Podcasts

Buying A Practice? Check The Numbers, The Culture — And Who’s Actually On Your Side

A 40-page valuation lands in your inbox. The practice looks good. The broker who sent it is friendly, responsive, professional — and works for the seller. Every experienced person in the transaction is paid by, or aligned with, the person on the other side of the table.

That’s the normal condition of a dental practice purchase, and it’s the reason our guest built his firm.

Brian Hanks is the founder of Dental Buyer Advocates and, as far as he knows, runs the only firm in the country doing solely buyer-side representation on dental transitions — the accountant and consultant working exclusively for the dentist writing the check. He’s also the author of How to Buy a Dental Practice and host of the Practice Purchased podcast. We had him on the Dentelligentsia podcast to talk about what a buyer should actually check before signing, and his answers organize neatly: the money, the numbers, the culture, and the team.

Why “my CPA looked at it” isn’t enough

Hanks came up as a financial planner inside dental CPA firms, watching associates bring practice deals to their accountants for a verdict. The advice they got back was, in his words, informed enough to be directionally helpful — and dangerous, because a general CPA sees a transition maybe a handful of times in a career. His analogy: hitting a couple of pitches from your Little League coach doesn’t prepare you for a broker throwing major-league fastballs. The act of swinging is the same. The game is not.

What does a specialist actually change? Hanks is careful here: “Don’t come to us thinking we’re going to guarantee you a lower purchase price. What we’re selling is peace of mind.” Then he told us two stories from the previous month.

An associate buying the practice where she worked had a verbal promise from her boss — your production won’t be counted against you in the price. Two years later, the seller’s broker’s valuation showed no such discount. Hanks built an independent valuation reflecting the promise; the difference was $87,000, and the seller — to his credit — remembered the conversation, looked at the math, and honored it. (The lesson under the lesson: get promises in writing. Always.)

The second one took two phone calls. A buyer brought Hanks the bank’s terms on a $1.95 million loan at 5.7 percent. A two-minute conversation with the buyer, one call to a competing banker, and the rate came down to 4.89 — roughly $230,000 of interest over the life of the loan.

The two pitfalls that catch almost everyone

Before any valuation, Hanks sees buyers stumble in the same two places.

Pitfall one: assuming the right practice will be listed when you’re ready. Dentists have marched a well-defined treadmill — undergrad, DAT, dental school, associateship — and assume the next station arrives on schedule: “Okay, I’m ready. Where’s my seven-op practice next door?” It isn’t on a website. The best practices change hands through relationships, which means the asset most associates lack is a personal network of older dentists who might sell — and building one takes years, not weeks. Start before you’re ready.

Pitfall two: buying cheap to build it up. The psychology makes sense — you’re carrying six figures of student debt, and a smaller loan feels responsible. But Hanks reframes what the cheap practice actually claims: “What you’re essentially saying is: I am smarter, harder working, and generally a better dentist than the person I’m buying from.” Sometimes true. Usually not — slackers don’t often survive dental school. Most buyers do better paying more for a practice already producing the dentistry and income they want, from the first day. And the debt fear inverts on inspection: “The quickest way to get out from underneath debt is to make a lot of money — and the way to make a lot of money in dentistry is a high-producing, profitable practice.” If borrowing $800,000 makes you nervous, good. It should. Buy the practice that pays it back fastest anyway.

The numbers to check

Hanks gave us his working thresholds for a general practice, useful as a first screen.

Collections: $800,000 or more, and he prefers a million. The top-line number quietly reports on the neighborhood, the reputation, the staff, and the active patient base all at once.

Profitability: the national average across all practices is 38.3 percent — average overhead of 61.7 — so a healthy target is an owner keeping roughly 40 cents of every collected dollar. True profitability is hard to extract on your own, so he offers proxies any buyer can compute. Staff costs (wages, payroll taxes, benefits — excluding the doctor) at no more than 32 percent of collections; at 35 he starts wondering about management, and at 40-plus a buyer is inheriting a painful staffing correction. Lab fees: 5 to 7 percent is world class, 8 acceptable. Dental supplies: same scale. At 10 or above in either, somebody’s assistant has the credit card and a very friendly supply rep.

The culture check nobody runs

The numbers say what the practice earns. Two other checks say what it will be like to own.

The best diligence, when you can get it, is working in the practice first — six to twelve months as an associate tells you everything. Failing that, Hanks leans on two data points anyone can pull. First, reviews: a hundred-plus Google reviews at 4.7 stars or better is a real signal, but read them — if every third review says “Mary the hygienist is amazing,” you now know who the patients are actually loyal to, and what you’re actually buying. Second, average staff tenure, where the shape matters more than the average. Everyone at 25-plus years means a culture that will resist every change you make. One or two ten-year veterans surrounded by staff who churn every twelve months usually means those two run the doctor and everyone else can only stand them for a year. Healthy looks like a mix — some new, some five-to-ten, a few long-timers.

Two more habits from his 35-page practice analysis, of which two full pages cover online presence: he considers a practice’s digital footprint two to three times more important than its physical visibility (words we never thought we’d type, and he’s right — patients find you on a screen before they find you on a corner). And always Google the seller by name. Three or four times in a thousand-plus deals, that search surfaced a billing-fraud investigation or a suspended license the buyer had never heard about.

Who to listen to

The Facebook group with 40,000 dentists is a fine source of data points and a terrible source of advice, because most comments come from someone who did the thing once — or knows someone who did. Hanks’s filter: ask how many times the person giving the advice has actually done it. Trust your gut about people. And run his explain-it test — if you can’t relay your advisor’s recommendation to your spouse in plain English, you didn’t get advice, you got jargon. It’s the same standard patients apply to dentists: say “caries” and you’ve lost the room.

His bluntest filter is the money question: you generally know someone is on your team if you’re the one paying them. Real estate is the honest exception — commission structures mean the buyer often isn’t cutting the check directly — which is exactly why it’s worth asking every advisor in the deal, out loud: who pays you, and how?

The part you’re worried about that’s fine

Patient attrition tops every buyer’s fear list, and Hanks’s data says relax. The transition letter should be upbeat — good news, new resources, and the seller’s departure mentioned in paragraph four, not framed as a funeral. Then do three things: start appointments on time, make sure the phone gets answered during working hours, and use plain English in the chair. “You do those three things and you’re immediately in the top 10 percent of dental practices nationwide.” His average client adds net patients in year one — buyers tend to be better at those three things than the sellers were.

The advice he closed with applies to the whole terrifying process: it’s not as hard as it looks. Books, podcasts, practice purchases — “99.9 percent of anything you watch somebody do is a learnable step.” Build the network, run the numbers, check the culture, and hire people who answer the who-pays-you question cleanly.

The full conversation with Brian Hanks is on the Dentelligentsia podcast; his book, How to Buy a Dental Practice, covers the whole process step by step. And for the half of the deal that comes with walls, a lease, or a building purchase — talk to us.