The 5 Essential Finacial Things You Need to Know Prior to Purchasing a Practice With Dr. Sonny Spera
June 23, 2019
In this interview, Dr. Drew Byrnes sits down with Dr. Sonny Spera to talk about practice transition and acquisition. Sonny has years of experience buying FFS practices and making them successful. He shares:
Income and expenses- how profitable is the business?
Does the dentist own the building? If so is it for sale? Could it be?
What’s the rent?
Is it expandable? Can you increase the size if needed? Any restrictions in the lease?
What’s the term? Read the lease agreement-who’s paying the taxes and if so which ones? Are there any grandfathered in things? Such as tax abatement which won’t transfer to new owner or won’t be applicable because it’s based on age of owner?
Be great to have layout of practice (floor plan)
3. Practice breakdown-
Production collection by provider
Production collection breakdown by category
Types of procedures not being done almost as important as what’s being done
4. Employee list with salaries and benefits- written and unwritten
Job titles and job descriptions
Perks- free dental? Day care? Travel? Extended family?
Insurance? Days off? Sick days? Retirement plans?
5. Practice valuation-
We can debate the specifics however it’s good to have something on hand
Equipment list and approx value (again highly debatable)
Practice wants/ needs and any future purchase agreements or understandings
If you have good enough information you can predict some cash flow based on what’s being done, who’s doing it and what’s it gonna take to continue? Increase? Minus purchase financing costs and purchases needed and what the incoming Dr needs to survive/thrive…
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