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 less upfront capital tied up in goodwill but a long 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, where SBA rules require the buyer to put in at least 10% equity. Common purchase price for a healthy general practice is benchmarked against trailing collections and adjusted EBITDA, with adjusted EBITDA the more reliable anchor.
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 depends on collections, profitability, and market. SBA 7(a) is the usual financing route, and lenders generally expect an owner equity contribution rather than full financing. | Build-out, equipment, and working capital, funded the same SBA way, plus operating reserves to cover the ramp before the practice reaches breakeven. |
| 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 until the schedule fills. Operating reserves cover the gap. |
| Time to mature profitability | Immediate, with a possible dip during the transition as patient retention is tested. | Much longer, often measured in years rather than months. New practices take years to build a full schedule and reach 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. 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 | Usually strong in year one if the seller stays through the 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 a long 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 years less ramp risk than starting from zero. 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 a long 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.
Frequently Asked Questions
How much does an SBA loan typically require down?+
SBA 7(a) rules effective 1 October 2026 set a 10% minimum equity injection for both: 10% of total project costs for a start-up, and 10% for an initial acquisition, which the lender cannot reduce. Lenders also expect a personal living-expense reserve, plus operating capital reserves for de novos. Strong credit and prior ownership experience help on terms and rate, but for an initial acquisition the 10% floor holds.
How is a dental practice typically valued for acquisition?+
Most general dental practices are valued against both trailing collections and adjusted EBITDA, with EBITDA multiples running 5 to 7 times for smaller practices up to 9 to 12 times for larger, platform-scale groups, per FOCUS Investment Banking's 2026 dental valuation bands. Specialty practices (orthodontics, oral surgery, periodontics) trade at higher multiples. The valuation should always cross-check both methods; collections-based pricing flatters practices with weak EBITDA, and EBITDA-based pricing punishes practices with messy add-back schedules.
What is a realistic ramp timeline for a de novo dental practice?+
How long a dental start-up takes to reach mature profitability depends on market density, open insurance panels and marketing spend, so build the ramp yourself. Model new patients per month, the hygiene and doctor schedule they fill, and the operating costs you must fund until collections catch up. Faster ramps happen but they require either a high-density market with insurance panels open, a strong personal referral base, or significant marketing investment.
Can I buy a practice and continue working as an associate elsewhere?+
Possible but uncommon. Most acquisitions assume the buyer will be the operating dentist shortly after close. SBA underwriting typically wants the new owner full-time on the acquired practice. If you are buying as a passive investment with another dentist running it, expect tougher financing terms and a different lender pool.
Should I use a dental-specific broker?+
For acquisitions, yes. Dental brokers know which practices are quietly for sale, what comparable transactions cleared at, and how to manage the awkward seller-buyer dynamic during diligence. Their fee, paid by the seller, is built into market pricing and rarely a reason to skip them. For de novos, brokers are not relevant; you need a banker, a real estate broker, and a dental-experienced architect or design-build firm.
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Founder of Sorso and a CFA charterholder. Before Sorso, Stan spent 19 years in corporate finance at institutions including UniCredit and Société Générale — managing a $450M loan portfolio and making senior partner at a major mezzanine lender by 29 — then built a fractional CFO firm exclusively for outpatient healthcare clinics.