Why NOW Is the Right Time to Buy a Dental Practice

Becoming a dentist did not just happen out of circumstance. You had to take the first step in realizing your goal. The four years of dental school took tremendous drive, dedication and dollars. But you got through it. Boards were passed, and now you are a licensed dentist. Now, you have been practicing in the “real world” as an associate dentist for a few months, maybe a few years. Maybe you work for a solo practitioner. Maybe you work for a corporate dental practice. Undoubtedly you have spent time envisioning what your practice career will look like. What is your next goal? Do you want to work alone or with a small group? Is your only option to work for corporate dentistry? What other options do you have? Despite what you may have heard to the contrary, private dental practices are alive and well. For many of you, there may not be a better time for you to take this first step towards practice ownership than NOW!

Earning Capacity

Money does not buy happiness, but that being said, would you rather be paid more or less for producing the exact same amount of dentistry? Even the most altruistic dentist would opt for being paid more. How much more? Let’s assume Dr. X works for corporate dentistry and is making 28 percent of their adjusted gross production. If we assume Dr. X’s adjusted gross production is $500,000.00 annually, this equates to $140,000.00 annually.

What would Dr. X’s compensation be if they owned their own office? Let’s assume Dr. X buys an office with the capability to continue producing $500,000.00 annually. At this office, we can conservatively assume hygiene production of $200,000.00 annually, leaving the practice with $700,000.00 of adjusted gross production. The average overhead for a dental practice is 60 percent. Applying this overhead to Dr. X’s practice, there would be $280,000.00 left after paying all of the practice’s bills. However, Dr. X still has to pay for the loan taken out for purchasing the practice. If we estimate the purchase price for the office to be $450,000.00, and the terms of Dr. X’s loan were 5 percent over 10 years, Dr. X’s annual debt service would be $57,300.00. This would leave Dr. X will $222,700.00 annual income for doing the exact same amount of production. Rather than being paid 28 percent of production, he/she is earning over 44 percent of production after paying all the bills including the bank loan!

Let’s take those numbers and extrapolate them over Dr. X’s entire practice ownership career. Dr. X purchases an office at 33 years old and operates that office with zero growth over the course of a 25-year ownership career (this means never raising fees while productivity remains flat … an extremely conservative estimation). A additional $82,700.00 per year is placed in investments earning 5 percent per year. As a practice owner, that would earn additional income of nearly $4,000,000.00 over the course of a professional career versus remaining as an associate over the same period of time. This also assumes Dr. X retires at 58 … not too bad. Keep in mind that this does not factor in the value of Dr. X’s dental practice at the time of retirement. Anything the practice sells for at retirement time is in addition to what was already earned by way of purchasing a dental practice.

Maximizing your time and earning capacity can make long term financial plans a reality.

Personal and Professional Satisfaction

When you are an employee, there are expectations. What hours will you work? How much personal time will you will have? How you will be compensated? What procedures are you expected to perform? These expectations change dramatically when you have ownership. Granted, they do not go away. Rather, they become something you control and not something dictated to you. With that freedom comes tremendous personal and professional satisfaction.

YOU have the ability to practice dentistry in the way YOU desire! You want to make equipment changes … not work on Fridays … incorporate new procedures into the practice … the choice is YOURS to make.

Talk to friends and colleagues who are practice owners. Ask them if the move into practice ownership was a good decision.

Practice Quality

As recent as five years ago, finding a dental practice on the market with modern amenities posed a challenge. Times have changed rapidly. Practices that utilize digital radiography, paperless charting and fully integrated computer systems are much more common in today’s dental market. It will not be a surprise that some capital outlay may be required to bring a purchased practice to the level that you desire. Undoubtedly, you will want to make some changes. The good news is the wholesale overhauls of days past appear to be largely in the past.

I recommend visiting an office or two for sale and get an idea of what practices currently on the market look like.


An obvious concern when contemplating practice acquisition is, “How can I afford to buy a dental practice?” Very few are fortunate enough to have access to several hundred thousand dollars enabling them to independently make such a large purchase. For the rest of you, I have fantastic news! Banks are literally lined up to lend you money to make your practice ownership dreams a reality. Hearing this, many of you are likely saying, “That’s great, but I have student loans, a mortgage, not to mention personal/ family expenses. There is no way I will qualify for a dental practice acquisition loan until I pay down my existing debt.” Guess what. You are actually a “typical” borrower. Lenders are more than accustomed to borrowers having these types of expenses, and they lend to people just like you. As ironic as it may seem, the easiest way to get out of debt is to take on additional debt! Good debt. Debt that enables you to increase your earning potential, providing you with an opportunity to not only pay off the practice acquisition debt, but also satisfy your personal debts in a more efficient manner.

Further, interest rates continue to be historically low. Beginning the conversation with a lender will not commit you to anything. Rather, it likely will open the doors for you to see what your possibilities really are … and I am willing to bet you will be pleasantly surprised.

Ownership Structure

Practice ownership does not have to come at the expense of leaving where you currently practice. Maybe you are working at a practice as an associate and it’s the perfect practice for you. Is your employer open to allowing you to buy in to the practice? For some, the prospect of dental practice owner-ship alongside a peer holds many advantages – camraderie, coverage during vacations and shared cost of equipment purchases, to name a few. Further, small group practices also often carry an additional benefit of lower overhead, meaning it is a more profitable practice. Because many older doctors feel the same way for the reasons above, these scenarios have become much more prevalent than in years past.

If this type of arrangement best suits you, have the conversation with your employer. Discuss bringing in a dental practice advisor (accountant, attorney, consultant) who can help you navigate whether this is a viable option for each of you as well as the practice. If not, these types of scenarios do exist. Contact an advisor to assist you in finding what options may be available in your area.

Whether you are ready to begin exploring what prospects await you in a new practice or whether you wish to move into an ownership position at your current practice, you owe it to yourself to start that process now. Quality practices and access to acquisition funds can mean a lifetime of difference not only to you professionally and personally, but also financially. Don’t miss out on this opportunity. Take that first step!

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