If you are thinking about buying into an established dental practice as a partner to a senior dentist, there are a lot of things you must keep in mind before you take the plunge. You don’t want to make rash decisions only to be disappointed when your partners are not what you had hoped for. To avoid this, you must take your time and find the right fit. Also, you must consult with a San Diego Dental Attorney to handle the legal aspect of a partnership. Both you and your possible partner must consider major issues including the following:
Like-mindedness
Before you finalize the partnership, consider if you and your partners share the same business and professional philosophies. You need to be like-minded about significant issues like when and how to invest in your dental practice. Also, you must consider the culture of your practice and whether your possible partners feel comfortable with it.
Due Diligence
Before you buy into the practice, review the documents the senior dentist offers. Ask any questions you may have about every aspect of the business including patient records, financial statements, financial records, personnel records, bank statements, tax returns, marketing programs, accounting functions, and others. Understand the expenses of the practice during your due diligence and do not hesitate concerns when you spot some issues.
The Purchase Price
Ensure you get a fair market third-party appraisal of the dental practice to avoid frustration with the outcome. Often, buyers and sellers can get emotional during negotiations. But remember that open communication is important. After all, you and the senior dentist will be working alongside each other for a lot of years. When valuing a practice, factors such as the location, years in existence, the ability to transfer goodwill to a possible buyer, the practice’s stability, staff quality, and others must be considered.
The Partnership Agreement
Ensure this agreement addresses the way the dental practice will be handled and who will manage the daily operations. Often, the senior dentist may want to stay responsible for the daily management of the practice. But, you can have the partnership agreement identifying major decisions that call for your input. Also, make sure the agreement must address exit strategy issues the buy-sell section sets forth. You and the senior dentist must establish when a co-owner would be compelled to sell ownership interest and based on what terms. The partnership agreement needs to identify a formula for valuing the ownership interest and give payment terms.
