Buying a dental practice is complicated. There are so many ways to do it wrong. That’s why we’ve created this step-by-step checklist and filled it with expert insights.
Check out our ultimate guide to buying an existing practice ; it makes an excellent companion to this checklist.
Click here to download and use it as you go.
A dental practice acquisition is the purchase of an existing practice—rather than starting your own practice from scratch. You get to step into the driver’s seat of a practice that’s already in business and making money.
Going the startup route means beginning from square one. You scout locations, lease space, buy equipment, hire staff, and establish operations and systems. Then comes the tough part: attracting new patients from scratch without an existing reputation.
When you purchase an existing dental practice, you’re taking the fast track to owning your own thriving dental business. You step into a practice that already has existing patients, experienced staff, and smooth operations.
But here’s the catch: the purchase process itself is a beast. Valuation , financing, due diligence, negotiations—one complex tangle of legal and financial snarls. Without know-how, you risk overpaying, misunderstanding tax implications , or buying something totally different than advertised. And saying “I do” to the wrong practice makes for an expensive divorce.
Attempting this solo leaves you stranded on Struggle Street. But with our team of industry experts at your side, your chances of a good practice acquisition go sky-high. We’ve done this dance; we guide you through due diligence , help you drive a fair bargain, guide you to securing the right financing, and ensure the smoothest transition into ownership.
The choice is yours: take the slow road or zip into the fast lane. Let us know if you’re ready to start scoping out practices so we can jumpstart your ownership journey.
Buying a dental practice is not as simple as handing over a check. Take the following steps to set yourself up for success. Skipping important details can leave you blindsided down the road, so use this dental practice checklist to make your purchase smooth sailing.
Download the PDF for even more resources than you’ll find here.
Here’s the checklist:
Let’s go into each of these points in more detail.
The size of the practice you can buy—and your success after you buy it—will be largely determined by your ability as a dentist to perform highly-compensated procedures efficiently. By building a strong record of fast, effective dentistry from the start, you’re building a foundation for a lucrative career.
Where does your passion lie? Dental school should go a long way to
helping you answer that question. But in your first year or two out of
school, spend time exploring new specialties and cementing (pun
intended) your passions.
After you graduate, the paychecks you’ll see will likely be larger than anything you’re used to. Resist the urge to live large. Save as much as you reasonably can as soon as you can—you’ll need at least $50,000 in deposits to prove to the banks that you’re ready to buy.
In searching for a practice, spend 80% of your time connecting with other dentists. Those dentists—especially gray-haired ones—are your surest pipeline to finding a great practice to buy. Go to alumni events, make some calls, or send mailers to introduce yourself to dentists who will know of the great practices to buy.
The other 20% of your search time should be spent with brokers. Do it right and they may just want to connect you with just the right seller that they’re working with.
The second most important hire you’ll make when building your buyer’s team is the accountant. (Stay tuned for the first.) The numbers have to make sense, and that’s what accountants do. Make sure to get a dental-specific accountant who can easily understand the story behind the practice’s numbers.
Beyond the numbers, you need to know how you feel about the practice. Location, equipment, patient base, staff—there are plenty of areas that you are uniquely qualified to understand as the buying dentist.
Do you and the seller mesh well? You should, and not just for the ease of the transition. Having a similar clinical philosophy means your transition into ownership of the practice will likely be fairly smooth.
A dental-specific attorney is the most important person on your transition team—yes, even more important than an accountant. A good dental attorney has seen it all, and will know all the right ways to make sure you have a smooth transition that won’t cost you huge bucks down the road.
The Letter of Intent is legally non-binding, but it sets the tone and the expectations for the rest of the purchase process. A good dental attorney will help you get it right.
The banker usually matters far more than the bank. While your banker isn’t technically on your team, having the right one can be the difference between spending or saving tens of thousands of dollars over the long run.
Before the bank can do financial due diligence on a practice you’re interested in, they need to do some due diligence on you. Apply for financing to know what you can reasonably afford to look for. It will likely be more than you think.
The rate matters—big time! But there are many other factors that go into choosing the right loan, like origination fees, checking account and merchant services requirements, and much more.
Through a chart audit you’ll understand what kind of procedures this practice tends to do most often, and whether your clinical philosophy fits well with the seller’s. This will give you an idea of how much of a strain on the practice it will be to insert yourself into its daily routine.
Is the equipment ancient and in need of an update? Is it state of the art? Both are easy to understand. More likely, you’ll find equipment that you can live with until your ownership is established enough that you can get the type of equipment you’re most comfortable with.
While some sellers are skittish about it, do your best to meet the team before the purchase is finalized. The longer you and the team have to get used to each other, the better. Don’t freak out if this isn’t possible, though.
If you put together your team well, then you get to worry mostly about clinical and managerial stuff. Your attorney will handle the vital legal due diligence, and your accountant and banker will handle the numbers. Between the three of you, you’ll know long before you sign on the dotted line that this purchase is the right one for you.
The most common business type for a dental practice is an S corporation. However, your attorney and accountant may guide you in a different direction for your specific situation.
This is the big one. The Asset Purchase Agreement is the document that transfers ownership of the practice to you. You don’t want any surprises here that could cost you in money or stress. This is a job for a dental-specific attorney who knows just what to look for.
Some dentists own their practice real estate, others lease. There’s no right answer here, other than to make sure that you know the ins and outs of the purchase or lease agreement.
This step is absolutely vital, since this is how you’ll actually bill the vast majority of your patients. Begin the credentialing process with each insurance provider you plan to accept, as early in the transition as possible.
Set up your business insurance coverage as well: General liability, workers comp, disability, life—make sure you’ve got all the coverage you’ll need as a business owner.
Once you’re the boss…what then? Have a plan for how you’ll run each
aspect of your business, from personnel to supplies to marketing and
everything in between. Hint: you should change almost nothing for the
first 90 days, then start making the changes you want.
This could be the same CPA that you used for the transition process, if they provide ongoing services. If not, they can make some great recommendations for dental-specific CPAs.
The staff is going to become your family away from home. Take your
relationships with them seriously, and do your best to make a good first
impression. Assure them that this purchase won’t upend their life.
Patients must be notified of a change in ownership, and the most common way to do this is through a letter. This is a great time to have the selling dentist pump you up. The vast majority of patients will be just fine coming to you instead of the seller, as long as you do a good job.
Sign on the dotted line. Get the keys. Walk through the door on day
one as the new owner of your very own practice. Congratulations,
you’re almost done!
It has always surprised me how many dentists forget this step. This is a huge moment in your career! Throw a party, invite your family and friends to come slap your back and congratulate you on this massive accomplishment. And slap your own back while you’re at it.
As you can see, acquiring an existing dental practice is not a simple process. From valuations and negotiations to due diligence and transition coordination, it requires moving many pieces. It takes a lot of specialized expertise to properly value a practice, negotiate a purchase, secure financing, and transition ownership.
Don’t do it alone—we can quarterback you through the entire acquisition journey. We help qualified dental professionals like you find and purchase the perfect practice to achieve your goals.
Contact us today to start planning your dental practice purchase! With our guidance, you can invest in an established, thriving practice with confidence.
For more info on any specific aspect of the acquisition journey, click on the following headings.
From using a dental practice broker to doing your own legwork, we cover the different ways you can find a practice to buy.
Dental practice valuation is tricky. There are a lot of factors to consider, some qualitative and some quantitative.
You need to have some good negotiation skills to craft a win-win that helps you and the seller each get what you want.
When performing your due diligence, there are some red flags and some green flags to consider.
We help you navigate the world of dental practice financing, from initial preparation through closing.
Let’s look at any final closing tasks you need to handle when you finalize your dental practice ownership.
Dental practice transitions need to be handled in the right way to minimize turbulence. You don’t want to alienate your existing patient base.
We cover the gamut of insurance issues, from credentialing to malpractice insurance and a whole lot more.
A guide to the legal issues involved in acquiring and maintaining a dental practice.
It can cost around $300-$1,000 per person to acquire patients from selling dentists in a purchased dental practice, when factoring expenses for marketing, staff time, promotions, supplies, technology, and more. But quality retained patients earn that investment back through their lifetime value and referrals once the seller has already absorbed these customer acquisition costs.
Conduct inventory for a dental clinic by systematically cataloging all supplies, equipment, and materials used in patient care. Start by categorizing items such as dental instruments, disposables, and office supplies, use inventory management software to track usage, set reorder points, and streamline restocking processes, and regularly update the inventory to ensure smooth clinic operations and avoid shortages.
Determine dental practice valuation by assessing factors such as financial performance, patient base, location, equipment, and goodwill. Seek professional guidance from dental CPAs or practice valuation experts, such as experts at Dental Buyer Advocates, to ensure an accurate and fair valuation.
The most popular dental practice valuation method is using a multiple of annual earnings or discretionary earnings. This looks at the seller’s discretionary earnings (revenue minus salary and benefits) over the last 3 years. A multiple of 50-100% of this average annual discretionary earnings becomes the practice’s value.
Essential equipment in a dental practice includes diagnostic tools like X-ray machines, dental chairs, handpieces, sterilization equipment, and operatory lights. Additionally, digital technology like intraoral scanners and practice management software enhance efficiency.
A covenant-not-to-compete agreement is a legal contract often used in the sale of a dental practice. This type of contract restricts the seller from practicing dentistry within a specified geographic area for a certain duration after the sale.
It aims to protect the buyer’s investment by preventing the seller from competing directly and potentially drawing patients away from the newly acquired practice. The terms of the agreement should be carefully negotiated to strike a balance between the interests of both parties.
