The One Question You Must Ask When Buying a Dental Practice
The Key Question: Why Are You Selling Your Dental Practice?
This question is simple but incredibly telling. The answer you get will provide insight into the future success of the practice, so be ready to listen carefully. Here are the six most common responses, ranked from best to worst.
1. Retirement
This is the best answer you can get. A dentist retiring often means the practice has been successful but the seller is simply ready to move on. However, even if a dentist says they're retiring, you still need to ensure they sign a non-compete agreement. You don’t want them opening up shop across the street and taking patients with them. Also, inquire about their future plans—are they financially stable enough to actually retire, or could they return to work out of necessity?
2. Health Issues
While health issues are unfortunate, this can also be a valid reason for a sale. The key here is to investigate whether the dentist is truly stepping away from work for good, or if there's a chance they might return to practice after recovering. Serious health conditions like strokes, cancer, or even death can prompt a sale, but they also come with unique challenges—such as patient attrition after the selling dentist is no longer practicing.
3. Moving
When a dentist says they’re moving, this could be a neutral or positive reason depending on the circumstances. If they’re relocating for family or personal reasons, the practice may be in good shape. However, if they’re vague about where they’re moving or why, it’s a red flag. Dig deeper to ensure they're not trying to escape from a failing practice.
4. Burnout or Career Change
Burnout is common among dentists, and while it may seem harmless, it could indicate deeper problems with the practice. If a dentist is selling because they no longer enjoy the profession, ask yourself: Is it the career or the practice that’s driving them away? Make sure their burnout isn’t tied to issues within the practice itself, like poor patient retention or financial instability.
5. They Have Another Practice
If the seller owns multiple practices and is offloading one, tread carefully. Often, this means the practice they’re selling isn’t as profitable or desirable as their other locations. While it could be a chance for you to improve the practice, it’s a sign you’ll need to do more due diligence and potentially negotiate a lower price.
6. The Practice Is Failing
This is the biggest red flag of all. If the practice is struggling, you need to find out why. Failing practices can be salvaged, but only if the issues are fixable. Maybe the dentist has personal problems like addiction or poor management skills, but if the failure is due to location, competition, or lack of patients, it may not be worth the risk.
Conclusion
These six answers can tell you a lot about whether a practice is worth buying. Whether the seller is retiring, moving, or selling due to burnout, it’s essential to dig deeper and get the full picture. Always ensure there's a non-compete agreement in place and evaluate the health and profitability of the practice.
To help you make a better decision, I’ve created a free Practice Evaluation Checklist to guide you through the process. You can download it here to make sure you have all the key information before purchasing a practice.
If you’d like personalized help evaluating a practice, don’t hesitate to reach out! We specialize in guiding dentists through the practice-buying process. Contact us at email or visit our website to learn more.
Becoming a practice owner is one of the biggest and most profitable decisions you’ll ever make. Don’t sleep on this opportunity—get started today!
