Funding Your Dental Practice Acquisition

Funding Your Dental Practice Acquisition

So in last week’s blog, we talked about the important of carrying out due diligence before you commit to buying any dental practise for sale.

But we skipped a head a little.

Of course, you have already decided that this is the right path for you to go down so now is the time to start considering looking at the different financing options. 

Because as you and I both know, nothing in this life comes for free and like anything else…

Finance for your venture must of course, be approved beforehand. 

It is so important that you allocate enough time so it completes properly. Some banks can be quite pedantic when it comes to conducting their own checks and valuations. 

These checks can end up delaying the process for quite some time!  

Be sure to secure this funding early on and provide the bank with as much information as they require. 

Be organised and prompt answering their requests for information.

It is helpful to also keep in mind that the solicitors involved with the transaction may need confirmation from the bank that the mortgage advance will be available when requested, before allowing you to become legally committed to the purchase.

So what will the banks be looking for? 

When you look for a bank loan to fund your Dental practice purchase, it is of course imperative that the terms of the agreement are suitable for you, the borrower. 

But then again, it is equally important to understand what banks expect from you, the applicant. If you don’t get this, then the likelihood of you getting accepted for one becomes far smaller! 

They will want to see information on: 

Asset, liabilities, personal income and expenditure. (They will want this information going back three years or more depending on how picky they want to be). 

Earning history as an associate dentist (including information on hours worked). 

Background information on your personal finances, including credit scores. 

Whether you are a homeowner. 

You should be aware that there may well be other hoops you need to jump through before becoming successful at securing your finance. 

And don’t rule out the possibility that you will be asked to stump up your own capital for the venture.  

God it sounds awfully expensive and terribly intrusive doesn’t it! 

But if you have a sound business plan in place it doesn’t have to be as overwhelming as it sounds. 

Banks may take EBITDA (Earnings before Interest, Tax, Depreciation and Authorisation), into account. This means that the forecast from your business plan may be used to secure a greater level of funding. 

At the end of the day, owning your own Dental practice is incredible but no one said this process was going to be easy.

Follow the steps listed here to prepare yourself for the journey ahead by gaining a deeper understanding of what to expect during the process. 

Only then will you have the best shot at securing the best funding!

Best wishes, 

Kimberley Hagues

PS. The formula for EBITDA may seem daunting at first, with a professional hand it doesn’t have to be. Click here and we can talk you through it.