Due Diligence for Dental Practice Buyers

The decision to buy a dental practice is an exciting step in a dentist’s career and shouldn’t be taken lightly. After all, you have invested significant time and resources into getting the best education and training possible. As you evaluate potential practices, you should conduct a thorough assessment to ensure your transaction is successful. Here are a few tips for due diligence for dental practice buyers to determine if a specific practice is the right fit for you.

Practice Reputation

When buying a dental practice, be sure to investigate the office’s reputation. You should look for well-respected practices with competent staff who provide excellent care and service. Online reviews, such as Google My Business or Yelp, can give you an idea how the practice is perceived.

You will also want to check the doctor’s current standing with the state’s dental board and check for any previous violations. A practice with a dentist in good standing is an indicator that the business has potential for continued growth.

Finances and Contracts

Your due diligence process should include a thorough evaluation of the practice’s financial information, including:

• Profit and loss statements
• Balance sheets
• Tax returns for the past three years
• Accounts receivable reports

You should also have a clear understanding of monthly expenses, such as incidentals, cash flow and insurance reimbursements.

In addition, request information on all contracts with vendors, obligations to staff and current lease terms (if applicable). All this information will help you determine if purchasing the practice is a prudent decision for you.

Staff

The seller should provide you with a list of staff members, how long they have been with the practice and their current salaries. If the practice includes associate dentists, you will want to get detailed reports of their schedules, production and collections.

Office and Equipment

Whether the office space is leased or owned can make a difference in your ability to purchase the practice. Either way, you will want to make sure the office is well-maintained and has enough operatories to reach your production objectives.

You should also ensure any equipment that is included in the sale is in good working condition by getting a third-party inspection completed. You don’t want to start your practice ownership journey by having to replace faulty equipment.

Location and Demographics

Request patient demographic information to know how many patients are on the roster and if their accounts are current. You should also research the practice’s location to ensure its population, expected growth, market competition and commute time all match what you’re looking for.

By conducting due diligence, you will be confident in your purchasing decision and be taking proper steps to ensure a successful dental career.

Menlo Dental Transitions has many great dental practices available for sale. Check out our current inventory or sign up for our monthly emails to be notified when new listings become available. Our objective is to help you evaluate potential practices to find the ideal fit for your skills, background and goals.