Lender: Industry-focused with competitive loan structures
- Advisor: Guides long-term planning and practice growth
Other Needed Advisors:
- Insurance professional
- Real estate professional
- Computers / IT
- Business consultant
- Equipment and supply rep
Preparing for Financing
Strengthen your financial profile before applying:
- Improve your personal debt-to-income ratio
- Maintain strong credit
- Keep ~10% of the loan value in liquid assets
- Review retirement savings
- Pay down consumer debt
Review your professional experience to ensure you are ready for ownership:
- How long have you been practicing? (including residency)
- Do you have management experience?
- Are you able to access reports to show production abilities?
Transition and Growth Planning
A smooth transition requires cooperation from the seller. Look for:
- Patient and staff introductions
- Training on daily operations
- Clear communication with referral sources
After acquisition, plan to invest in marketing, with things like patient retention campaigns, website updates, and community outreach, to protect and grow your base.
Final Thoughts
Buying a dental practice can be one of the most effective paths to ownership. With established patients, cash flow, and infrastructure, the right acquisition can be the foundation of long-term success. But it requires diligence, the right financing, and a strong team to protect your investment.
At Panacea Financial, we work with dentists preparing to purchase a practice. With tailored lending solutions, we can help you evaluate opportunities, secure financing, and position your new practice for growth.
