The cost of buying a dental practice is the asking price plus four lines the asking price never mentions: the working capital the first months consume, the closing costs the deal itself generates, the interest paid over the life of the notes, and the equipment that reaches the end of its life in the buyer's first years rather than the seller's last. This page puts a worked figure on each, using the free calculator on this site for the first three and the equipment list for the fourth.
Working capital and closing costs
On the calculator's worked example the buyer brings $40,000 of working capital and $25,000 of closing costs on top of $45,000 of their own cash on the price, so the cost of the day is $110,000 rather than $45,000. Working capital pays staff and rent before collections clear; closing costs pay the lender's fees, the attorney, the valuation, licences and transfers.
Interest over the term
The example's SBA note of $360,000 at 10.5% over 10 years costs $4,857.66 a month, $582,919.20 over its term, so $222,919.20 of the total is interest. The seller note of $45,000 at 6% over 5 years costs $869.98 a month, $52,198.80 in total, $7,198.80 of it interest. The 10 year term is the program's maximum for a purchase without real estate; a longer term is available only where real property is acquired.
Equipment on its last years
The equipment list with ages is on the checklist for this reason. Chairs, units and imaging bought by the seller a decade ago become the buyer's capital expenditure in years one to three, and no funding stack covers it unless the buyer put it there. Read the ages, price the replacements, and either negotiate the price or add the figure to working capital.
Questions people ask about cost of buying a dental practice
Are closing costs really that high?
They vary with the lender and the state. $25,000 is the worked example, not a benchmark; enter your own quotes and the sheet updates.
Can I reduce the interest?
A shorter term or a lower rate reduces it, and a larger seller note at a lower rate than the bank's shifts some of it. The sheet shows each note's payment separately for exactly that comparison.
Where does Pro keep the equipment list?
As diligence items against the target, with the seller's stated ages, so the replacement budget is a recorded decision rather than a surprise.