5 Tips on Appraising a Dental Practice Before Buying

EAST BRUNSWICK, N.J. - March 5, 2016 - PRLog -- For a dentist, buying a dental practice is one of the most important decisions he or she will ever make. According to Pishoy Fahmi CPA, owner of P.N.F. Certified Public Accountants & Healthcare Advisors, making a thorough decision can lead to financial stability and a successful career in dentistry. Pishoy shares five important tips on appraising a dental practice before making a buying decision.

1. Review 3 to 4 Years of Tax Returns:

Reviewing a dental practice’s previous tax returns will allow one to evaluate its financial stability. It will provide the financial details needed to measure the historical performance of the practice.

2. Review the Cash Flow Model:

The practice’s cash flow model should have a 5 to 10-year projection. The cash flow model should provide the debt service needed to finance the purchase of practice, variable and fixed operating expenses, the compensation needed by the buyer to support his/her financial needs and the growth rates.

3. Aged Accounts Receivables Report:

The report should show the competence of the collection policies in the dental practice.

4. List of Current Employees, Salaries and Benefits:

Prospective buyers should request for a comprehensive list of the current staff – including information about their health benefits and salaries.

5. The Company’s Financing Ability:

Banks and lending institutions look at the practice’s ability to generate a sufficient amount of cash flow to cover debt. For example, the buyer will need to have (or borrow) $50,000 to $100,000 worth of working capital to launch the dental practice.

Bonus: Gain access to the patient demographics and the number of new patients. A practice’s demographics can be retrieved through a software package. As far as patient’s are concerned, a buyer should know the number of patients. Knowing the amount of patients will give the buyer the new patient flow into the practice.

About P.N.F. Certified Public Accountants & Healthcare Advisors

P.N.F. Certified Public Accountants & Healthcare Advisors provides accounting services for health professionals throughout the East Coast, including New Jersey, New York and Connecticut. For more information about Pishoy’s accounting services, visit their website at: http://www.pnfcpa.com or call (732) 605-1529.