Resources for dental offices
Buying a dental practice marks a significant milestone in your dental career. Unlike joining as an associate, owning a practice opens doors to exciting opportunities and serious responsibilities. This checklist breaks down the acquisition process into clear steps, covering everything from financial readiness to transition planning.
Jun 2, 2025
1. Self-Assessment and Goal Setting
Before you start searching for practices, take time to prepare thoroughly.
First, assess your financial readiness for buying a dental practice. You'll need a credit score of at least 680 to improve your loan approval chances. Don't worry too much about your debt-to-income ratio, as dental-specific lenders understand the reality of student debt. Try to save at least $50,000 for initial deposits and working capital. Create a detailed personal budget to determine what practice debt you can manage comfortably.
After you assess finances, define your professional goals and preferences. Think about what type of dentistry you want to practice, general or specialty focus. Consider what patient demographics you prefer to work with. Define your ideal workplace culture and values. Decide where you want to practice. Keep in mind that urban, suburban, or rural settings all offer different advantages.
2. Assemble a Team of Advisors for Buying a Dental Practice
You can't navigate this process alone. Your team should include experts in legal, financial, and operational areas, and dental staffing solutions to help with staff transitions.
The team you'll need includes:
Dental-specific attorney: Find an attorney with experience in dental transitions, healthcare regulations, and practice contracts.
Dental practice CPA: Look for a CPA specializing in dental accounting and understanding practice valuation and tax strategies.
Practice broker: Connect with a broker with strong connections in your target area and experience representing buyers.
Lender with dental industry experience: Choose a lender familiar with dental practice financing and cash flow patterns.
Equipment and technology specialist: Hire an independent specialist to evaluate existing equipment and identify necessary upgrades.
3. Identify and Evaluate Potential Practices Using Your Buying a Dental Practice Checklist
You can find practices through dental practice brokers, dental associations, direct mail campaigns, and networking with colleagues and industry contacts.
Develop a scoring matrix to compare practices objectively. Prioritize what you need versus what would be nice to have. Set minimum thresholds for important metrics and consider how well the practice aligns with your treatment philosophy.
Research the area's population growth trends, age distribution, income levels, and insurance coverage rates.
It's also important to assess competition and market potential. Map out competing practices within 3–5 miles of your potential purchase. Analyze their services and target demographics. Look for service gaps you could fill and evaluate whether the market is saturated.
When you visit a practice, note the facility's appearance and condition, equipment age and technology level, staff dynamics, practice workflow, patient demographics, and location factors.
4. Conduct Thorough Due Diligence
Thorough due diligence requires a detailed financial analysis, patient base evaluation, staff assessment, equipment and technology review, legal and compliance verification, and facility and lease examination.
When doing financial analysis, calculate the collections ratio by dividing collections by production (x100). Check that the overhead percentage is 63% or less of total income. Review 3–5 years of financial statements to spot production trends. Evaluate collection efficiency through accounts receivable aging.
What does the patient base look like? Check the active patient count, new patient flow, patient retention rates, insurance participation, and patient demographics.
To assess staff properly, examine staff tenure and experience, compensation structure, job descriptions, team dynamics, and culture.
Pay close attention to equipment and technology. Assess the age and condition of major equipment, technology systems, maintenance records, and replacement needs.
Also, avoid legal complications by verifying licenses and permits, HIPAA compliance, OSHA requirements, employment agreements, insurance policies, and cybersecurity measures.
Finally, review lease terms, building condition, accessibility and visibility, and expansion potential.
Consider conducting a chart audit on random patient records to assess documentation quality.
5. Valuation and Offer Strategy
There are a few common ways to value a business, depending on what you want to focus on.
Income-based approach: Looks at expected earnings, using methods like capitalized earnings or discounted cash flows.
Market approach: Compares the business to similar ones using ratios such as price-to-collections or price-to-earnings.
Asset-based approach: Adds up the value of tangible assets, like equipment or property.
When evaluating these methods, consider the business’s growth potential, revenue stability, patient base quality, equipment condition, and lease terms, as discussed earlier.
When you got all that set up, it's time to structure your letter of intent and offer. Address purchase price and terms in your offer. Include employee retention provisions, outline the transition period, specify patient records transfer, and detail contingencies.
Your letter of intent should also include assets and liabilities included/excluded, due diligence period, non-compete terms, and timeline for closing.
6. Secure Financing for Buying a Dental Practice
Securing financing is a crucial step in buying a dental practice. Here are the main options:
Traditional bank loans: Offer competitive interest rates but are harder to qualify for. They typically require a strong credit score, solid financial history, and a significant down payment.
SBA loans: Backed by the federal government, these loans often require lower down payments and provide more flexibility, especially for new buyers.
Dental-specific lenders: These lenders understand the unique needs of dentists, including student loan debt, and may offer 100% financing, making the process smoother.
To strengthen your loan application, gather key documents like your personal financial statement, credit report, tax returns, and a solid business plan with financial projections.
To confirm the investment is viable, lenders will assess your credit score, debt-to-income ratio, clinical production ability, and the practice’s financials. Clear documentation and a strong business plan will help speed up the approval process.
Understand the loan duration, amortization schedule, and any prepayment penalties or fees. This will help you avoid surprises down the road.
7. Finalize Purchase Agreement
Your purchase agreement should cover physical assets, patient records and goodwill, accounts receivable, transition assistance, and non-compete clauses.
Include financing contingency, due diligence contingency, patient records review, lease assignment terms, and staff retention requirements.
Consider allocating more assets to quickly-depreciable equipment and less to goodwill (depreciated over 15 years) for tax advantages.
As a part of the pre-closing checklist, ensure all contingencies are satisfied, insurance policies are ready to transfer, staff agreements are prepared, banking services are set up, and licensing is in place.
When closing day comes, bring your attorney to review any last-minute changes before signing final documents.
8. Transition Planning and Implementation
Develop a clear transition plan, aiming for gradual changes over 3-6 months to maintain stability and support growth.
Staff retention: Meet with staff individually, maintain compensation initially, and commit to retention for 90–180 days. Involve them in decisions and share your vision while respecting existing workflows.
Patient retention: Inform patients through a joint announcement with the selling dentist. Maintain current financial policies and introduce the new owner through a "meet and greet" event.
Collaboration with the selling dentist: Negotiate a 3–6 month transition period for patient introductions and knowledge transfer.
Document current workflows, maintain existing schedules, and keep vendor relationships intact during the transition. Introduce improvements gradually, once you’ve assessed what’s working well. Set up financial monitoring early to track performance and cash flow.
Review existing technology systems, focusing on those that enhance patient experience or ease team operations. For new tools like AI dental receptionists or scheduling, roll them out in phases with proper training.
Post-Acquisition Success Strategies
The first 90 days are crucial for maintaining consistency in care and operations. Focus on building team relationships, observing workflows, and mastering practice management software. Review patient records and treatment plans, and monitor financial performance closely. Track key metrics like production per hour, collections ratio (aim for 98%+), case acceptance, new patient numbers, treatment mix, and overhead (target: 63% or less).
Use AI tools to improve record-keeping and focus on patient care. Once you understand the practice’s performance, plan for growth by identifying service expansions, technology needs, and fee schedule adjustments. Implement changes gradually.
Update your digital presence by refreshing the website, managing online reviews, and improving SEO. Launch a patient referral program and explore digital marketing and community engagement strategies.
Finally, lead by example with transparent communication, involve your team in decisions, and prioritize continuing education. Also, take care of yourself by setting reasonable work hours and scheduling regular time off.
Your Roadmap to Successful Practice Ownership
Start with pre-search preparation, then move through practice evaluation and due diligence, financing, purchase negotiation, and transition planning.
The most successful acquisitions come from thorough preparation and proper due diligence rather than rushing through critical steps. Practice ownership represents both a significant professional milestone and a complex business transaction.
With strategic preparation and the right advisory team, you can achieve professional fulfillment and financial success as a practice owner.
If you need additional staff after the acquisition, consider leveraging Teero's dental staffing solutions. Teero offers a user-friendly platform that connects dental practices with qualified hygienists for temporary and permanent positions, simplifying the staffing process so your practice operates smoothly. Give us a call, and let us help you set up for successful practice ownership.