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For many new dentists, owning a practice (or becoming a partner) is an exciting and achievable goal. Whether you’re buying an existing practice, starting one from scratch, or joining a partnership, it’s important to understand the financial, operational, and personal factors that lead to practice ownership.
1. Startup vs. Buying an Existing Practice
One of the first decisions is whether to build your own practice de novo or purchase one from a selling doctor. Each option has trade-offs.
Buying an Existing Practice – Advantages:
- Comes with an established patient base already generating cash flow.
- Staff and insurance contracts are in place.
- Immediate (and demonstrated) revenue potential and opportunity for growth.
Challenges:
- Staff may resist changes under new ownership.
- Patient attrition can occur.
- The office or equipment may be outdated — though older equipment is still producing the cash flow that determines the valuation.
Starting a New Practice – Advantages:
- Full autonomy to design your space, culture, and systems.
- Ability to install brand-new equipment and technology.
- Choose a location that fits your vision.
Challenges:
- Significant upfront costs for equipment and build-out (equipment depreciates quickly).
- If you lease a space, you are not building equity in real estate.
- No patients on day one — you’ll need to market to attract them.
- You may need to continue working another job until the practice becomes profitable.
2. Considering Partnerships
Another path to ownership that could be considered if available in larger practices is entering into a partnership. Partnerships can be especially appealing for new dentists in group practices because they combine the advantage of stepping into a practice with demonstrated cash flow, as well as the benefit of mentorship from an experienced practitioner for clinical and business guidance..
The key to a successful partnership lies in compatibility of the partners. The new dentist and existing dentist should share similar values, practice philosophies, and styles of patient care. A common best practice is to begin with an associateship period. This allows both parties to test compatibility in a low-risk way, while setting expectations early that the associateship could evolve into a defined path to partnership.
If the relationship progresses, it’s important to clearly define:
- Compensation structure during the associateship versus partnership (how dentists are compensated for their production).
- Profit-distribution terms once partnership begins.
- Ownership roles and responsibilities within the practice.
When structured thoughtfully, partnerships not only provide financial opportunity but also invaluable mentorship in both clinical dentistry and the business side of practice ownership.
3. What You’re Actually Buying
When you buy an existing practice, you are typically purchasing:
- Equipment
- Patient charts and goodwill (the value of the patient base)
The building is usually not included. It may be leased, or it may be owned separately by the selling doctor. If you want to own the real estate in addition to the practice, you’ll need separate financing.
4. Financing Your Practice
Banks view dental practices as relatively low-risk investments and often provide favorable financing terms:
- 100% financing from the bank is often available for many practice purchases, and for buildings in some cases.
- Practices are commonly valued by banks at 75–80% of annual revenue.
- A typical loan in 2025 might be structured as:
- $500,000 → construction or build-out (3–4 operatories)
- $350,000 → equipment
- $100,000 → working capital
In addition to bank loans, some selling doctors may offer seller financing for part or all of the purchase over 5–7–10 years. This can make a transition smoother and create more flexibility.
5. What Lenders Look At
When considering your loan application, banks want to know you’re financially ready to succeed. They evaluate:
- Credit score – a strong score increases your approval chances but isn’t the only factor.
- Debt profile – student loans (~$450,000 average school debt in 2025) are common and not a dealbreaker, but high credit card debt is a concern.
- Liquidity (savings) – plan to have 7–10% of your loan amount saved (e.g., $60,000 savings for a $600,000 loan).
- Production capacity – your ability to generate revenue as a practicing dentist is a big consideration.
Banks usually want to see a 1.2:1 return-to-expense ratio (for every $1 in doctor expenses, at least $1.20 in income). This ensures there’s room for the dentist to comfortably cover debt payments.
6. Building Your Professional Team
Owning a practice isn’t just about dentistry — it’s about running a business. You’ll need a team of advisors who know the dental industry:
- Banker
- Attorney
- Accountant
- Real estate broker
- Insurance agent
- Architect & contractor
- Equipment and technology specialists
- Marketing & HR consultants
Banks and dental advisors can often connect you with trusted professionals who understand dental practices specifically.
7. The Buying Process
If you choose to buy a practice, here’s how the process typically works:
- Explore opportunities – practices are often listed on Practice Trader, Dentographics, Dental Nachos, or Dentaltown. Connect with a broker.
- Confidential agreement & first meeting – protects sensitive information while you learn about the practice.
- Letter of Intent (LOI) – sets the price and outlines terms (may include exclusivity and non-compete clauses).
- Due diligence – review financials, evaluate cash flow, inspect equipment, and confirm the patient base.
- Asset Purchase Agreement – final contract, sometimes with an agreement for the seller to stay on during the transition.
- Closing – sign documents (often electronically), funds are transferred, and you take ownership.
8. Key Takeaways
Buying vs. Starting: Buying gives you patients and cash flow immediately; starting fresh gives you control but comes with higher risk and upfront costs.
- Partnerships: Can provide mentorship, shared values, and business guidance, but require clear agreements and cultural compatibility.
- Financing: Banks often provide 100% financing for practices, but you’ll need savings and a clean credit profile. Seller financing may also be available.
- The Building: Remember that most practice sales don’t include the building. Owning the real estate requires separate funds.
- Support Team: Surround yourself with experts who know dentistry to guide you through financing, legal, and operational decisions.
- Plan Ahead: The path to ownership is achievable sooner than many dentists realize — with preparation and the right partners.
