Buying vs starting a dental practice
TL;DR: Buying an existing dental practice gives you cash flow on day one, an active patient base, trained staff, and predictable economics for SBA lenders. Starting from scratch (de novo) gives you full control of culture, systems, and location, with significantly lower upfront capital but a 24 to 36 month ramp before reaching mature profitability. For most new owners, buying wins on financial risk and lender appetite. Starting wins for niche concepts, underserved markets, or owners who want to build exactly what they want.
Option A
Buying an existing practice
Acquiring an established dental practice with active patients, staff, equipment, and revenue. Funded typically through SBA 7(a) financing with 10 to 15 percent down. Common purchase price for a healthy general practice is 60 to 80 percent of trailing collections.
Option B
Starting de novo
Building a new practice from the ground up. You select the location, design the build-out, recruit the staff, and grow the patient base from zero. Funded typically through SBA 7(a) or 504, plus owner working capital reserves.
| Category | Buying an existing practice | Starting de novo |
|---|---|---|
| Upfront capital required | Purchase price typically $400K-$1.5M+ for a healthy general practice. SBA 7(a) commonly finances 85-90% with 10-15% owner equity ($40K-$200K out of pocket). | $400K-$700K for build-out, equipment, and working capital in most markets. SBA financing similar; 10-15% owner equity ($40K-$100K) plus operating reserves. |
| Cash flow on day one | Yes. Active patients, predictable monthly collections, existing staff payroll. Most acquisitions are cash-flow positive in month one. | No. Zero patients on day one. Cash-flow negative for the first 12 to 24 months while you ramp. Operating reserves cover the gap. |
| Time to mature profitability | Immediate, with possible dip during transition (typically 6-12 months as patient retention is tested). | 24-36 months. New practices take 2-3 years to reach 60-70% schedule utilization and full mature collections. |
| SBA lender appetite | Strong. Banks love acquisitions because the practice has a track record, real collateral, and a debt-service ratio they can underwrite from existing financials. | Weaker but workable. Banks fund de novos but expect more owner equity, stronger personal credit, and a detailed business plan with realistic ramp assumptions. |
| Risk profile | Lower financial risk during ramp. Higher concentration risk on the seller's patient base; if the seller-doctor was the relationship, retention can suffer. | Higher financial risk in years 1-2 (ramp longer than expected). Lower long-term risk because you built the systems, culture, and patient base intentionally. |
| Control over systems and culture | Inherited. You take on the existing PM, EHR, processes, and team dynamics. Changing them after closing is harder than expected. | Full control. You select everything from chair brand to scheduling system to hygiene protocol. Painful at first; durable advantage long-term. |
| Staff retention | Mixed. Some teams welcome a new owner; others see acquisition as a threat and leave within 6-12 months. Retention bonuses and culture work matter. | You hire your own team. Easier to build culture; harder to staff up before opening because you have no track record. |
| Patient retention | Typically 75-90% in year one if the seller stays through transition. Drops sharply if the seller-doctor was the primary relationship and exits at close. | N/A. You build patient base from zero through location, marketing, insurance contracts, and word-of-mouth. |
| Negotiating leverage | Variable. Strong markets and competitive specialties have multiple buyers; soft markets give buyers leverage. Letter of intent and quality of earnings analysis matter. | Lease and equipment financing terms are your main negotiation. No seller dynamic. |
| Best for | First-time owners who want predictable cash flow, lower ramp risk, and a financial profile their lender can underwrite easily. | Owners with a specific concept (cash-pay, niche specialty, particular patient demographic), strong personal financial reserves, and tolerance for 24+ months of ramp. |
Buying wins for most first-time owners. Starting wins for specific concepts and underserved markets.
The risk-adjusted answer for most new dental owners is buy, not build. Acquisition gives you cash flow on day one, an underwritten lender thesis, and 24 to 36 fewer months of ramp risk. The work is in the diligence (especially patient and staff retention), the LOI, and the post-close transition; not in the financial model. Building de novo is the right call when you have a specific concept that does not exist in your market, an underserved geography that needs the capacity, or strong reasons to want full control of culture and systems from day one. The honest cost of de novo is 24 to 36 months of ramp, real financial risk in years one and two, and the founder hours required to recruit a team and build a patient base from zero. Owners who go in with realistic expectations on both timelines and capital typically come out fine; owners who underestimate the ramp run into distress in year two.
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