Funding a Partner Buyout for Your Dental Practice

I was on the phone last Tuesday with a dentist out of Chicago—let's call him Dr. Miller. He sounded exhausted. Not the usual "I've been doing root canals for ten hours" exhausted, but the kind of tired that comes from dealing with lawyers and business partners.

His situation is one I see constantly. He built a practice with a dental school buddy twenty years ago. Now, the buddy wants to retire to Florida, play golf, and cash out. But Dr. Miller isn't done. He wants to keep growing.

The problem? The partner wants his half of the equity now. Not in five years. And Dr. Miller didn't have $400,000 sitting in his checking account.

If you're reading this, you're probably in the exact same boat. Buying out a partner is honestly one of the most stressful things a business owner goes through. It's essentially a business divorce. emotions run high, and if you don't have the money to settle the deal, the whole practice can suffer.

Why banks make this harder than it needs to be

Dr. Miller went to his local bank first. Makes sense, right? He's banked there for a decade. He thought they'd roll out the red carpet.

Instead, they handed him a stack of paperwork as thick as a phone book. They wanted personal financial statements, three years of tax returns for the business, three years of his personal returns, and a business plan for how he'd run the place solo. And then they told him the underwriting process would take "60 to 90 days."

Sixty days? In that time, his partner could change his mind, demand a higher valuation, or sell his share to one of those massive corporate DSOs (Dental Support Organizations) that are buying up everything in sight. You don't want a corporate board telling you how to treat your patients just because you couldn't get funding fast enough.

Here's the thing about banks: they look at a partner buyout and they get nervous. They see it as a risk because the business is losing a key operator. They worry that when your partner leaves, half the patients will leave too. We know that's usually not true—patients stick with the practice or the hygienist they like—but try explaining that to a risk officer who has never drilled a tooth in his life.

Valuing a practice is… messy

Before we even talk about the cash, we have to talk about the number. How much is your partner's share actually worth? I'm not an accountant, but I see the numbers all day long.

In dentistry, it's weird. You've got tangible assets like your X-ray machines, the chairs, the sterilization equipment. That stuff is easy to price. But the real value is in the charts. The recurring patients. The goodwill.

When you come to us for funding, we don't get bogged down in a six-week valuation study. We look at the cash flow. Simple as that.

We look at:

• Your monthly deposits. What's actually hitting the bank account?
• Insurance reimbursements. We know PPOs can be slow to pay. We account for that lag.
• Consistency. Is the practice seasonal? (August is usually crazy with back-to-school checkups, December is busy with "use it or lose it" benefits).

I had a client last year, a periodontist, who needed to buy out a partner who was causing massive HR issues. The toxic environment was driving staff away. The remaining partner needed that guy gone yesterday. We didn't care about the real estate appraisal. We saw the practice was generating $1.2M a year consistently. That was enough for us to get him the capital to cut the check and take full ownership.

So how do we actually fund this?

At LoanQuail, we aren't a bank. We're a private funding marketplace. That means we have flexibility that Wells Fargo just doesn't have.

For a partner buyout, we usually look at a few options depending on how your cash flow looks:

1. Term Loans
This is the standard route. You get a lump sum to pay off your partner, and you pay it back over a set period with fixed payments. It's clean. It works. The rates might be higher than a traditional SBA loan, but you get the money in days, not months. Sometimes speed is worth the premium.

2. Revenue-Based Financing
This is what I recommend if your revenue fluctuates a lot. We advance you the cash based on your future receivables. If you have a slow month because you took a vacation or the hygienist was out sick, the payments adjust slightly (depending on the specific product). It’s not a loan in the traditional sense; it’s a purchase of future sales. It's incredibly fast to set up.

3. Line of Credit
Sometimes you don't need the whole lump sum at once. Maybe you structured the buyout to pay your partner over six months. A line of credit lets you draw what you need, when you need it. You only pay interest on what you take. I wish more dentists did this, honestly. It's unmatched for cash flow management.

It's about control (and your sanity)

Look, I'm gonna be real with you. The financial side is just math. The real reason you're doing this is emotional. You want to run your practice your way.

Maybe you want to invest in that new 3D imaging tech, but your old-school partner thinks it's a waste of money. Maybe you want to open on Saturdays to capture the working crowd, but your partner refuses to work weekends. Or maybe you just can't stand seeing their face at the morning huddle anymore.

Whatever the reason, staying in a bad partnership is bad for business. It drains your energy. And patients notice tension. They really do.

We funded a buyout recently for a cosmetic dentist in Miami. She told me after the deal closed, "I feel like I can breathe for the first time in five years." That's what we're actually selling here. Not just money. Breathing room.

What you need to have ready

If you call me tomorrow (and you should), I'm not going to ask for your first-born child. But I will need a few things to get the ball rolling.

• 3-6 months of business bank statements. This is the holy grail. It tells us the health of the practice better than anything else.
• A rough idea of the buyout agreement. You don't need the final signed contract yet, but we need to know: Are you buying 100% of their shares? Is it a lump sum?
• Driver's license and a voided check. The basics.

That's usually enough to get you an offer. We don't need to see the practice's tax returns from 2019. We care about what you're making right now.

Let's get this done

Buying out a partner is a big move. It's scary. You're taking on more debt and losing a set of hands in the operatory. But the upside is huge. You get 100% of the profits and 100% of the decision-making power.

Don't let a slow bank kill your deal. If your partner is ready to sell, you need to be ready to buy. We can get you funded in as little as 24 to 48 hours once we have the docs.

Head over to our application page. It takes about two minutes. Let's see what you qualify for and get you sole ownership of your practice. You've earned it.