Buying a dental practice is a stressful time. Many factors need to be taken into consideration, such as finding the right location and funding for the project. One thing to keep in mind is whether to buy into a partnership or go into business alone. Both of those options include a number of factors that need to be taken into account, the following being of absolute importance: The legalities and personal aspects of the business need careful consideration, and these should encompass the practitioner’s dental philosophy and enable the dentist to meet their goals for the practice.
There are two main ways in which a dentist can establish a dental practice. They can either buy an already existing one that has its own patient base, or they can start from scratch. It goes without saying that a new practice will have considerably larger start up costs taking into account buying new dental units, furnishings and converting a building. An existing patient base, if the prospective owner buys an already established practice, will provide a cash flow instantly from the patient community, as long as those patients do not migrate to another or the predecessors new practice. Conversely a new practice will not have this community of patients, resulting in a need to generate new clientele and will also be bereft of that immediate cash flow meaning that there will be a slower economic start for the practice.
Being the sole owner of the practice comes with its own advantages, drawbacks and responsibilities. The future owner must take into account location regardless of whether they are entering into a partnership or not. They will want to evaluate the community’s ability to meet the practices needs and see if the area can support more dental practices. Financial liability will be exclusive to the sole owner, however what comes with these responsibilities is the freedom of working single-handedly.
As one would expect, being in a partnership also comes with its burdens and rewards. Practitioners who enter into a partnership share financial risk and liability, opposed to sole owners where the financial responsibility lies exclusively upon them. Though on the other hand in a partnership there is the opportunity to discuss and share problems with other professionals, which is not the case with sole ownership.
A good working relationship is key to success between partners as conflict between them can lead to disaster for the practice. A mutual understanding between partners regarding the philosophy of the practice and common interests concerning the practice’s goal is essential. Sole ownership will avoid the troubles that being part of a partnership may bring.
Another useful advantage of a partnership is that in the eventuality that a partner wishes to take time off, the practice can remain open as another partner can cover for them. This is not possible being a sole owner, where the practice must shut if the sole practitioner wishes to take any time off.
Whether the practitioner plans to be the sole owner of a practice or enter into a partnership, the type of building where the practice is established needs to be thought of carefully. Medical complexes are usually modern and stylish buildings and are a popular choice that will attract patients. They also allow for a degree of interaction with other dental professionals, and for the sole owner this can be hard to come by if they have established a practice outside of a medical complex.
Be it starting from scratch or buying an existing practice, another thing to take into account is the competition. There may be a real possibility of overcrowding within the location chosen, which can result in market saturation, so this is of paramount importance. If the practitioner is buying an existing practice and the predecessor sets up another practice that is relatively near, there is a high possibility that their patients will follow. Therefore the buyer needs to draft carefully restrictive provisions (also referred to as binding out clauses) into the sales agreement to stop the seller or retiring partner opening a new practice within a certain time frame or area.
There is a huge amount to be considered when buying a dental practice and it is wise to seek professional, legal help. Luckily there are specialised firms of dental lawyers who know exactly what to do when buying a practice. GoodmanGrant and their team of solicitors have over 75 years of experience, and are committed to helping dentists both with the acquisition of their practices and disposal of them. Whether buying as a sole owner or with partners it does require specialist knowledge of the legalities that come with it. This is why GoodmanGrant can make the difference and offer peace of mind when it comes to buying or selling a practice.
John Grant of GoodmanGrant Lawyers for Dentists – a NASDAL and ASPD member
A NASDAL and ASPD MEMBER