Bridging the Way: 2003 Student Event
BUYING A PRACTICE
James D. Spivey, DDS, MS, began his dental career as a dental hygienist in 1981. He worked with a periodontist and general dentist in private practice before graduating from the University of Michigan Dental School in 1987. Following a one-year preceptorship in oral surgery at Michigan, he received his periodontal certificate and Masters of Science degree from the University of Iowa College of Dentistry in 1990. Dr. Spivey worked as a professor of periodontics for 5 years at University of Iowa and became a Diplomate of the American Board of Periodontology in 1995. He purchased a solo private practice in 1995, and enjoys the practice of periodontics in Portsmouth, New Hampshire. He has a wife, a son and two daughters.
What was your ideal plan after graduation?
My initial plan was to buy a dental practice in a location compatible with family living. Also, I wanted to practice in a progressive area.
What factors affected your plans and decisions about your career and future?
I wanted to practice on the East Coast (Boston area) because of the reputation of progressive dental care. I wanted an area where people were not insurance dependant and had a relatively high dental IQ.
What appealed to you in terms of buying a practice?
Buying a practice gave me the opportunity to shoulder all the potential success (and failure) of being an entrepreneur. I liked the idea of exercising my creative talents to fulfill a vision of practicing dentistry.
How did you begin the process of buying your own practice?
After identifying the location, I began by asking and answering several questions:
- How could I prove there was a need for a periodontist in the area of concern?
- Would the bank loan me the money?
- Once the practice was purchased, what obstacles hindered me from focusing on patient care, i.e.:
- Did the facility need renovations?
- Would the employees stay and for how long? Do I want the employees to stay?
- Does the equipment need replacing or updating?
In other words the process began in my head first. I had to clarify lots of things before I knew that buying a practice was doable for me in the long run.
Did location influence any of your decisions?
Location was a big factor from two viewpoints, personal and professional. For me, professional was the most important. I wanted a location that would allow me to thrive professionally. Once the practice did well, I slowly attained the means to do things that gave me personal enrichment. For example, after caring for my wife and three children, I give a lot of time, talent, and money to other things.
Did you meet with an attorney, practice consultant or accountant before pursuing a loan? Why or why not? What did they do for you and why was it beneficial?
After identifying the practice to buy, I sought financing by interviewing four of the most well identified banks in my town. Once I established a relationship with the banker, he referred me to two “good” attorneys that he thought were helpful. I picked the one with the most gray hair. Seven years has past, and he is still my lawyer.
How did you determine the financial requirements for buying a practice?
The seller dentist had his practice valuated by a broker. The bank did their own assessment and validated the purchase and sales agreement.
How did you obtain financing?
I developed a business plan by using a popular software package. I found a bank that was willing to take the risk. This was as simple as walking into several banks and selling my potential and my value to the community.
What risks were involved in starting your practice?
- Would referring dentists trust me to care for their patients?
- Would the community be a good place to raise a family?
- Could I learn what it takes to do it?
- Would my health hold out?
How did you assess and manage those risks?
I interviewed the dentist and trusted that they would honestly tell me what they wanted from a periodontist. My wife interviewed the schools and we talked to many people in the community. Because all depends on how healthy we are, I have committed to an active healthy lifestyle.
Did the original owner work in the practice in the beginning or retire?
It was a turnkey situation. The original owner was disabled and could not continue to practice.
What is your situation now?
I have a solo practice, and am Board Certified in Periodontics. I have 7 employees and perform all phases of periodontics and implant dentistry. I have a “Pride Institute Practice” layout and I govern my practice after the principle centered leadership principles of Stephen Covey.
Did you restructure the practices finances in the beginning to pay the bills, yourself, staff and/or buy new equipment, etc.?
I pay myself and family first, my staff second, my bills next.
What financial issues or considerations came into play when planning for the future?
What age do I want to retire and how much do I need when I retire? In other words begin with the end in mind.
Using real or fictitious numbers, how did the realities of your finances compare to the plan you originally outlined?
I used the previous periodontist numbers and new right away that I could exceed them.
What resources (i.e., people, publications, groups) did you find the most helpful?
I read the book Principle Centered Leadership by Stephen Covey
Given what you know now, what might you do differently?
Nothing! If I would have known all that I know now, I would be afraid to do it. I would still do it, because it is very fulfilling, and it's fun.
What suggestions do you have for individuals buying a practice?
Interview periodontists that are at the peak of their professional career for information. These people will tell you the plain truth.
Find Out More
- Starting as an Associate, E. Todd Scheyer, D.D.S., M.S.
- Starting as an Associate, Benjamin Duval, D.D.S.
- Partner's Perspective, Charles Chen, D.D.S.
- Seller's Perspective, Michael Hersh, D.M.D.
- Starting Your Own Practice, Wayne Aldredge, D.M.D.
- Starting Your Own Practice, Deena Kuempel, D.D.S.
- Buying a Practice, Nicholas Caplanis, D.M.D., M.S.
- Independent Contractor, Eddie Zupnik, D.D.S.
- Independent Contractor, Richard Finlayson, D.D.S.
- Fictional Example of Contractual Agreement Between Partner and Associate
- Fictional Example of Contractual Agreement for independent contractor
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