Dental Practice Acquisition Financing Guide

What lenders look at in a dental acquisition

Every lender has its own credit box, but these questions come up in almost every deal:

• Collections trend over 3 years — growing, flat or declining.
• Seller's discretionary earnings after normalizing the seller's pay and personal expenses.
• Hygiene production share and active patient count.
• Payer mix: fee-for-service, PPO, and any capitation or Medicaid.
• Your production history as an associate and whether you'll retain the seller for a transition period.
• Lease terms — a short or unassignable lease can stall a deal.

Worked example (synthetic numbers)

A general practice collects $1.2 million with $320,000 of seller's discretionary earnings. Suppose buyer and seller agree on $750,000. Financing $675,000 (90%) over 10 years at an illustrative 9% is about $8,550 per month, or roughly $102,600 a year.

That leaves about $217,000 of SDE before the new owner pays themselves — a coverage of roughly 3.1x. Change any input and that cushion moves quickly, which is why it's worth testing your own numbers in the coverage calculator below.

Don't finance only the purchase price

New owners commonly underestimate the first 90 days: payroll before insurance collections catch up, supplies, a marketing push and technology updates. Ask whether working capital and equipment can be included, and model the payment with them.

Review the payment stack during the transition

Card processing, patient financing and practice-management integrations transfer with the practice by default. The transition is the easiest time to review them.

Common questions