Buying a dental practice doesn't happen in one smooth, easy step. In fact, throughout every step of this process, you need a team of advisors that will help track your needs and ensure that you are making wise financial and legal decisions to protect yourself as you purchase your practice and learn more about what it has to offer.

Before you purchase a dental practice, you need to:

• Secure financing: you need to know how much you can afford when you're ready to buy the right practice for your needs.

• Develop an understanding of the health of the practice. Does it have enough clients to cover your financial needs? Will you need to turn around a struggling practice, or does it already have a firm foundation?

• Hire a lawyer and an accountant to work with you as you purchase your practice.

Once you've moved through these three important steps, it's time to gather critical financial data about the practice you're going to be purchasing.

What Members Do You Need for Your Advising Team?

As you're buying a dental practice, it's important that you have the right members for your team. Your specialty is dentistry, which means that you need your advising team to help walk you through the other steps in the process.

The Lender: Your money has to come from somewhere--and you need a dental lender who will provide you with decent rates and a strong understanding of what you can expect from your new purchase. Choose a lender with experience in the dental industry such as Bank of America or Wells Fargo who have a team of people with direct experience in dental practice acquisitions.

Your Dental Lawyer: As you're purchasing your practice, your lawyer will accomplish four key things for you:

• Reviewing the letter of intent to ensure that it takes your best interests into consideration

• Advising you about how to create the right entity for your practice, including the type of entity that's right for you

• Reviewing the lease for your practice and negotiating it as needed

• Advising you about your purchase agreement and any factors that you need to take into consideration

Your Accountant: Your accountant is responsible for taking care of your money throughout the transition to owning a dental practice. When you hire an accountant, you want them to:

• Examine the financial paperwork of your new business, including tax records, payroll, and other factors, to ensure that your practice will be a good investment

• Determine how much practice you can afford--that is, how much you can afford to pay for the loan on your practice, including taking into consideration other factors like home loans, student loans, or car loans

• Preparing future tax returns and other critical financial information, both for you personally and for your practice

• Providing critical advice about managing your taxes and your finances this year, as you buy a practice

Financial Planners: Surprise! Your accountant isn't the only one responsible for helping you deal with money as you make the transition to a dental practice owner. Your financial planner will:

• Help you plan for your future financial needs, including retirement

• Evaluating your assets and your income to determine how much money you'll have when you're ready to retire

• Shifting your financial plan annually in order to reflect your changing financial needs and concerns

Practice Management Consultant: Often, practice management consultants don't become part of the team until you've had your practice for a few years. Bringing one in from the beginning, however, can provide critical information that will make it easier for you to make important decisions about your practice. They:

• Help manage the transition in ownership within your practice

• Help determine potential sticky spots and smooth them out so that you will end up with a better transition for everyone involved

• Grow your practice and increase your patient base through careful advice and planning

How Should You Choose the Members of Your Advising Team?

It's important to choose the members of your advising team with care. You want to be sure that you're choosing high-quality lawyers, accountants, and financial planners who will give you the right information about moving forward with your practice and your financial needs. Use these criteria to help evaluate the advising team you're choosing.

Look for lawyers, financial planners, and accountants with experience working with dentists. While most lawyers can probably draw up a competent letter of intent, for example, a lawyer with experience in the dental field will be able to handle the specific details related to purchasing a dental practice.

Know who your advisors are working for. You want advisors who are working for you, specifically, and who have your best interests at heart as they help you make critical financial decisions. In the case of entities like practice brokers, who provide advice for both buyer and seller, you may not be sure that you're getting the best advice for you, specifically. Defining who your advisors really work for and whose interests they have at heart will help you make more effective decisions about who to trust.

Check the financial information. You don't want a financial planner who has never worked with a dentist before or a lawyer who opened their practice weeks ago, but you also don't want to find yourself paying a fortune for those advising services. Look for practices that offer a reasonable budget, then be sure that you fully understand what you're paying for as you work with them.

Skip the family members who vaguely understand some aspect of your practice. It's natural to turn to family to help you during times of big transitions. Unless your family member has extensive experience in working with dental practice purchases, however, they can't give the same advice you'd get from a professional who specializes in your field. Instead, opt for the experience. You'll get higher-quality advice that will substantially benefit your practice in the long run.

Buying a dental practice is a big step for you as a dentist. You want to make sure that all of the critical details are taken care of, and that means having an advising team that will help you move through the process successfully. By carefully considering your team, you'll increase your odds of success long after you purchase your new dental practice. If you’d like a recommendation for high-quality advisors that you can trust, please contact us below.