A dental practice buy comes down to three numbers and one form. The numbers are the cash at the keys, the payment every month and the earnings left after the buyer is paid; the form is the asset acquisition statement both sides file to say how the price was split. Everything else in the purchase, the visits, the negotiation, the transition, serves those four things. This page states each plainly and shows where the free calculator on this site produces it.
Cash at the keys
Price less the bank's note less the seller's note is the buyer's cash on the price, and working capital plus closing costs come on top. On the calculator's worked example a $450,000 price with the bank at 80% and the seller at 10% is $45,000 on the price and $110,000 at the keys once $40,000 of working capital and $25,000 of closing costs are added.
The payment every month
The SBA note is amortised over 10 years, the longest term the 7(a) program allows for a purchase without real estate, and the seller note over 5. At 10.5% and 6% the example's two notes cost $4,857.66 and $869.98 a month, $68,731.68 a year, which the practice must earn before the buyer draws anything.
What is left, and the form
Seller's discretionary earnings of $180,000 less the buyer's own pay of $90,000 leaves $90,000 to service the notes: 131% coverage and $21,268.32 of cash in year one on the example. The form is the allocation of the price across equipment, records and goodwill, agreed in the purchase agreement and reported by both sides.
Questions people ask about dental practice buy
Why does the calculator separate the seller note?
Because it is the lever the buyer controls. A larger seller note lowers the cash at the keys and raises the monthly payment; the sheet shows both sides of that trade.
What if coverage is under 100%?
The practice cannot pay the notes and pay you. Lower the price, lengthen the seller note, take less pay or walk away; the sheet lets you try each before the offer.
Where is the form recorded?
The agreed allocation lives in the purchase agreement and, in Pro, beside the target so the accountant has it at return time.