Dental Practice Acquisition Calculator

Buying an established practice is the most common path to ownership for dentists. Lenders are generally willing to finance it, but the loan payment takes a large bite out of profit for the first decade. This calculator shows what you'd actually take home after loan payments, how comfortably the practice covers its debt, and how that compares with your current associate pay.

What this calculator does

Enter the purchase price, any working capital added to the loan, your down payment, the loan rate and term, the practice's expected collections and its overhead (not counting your pay or the loan). It shows:

• owner take-home after loan payments, before personal taxes,
• the monthly and yearly loan payments,
• cash flow before debt,
• the debt service coverage ratio (DSCR), and
• the change compared with your current pay.

The formula in plain English

Loan amount = purchase price + working capital − down payment.

Monthly payment = the standard loan formula for the loan amount, rate and term.

Cash flow before debt = collections × (1 − overhead %). This is what the practice produces for its owner before the loan.

Owner take-home = cash flow before debt − yearly loan payments.

DSCR = cash flow before debt ÷ yearly loan payments.

A worked example

Dr. Chen earns $230,000 as an associate and is looking at a practice priced at $950,000. The bank will lend the full price plus $75,000 of working capital at 8% for 10 years. The practice collects $1.15 million, with 60% overhead.

• Loan: $1,025,000. Monthly payment: about $12,440, or $149,200 a year.
• Cash flow before debt: $460,000.
• Owner take-home: about $310,800, roughly $80,800 more than her associate pay.
• DSCR: about 3.1, comfortably above what lenders look for.

If 15% of patients leave in the first year and collections drop to about $977,000, cash flow falls to about $391,000 and take-home to about $242,000. That's still above her associate pay, but much closer. Testing a weaker first year shows how much room there is for surprises.

Why it matters at each career stage

If you're: Employed

Run this for every practice you seriously consider. Use the seller's actual collections and overhead from tax returns, not projections. Compare the take-home with your associate pay, and remember that you'll also be managing staff, billing and the building.

If you're: Practice owner

If you're buying a second location, use the second practice's numbers alone first. Then consider the management time it will take away from your current office.

Before you make an offer

Review three years of financials. Look for steady or growing collections, and watch for overhead that seems too low because the owner skipped maintenance or underpaid staff.

Count active patients. Ask how many patients were seen in the last 18 months and how full hygiene is.

Check the lease. Make sure it can be assigned to you and runs long enough to cover your loan term.

Plan the transition. A seller who stays on for a few months and introduces you to patients protects your investment.

Think about equipment. If major equipment will need replacing soon, factor that in. Our equipment lease vs buy calculator can help.

Check the price with the dental practice valuation calculator, compare with a startup, and see how your overhead stacks up with the overhead benchmarks calculator.