Dental Practice for Sale: 4 Terms the Involved Parties Should Know

Being a dentist can be a great feeling especially if you have a sizable number of clients who find your services reliable and trustworthy. However, it may be hectic at times when a dentist intends to buy or sell the dental practice. Selling a dental practice together with the brokers requires the dentist to put more energy and efforts into the purchase price. Most dentists include the down payment or their retirement fund in the purchase price when selling the practice, while those buying it concentrate on the future cash flow. Besides the tax consequences and price tag, the parties interested in a dental practice for sale need to think about these 4 terms.

Payment terms

Cash is usually the official language in any dental practice business. Most dentists selling their practice prefer cash payment terms over installments. The argument that most buyers have is that the sellers should have no problem taking a lower price especially if the payment is in cash terms. On the other hand, buyers have no problem paying a higher price particularly if the practice seller is willing to accept a promissory note. Cash deals are always palatable to the sellers since non-payment risks and the fear of a reduced future value of the practice are eliminated.

Accounts receivable

One of the key aspects that any seller finds hard to dismiss is whether the buyer would also be willing to purchase the receivables. Warranted higher price would not be avoided especially if the buyer will be legally allowed to keep post-closing collections. One of the main issues that can be hard to establish is whether the full face value of the receivables is worth. The seller may at times be ready to pay the buyer a specified administrative fee if the receivables are not included in the purchase price. The buyer should collect the receivable accounts to ensure the patients don’t notice any division between the buyer and seller. This is important in any deal involving a dental practice for sale in Sydney.

Accounts/liabilities payable

Some people argue that lowering the purchase price helps to reflect the payables and liabilities that most buyers assume. In fact, modifying the purchase price is important since it reflects the dental items that have been paid in arrears or prepaid. According to those who have been in the dental practice business for a long time, most buyers assume the ongoing prepaid dental contracts, personal property taxes and utility charges. Payable accounts and liabilities are essential components in most Sydney dental practices for sale and they should not be ignored. Dental Acquisitions

Lease terms

Buyers should understand that they don’t compensate a high-market lease by getting a low purchase price. Any buyer interested in a dental practice for sale should find out the increase rate of the rent per year. It’s also important for buyers to find out if they would have to pay maintenance expenses, insurance and taxes. At times, the actual lease cost may be higher than what the buyer had anticipated. Asking about the remaining lease years, the renewal terms as well as the cost for renewal is important in dental practice business deals.

The fact that you are buying a dental practice from a person you know does not mean you should consider the above terms irrelevant. Dismissing any of these terms would be dangerous because you may come to realize some of the things that went wrong when it’s too late.