The Art of Due Diligence with Art Wiederman
November 29, 2022
Every step you take when buying a dental practice is important, but one of the most significant happens after you’ve sent your LOI to the seller—due diligence. Art Wiederman, the guest on Episode 14 of the Dental Acquisition Unscripted Podcast, is an expert on this particular subject. He is the Dental Division Director at a CPA firm called Eide Bailly and has over 38 years of experience helping dentists get answers to the most important questions when purchasing. To get a brief overview of everything he and Mike talk about, keep reading. Or, you can listen to the entire podcast right now on YouTube, Spotify, or Apple!
Which Numbers Matter Most?
Art’s goal when working with a dentist to perform due diligence is to help them dig into the nitty-gritty of the practice they are buying, specifically the numbers that tell the story of the business. How much is the production compared to the overall evaluation of the practice? How many patients have they seen in the last 18 months? How much will the buyer need to make in a year to live a comfortable life in the area?
While these numbers might seem straightforward, getting them simply isn’t. Practice software doesn’t calculate everything correctly or even have the right data necessary for adequate due diligence most of the time, so the buying dentist needs to get the correct information and learn how to parse it.
It’s Always About Insurance
Getting credentialed with insurance providers is absolutely required for many practices to succeed, and knowing which insurances (and what rates) a practice is currently accepting can make a big difference in the buyer getting a strong start. Does the practice currently only accept Delta Dental Premier, or are they open to several PPOs and Medicare/Medicaid?
Trying to switch a Delta Premier practice to a largely PPO-based one can take a long time—Art says that these types of transitions can sometimes require more than a year of negotiating with insurance companies. Due diligence not only allows the buyer to know where they are starting insurance-wise, but also enables them to put together a plan to make any changes.
The Necessity of Working with a Professional
Art is extremely comfortable looking through balance sheets and tax returns to pull out the information that he needs, but that’s because he’s an accountant with decades of experience. A dentist, whether they are experienced or just out of school, can’t expect to look at spreadsheet data and see everything that he does.
That’s why working with an accountant, namely one with dental experience, is so important when buying a dental practice. They will not only help you ask the right questions, but also know the right ways to get the true answers. As a member of your buyer’s representation team, they can identify potential potholes and opportunities that may not be obvious at first.
Art goes much more in-depth about these subjects and many more while discussing real-world cases he’s seen throughout his career, so be sure to check out the episode before making any big decisions!
About Next Level Consultants
At Next Level Consultants, our mission is to bring you the knowledge and skills necessary to buy, manage, and successfully operate your new dental practice. Under the leadership of Michael Dinsio and Paula Quinn, our team works tirelessly to ensure that you feel good about the direction your career is heading. If you have any questions about performing due diligence when buying a dental practice, don’t hesitate to reach out to get the expertise you deserve.