Using Data to Analyze Your Practice Acquisition – webinar by Dr. Scott Leune
Dr. Scott Leune, a seasoned expert in dental practice startups and acquisitions, shared actionable insights on analyzing dental practice acquisitions. With over 200 startups under his belt and a career dedicated to mastering the business side of dentistry, Dr. Leune’s goal is to guide dentists toward successful ownership, whether through acquisitions or startups.
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Key Highlights
Understanding the Acquisition Decision
Scott emphasizes the need for a data-driven approach when evaluating dental practice acquisitions. While many dentists debate between starting a practice and acquiring one, he urges a broader perspective: evaluate the local market and opportunities for both options. Acquisitions often appeal due to easier funding compared to startups, but they require a deeper dive into financial health to ensure long-term profitability.
- Key Insight: Avoid emotional decision-making based on aesthetics or equipment quality. Instead, focus on profit margins, cash flow, and the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
- Rule of Thumb: A fair valuation typically involves paying 4.5-5.5 times EBITDA.
Healthy vs. Distressed Acquisitions
Dr. Leune categorizes acquisitions into healthy practices and distressed practices:
- Healthy Practices: Protect existing EBITDA by minimizing disruptions in the first 3-6 months. Gradual, low-disruption changes (e.g., supply vendor adjustments or hiring policies) ensure financial stability.
- Distressed Practices: These require heavy disruption. Scott advises focusing on aggressive cost-cutting, streamlined staffing, and robust marketing strategies to rebuild financial health.
He cautions against purchasing distressed practices without proper business training, as they carry high risk—potentially leading to years of hard work with minimal profitability.
Dental Practice Patient Acquisition Strategies
Scott highlights the importance of patient flow in practice success, advocating for:
- Enhanced marketing strategies tailored to the practice demographic.
- Optimizing case acceptance through improved communication and operational systems.
- Leveraging modern technology like AI-driven tools for marketing and patient retention.
Analyzing Financials for Dental Practice Acquisition Loans
Dr. Leune stresses the importance of evaluating a practice’s profit and loss (P&L) statements with a professional accountant. Adjustments should account for costs like employee benefits, realistic dentist salaries, and discretionary expenses.
- Loan Strategy: Most acquisitions involve borrowing more than the purchase price to fund immediate improvements. Understanding dental practice acquisition loan interest rates is crucial for calculating post-loan profitability.
- Example: For a practice collecting $1.18M with an EBITDA of $219K, a purchase price of $850K reflects a 3.9x EBITDA multiple, signaling a good deal.
The Long-Term Vision
Scott encourages dentists to aim for practices that allow for scalability and financial growth, targeting $2M in collections and $1M in take-home pay within three years. He advises balancing cost-cutting with growth strategies, like assisted hygiene and virtual staff, to optimize overhead.
- Startups vs. Acquisitions: Startups offer customizable locations, modern equipment, and a unified team from the start, whereas acquisitions might require additional investments to fix inefficiencies.
Learn more about Dr.Scott Leune’s The Two Million Dollar Startup Webinar
Closing Thoughts
Scott believes every dentist should invest in business training to confidently navigate dental practice acquisitions and patient acquisition strategies. He warns against staying in mediocre positions due to a lack of knowledge, encouraging dentists to take bold steps toward ownership.
“Bet on yourself, get the training you need, and move forward,” Dr. Leune concludes, emphasizing the potential for wealth and career fulfillment through well-executed dental practice acquisitions.