The 5 Essential Finacial Things You Need to Know Prior to Purchasing a Practice

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? 3-4 years tax returns incl YTD 3-4 years P & L incl YTD 3-4 years balance sheets incl YTD Lease agreements, software agreements, loans (equip etc)       2. Location arrangements- Does the dentist own the building? If so is it for sale? Could it be? What’s the rent? What’s included? 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 Pay rates 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…    Do you have a FFS practice? Would you like to be interviewed? Fill out the FFS Stories request form here:https://goo.gl/forms/7TaUF9Nqi49l1RFF2  Episode resources: Dental Membership Directwww.dentalmembershipdirect.comDental Financing Directwww.dentalfinancingdirect.comDental Membership Master Course with Dr. Chris Phelpswww.membershipmastercourse.comSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.