Dental Practice Acquisition Financing
Buying an existing practice is a different underwrite than going de-novo: the seller's P&L is the file. Lenders model post-acquisition debt service against trailing-twelve-month collections (typically requiring 1.20–1.40x DSCR after debt), value the equipment in the bill of sale, and finance goodwill against a multi-year amortization. Acquisition loans routinely cover 100% of the purchase price plus working capital and a small equipment upgrade allowance.
No hard credit pull to start. · Takes about 2 minutes.
How this product is shaped.
- Up to 100% financing common. Specialty programs finance the full purchase price for credit-strong buyers. Working-capital sub-loan often included.
- 10-year amortization standard. Typical structure: 10-year term loan on goodwill + working capital; equipment carved out on 5–7 year amort if separately quoted.
- DSCR-driven pricing. Best terms when trailing-twelve-month collections support 1.30x+ DSCR on the projected debt service.
How lenders value the practice
Specialty dental lenders use practice-specific valuation conventions. Goodwill is typically valued at 55–80% of trailing-twelve-month collections depending on production mix, payor mix (more in-network insurance = lower multiple than fee-for-service), and condition of equipment. Equipment is valued against the bill of sale — overstated equipment value gets discounted in the lender's appraisal.
A practice doing $1.2M in collections with a 55% multiple values around $660K goodwill + equipment + AR. Lenders cap LTV against the appraisal (not against the contract price); a buyer paying a 70% multiple in a 55%-multiple market may need to bridge the difference with equity.
What slows acquisitions
The two common slow-downs: (1) seller financials. If the seller runs the practice on cash and reports aggressive owner perks against the P&L, the trailing collections look weak. Lenders normalize by adding back owner comp, family on payroll, and one-time expenses — but only with documentation. Get tax returns + an addback schedule before submitting. (2) Real estate. If the practice is owner-occupied and the building is part of the deal, the file becomes a CRE underwrite (longer, separate appraisal). Carve the real estate into a separate loan if speed matters.
Frequently asked.
- Can I roll closing costs into the loan?
- Most specialty lenders allow closing costs (legal, accounting, bank fees) to roll into the loan up to a cap (often 2–3% of purchase price).
- What if I'm an associate buying into a partnership?
- Partner buy-in financing is a distinct product — typically structured as a term loan against the buy-in equity value, with the practice's P&L providing additional cash-flow support. See /qualify to start.
- Do I need a CPA on the file?
- Yes — a dental-experienced CPA is the difference between a clean addback schedule and a denied file. Most specialty lenders maintain referral lists.
See your match.
Soft-pull first. One hard pull only with the lender you choose.