Acquistion

Question 1

What does a dental attorney do in the acquisition?

Answer 1

1. Review and negotiate the LOI.
2. Review and negotiate terms of the practice purchase contract.
3. Review and negotiate terms of the lease or building purchase.
4. Help Set up a business entity.

Question 2

What percentage should staff wages and benefits be in a practice?

Answer 2

24-28%.

Question 3

What should your lab/supplies percent be on average for your practice?

Answer 3

10-14%

Question 4

What is the average overhead percentage for a good dental practice?

Answer 4

60%

Question 5

What is the average profit percentage for a good dental practice?

Answer 5

40%

Question 6

What is the typical value of a dental practice based on?

Answer 6

Price to Collections ratio

Question 7

What is the most accurate value to base a practice on?

Answer 7

Price to Earnings ratio

Question 8

What is the historical average percent of a practice worth based on the price to collections ratio?

Answer 8

70%

Question 9

What is the historical average percent of a practice worth using the price to earnings ratio?

Answer 9

160%

Question 10

Almost all brokers will base the value of a practice on what ratio?

Answer 10

Price to Collections ratio

Question 11

What are the quantitative factors used to analyze a practice?

Answer 11

1. Collections
2. Profit ratio
3. Employee expense ratio
4. Lab fees and dental fee ratio
5. Rent
6. Hours of Operation
7. Cash flow in line with goals.

Question 12

What is the amount of collections you should look for in an ideal practice?

Answer 12

800k-1M

Question 13

What are the qualitative factors that you should look at while buying a practice?

Answer 13

1. Family test
2. The selling doctor
3. The facility
4. The equipment
5. The team
6. The patients and scheduling
7. Procedures and chart audit

Question 14

What is included in the letter of intent?

Answer 14

1. Included and excluded assets
2. Accounts receivable and an A/R purchase schedule.
3. Purchase price and tax asset allocation
4. Due diligence period.
5. Intentions around real estate.
6. Details around the seller’s transition
7. What will happen with employees and benefits.
8. Redos and rework.
9. Restrictive covenants.

Question 15

What are included assets in an LOI?

Answer 15

Equipment, supplies, furniture, instruments, computers, fixtures, digital assets, etc.

Question 16

What are excluded assets in an LOI?

Answer 16

Cash, personal effects, employee benefits, liabilities of the seller, and any cars the practice has.

Question 17

What is the percent that you should charge a doctor if you continue to collect his accounts receivable for him?

Answer 17

5%

Question 18

What is an A/R fee schedule is purchasing from the seller?

Answer 18

It means that you will pay a percent of the accounts receivable needed to be collectible based on the age of the account.

Question 19

What is the typical amount of time for due diligence for working out and finalizing the necessary paperwork for purchase?

Answer 19

30 days

Question 20

What is a typical restrictive covenant in the letter of intent?

Answer 20

15 miles and 5 years

Question 21

When is an on site visit a must?

Answer 21

Between signing the LOI and the closing documents. You have shown enough to see how the SOP and such is going on at the practice

Question 22

What are the two areas where you can negotiate buying the dental practice without affecting the asking price?

Answer 22

Accounts receivable and asset allocation

Question 23

What is the total percent that banks will pay relative to the previous years collection to buy the practice

Answer 23

85%