DENTAL PRACTICE DUE DILIGENCE WHEN BUYING A PRACTICE

Every step you take when buying a dental practice is important. However, perhaps the most significant phase happens after sending your LOI to the seller. This article breaks down the art of dental practice due diligence. Art Wiederman is an expert on this particular subject. He is the guest on Episode 14 of the Dental Unscripted Podcast.

He is the Dental Division Director at the CPA firm Eide Bailly. He has over 38 years of experience helping dentists. Specifically, he helps them answer important questions about the profitability of a dental practice. To get a brief overview of everything he and Michael Dinsio talk about, keep reading. You can listen to the entire conversation right now on YouTube, Spotify, or Apple!

WHICH NUMBERS MATTER MOST?

Art’s goal is to help dentists dig into the nitty-gritty of the practice they are buying. He focuses specifically on the numbers that “tell the story” of a business. How much is the production compared to the overall evaluation of the practice? How many patients have they seen in the last 18 months? How much will the buyer need to make to live a comfortable life in the area?

While these numbers might seem straightforward, getting them isn’t. Practice software doesn’t calculate everything correctly most of the time. It often lacks the accurate data necessary for an adequate due diligence. So, the buying dentist needs to get the correct information. They must also learn how to examine it.

IT’S ALWAYS ABOUT INSURANCE ISN’T IT

Getting credentialed working with insurance providers is absolutely required for many practices to succeed. Knowing current insurances and rates can make a big difference in getting a strong start for a buyer. Does the practice currently only accept Delta Dental Premier? Or are they open to several PPOs and Medicare/Medicaid?

Switching a Delta Premier practice to a largely PPO-based one can take a long time. Art says these transitions can sometimes require more than a year of negotiating with insurance companies. Due diligence allows the buyer to know where the starting point is insurance-wise. It also enables them to put together a plan of action to make any changes.

THE NECESSITY OF WORKING WITH A PROFESSIONAL

Art is comfortable looking through balance sheets and tax returns to extract necessary information. He can do this because he is an accountant with decades of experience. A dentist typically can’t expect to look at spreadsheet data and see everything.

That’s why working with an accountant with dental experience is so important when buying a practice. Not only do they help you ask the right questions, they also know the right ways to get the true answers. Being a part of a transition team allows you to identify potential pitfalls and opportunities. These “devil in the details” may not be obvious at first glance.

Art goes much more in-depth about these subjects and many more while discussing real-world cases he’s seen throughout his career, so be sure to check out the full episode on the podcast before making any big decisions! You can also reach out to NEXT LEVEL CONSULTANTS to assist in your dental transition.

Our mission is to give you the information and confidence necessary to buy a dental practice. Michael Dinsio is a trained buyer representative that has supported hundreds of dentists buy a practice throughout his career.