Dental Practice Acquisition: How Dr. Chen Bought Her Dream Practice

The Client

Dr. Michelle Chen graduated from dental school in 2020 and spent three years as an associate at a large group practice in Seattle. While she gained valuable experience, her dream was always to own her own practice.

The Opportunity

In late 2023, the dentist who had treated Michelle's family for 20 years was ready to retire. Dr. Harrison's practice represented:

• ●30 years of established patient relationships
• ●2,400 active patients
• ●4 operatories in a prime suburban location
• ●Strong revenue: $1.2M annually with healthy profit margins
• ●Loyal staff: Hygienist and office manager with 10+ years each

Dr. Harrison wanted to sell to someone who would take care of "his" patients. Michelle was the obvious choice.

The Challenge

Acquisition price: $920,000 (including equipment and goodwill)

Michelle had:

• ●$50,000 in savings
• ●$180,000 in student loans
• ●3 years of experience
• ●Excellent clinical skills
• ●No business ownership experience
• ●No significant assets for collateral

Most banks were skeptical of a new graduate buying a practice worth nearly $1M.

Finding the Solution

Michelle contacted Banked.fyi after researching dental practice acquisition options. We connected her with lenders who specialize in healthcare practice transitions.

Why SBA 7(a) Made Sense

1. ●Lower down payment: 10% vs 20-30% conventional
2. ●Longer terms: 10 years vs 5-7 years
3. ●Built-in support: SBA requirements meant thorough planning
4. ●Lower monthly payment: Preserving cash flow for growth

The Structure

SBA 7(a) Loan:

• ●Amount: $828,000 (90% of purchase price)
• ●Term: 10 years
• ●Rate: Prime + 2.5% (initially 10.5%)
• ●Monthly payment: $11,240

Down payment: $92,000

• ●$50,000 from savings
• ●$42,000 seller financing (held for 18 months)

Documentation Required

The SBA process was thorough:

• ●Practice tax returns (3 years)
• ●Practice financial statements
• ●Patient demographics analysis
• ●Transition plan
• ●Michelle's resume and credentials
• ●Personal financial statement
• ●Business plan with projections

Timeline

Month 1: Initial consultation, document gathering, lender matching Month 2: SBA application submitted, underwriting Month 3: Conditional approval, additional documentation Month 4: Final approval, closing scheduled Month 5: Closing, ownership transfer

Total: 5 months from first contact to ownership

The Results

Transition Success

Patient retention: 94% (well above industry average of 85%) Staff retention: 100% (both hygienist and office manager stayed) Revenue impact: Only 8% dip in first quarter, recovered by Q2

Six-Month Performance

What Drove Success

1. ●Dr. Harrison stayed 3 days/week for first 3 months
2. ●Staff continuity maintained patient relationships
3. ●Michelle's energy attracted new younger patients
4. ●Updated technology improved patient experience
5. ●Extended hours captured working professional market

Key Takeaways

For Healthcare Practice Buyers

1. ●Start planning early - SBA takes time but offers best terms
2. ●Seller involvement helps - Transition period is crucial
3. ●Staff are assets - Retention should be priority
4. ●Don't undercapitalize - Include working capital in loan
5. ●Get specialized help - Healthcare lending is specialized

Financial Lessons

• ●SBA was right choice - $11,240/month was manageable vs $15,000+ with conventional terms
• ●Seller financing bridge - Made down payment possible
• ●ROI is clear - $28K monthly profit vs $11.2K payment = strong cash flow

What's Next

With a successful first year under her belt, Michelle is planning:

• ●Technology upgrades: Digital impressions and CAD/CAM
• ●Marketing investment: Building presence with younger demographics
• ●Associate hire: Ready to add a part-time associate in Year 2
• ●Student loan refinancing: Now qualifies for better terms

The practice that took Dr. Harrison 30 years to build is now positioned for another generation of growth under Dr. Chen's ownership.