Due diligence checklist for buying a dental practice

Due diligence is the period after you and the seller agree on the basic terms and before you sign the purchase agreement. It is your chance to confirm that the practice is what the listing says it is. Most problems buyers regret could have been found here.

This checklist groups what to review by area, and names the professional who usually checks each one. Dentagraphics does not broker or appraise practices. We cover the market around the practice, which is the part of due diligence most often skipped.

Who should be on your due diligence team?

Role	What they check
Dental CPA	Financial statements, tax returns, collections, overhead, payroll
Dental attorney	Purchase agreement, lease, entity, contracts, non-compete terms
Practice appraiser	Whether the price is supported by the practice's numbers
Lender	What the bank needs to approve the loan
Market analysis	Saturation, income, growth and competition around the practice
You	Charts, schedule, equipment, staff, the feel of the office

1. Financials

Three or more years of profit and loss statements and tax returns, plus the most recent months.
Collections by month, not just by year, so you can see trends and seasonality.
Production versus collections, and how much is written off or sent to collections.
Overhead by category: staff, rent, supplies, lab, marketing.
Owner compensation and any personal expenses run through the practice.
Accounts receivable aging, and whether receivables transfer with the sale.

Ask your CPA: do the tax returns match the profit and loss statements? Are the most recent months in line with prior years?

2. Patients

Count of active patients, and how the seller defines "active."
New patients per month over the last two or three years.
Payer mix: fee-for-service, PPO plans, Medicaid.
Age mix of patients compared with the services the practice earns revenue from.
Recall and reappointment rates, if the practice software can report them.

See how to evaluate a dental practice's patient base for detail.

3. Staff

Roles, tenure and pay for every employee.
Any employment contracts, bonuses or promised raises.
Associate dentists and hygienists: are they staying, and on what terms?
Benefits and accrued paid time off that would carry over.

4. Equipment and technology

Age and condition of chairs, imaging, sterilization and the compressor and vacuum.
Practice management and imaging software, and whether licenses transfer.
Leased equipment and the remaining payments.
Any equipment you would need to replace in your first year.

5. The lease and the space

Remaining term and renewal options. Lenders often want the lease to run at least as long as the loan.
Whether the lease can be assigned to you, and the landlord's conditions for consent.
Rent increases, common area charges and who pays for repairs.
Exclusivity: can the landlord lease nearby space to another dentist?
Personal guarantee terms.

A lease review before you sign is worth the cost.

6. Legal and regulatory

The entity being sold, or the assets, and what that means for liabilities.
Licenses, permits and radiation equipment registration.
Any pending complaints, malpractice claims or board actions.
Payer contracts and whether they transfer to a new owner.
The seller's non-compete: distance, length and whether it is enforceable in your state.

7. The market around the practice

The practice's history shows how it performed in its market until now. The market tells you whether that can continue.

Saturation: residents per general practice within a short drive, compared with the county and the US average of about 3,850.
Competition: the nearby practices by specialty, especially offices that opened recently.
Income: household income around the practice, which shapes fee-for-service potential.
Growth: whether the population nearby is growing, flat or shrinking.

Count competitors from a list a person has checked. Online maps include closed offices, duplicates and listings that are not clinical practices.

Frequently asked questions

How long does due diligence take for a dental practice? It depends on how quickly the seller provides documents and how complex the deal is. Agree on a due diligence period in your letter of intent, and ask your attorney what is realistic for your deal.

What is the most commonly skipped part of due diligence? The market. Buyers review the practice's own numbers closely but often do not check whether the area around it is crowding, growing or shrinking.

Does Dentagraphics do due diligence? Dentagraphics covers the market side: verified competition, demographics, saturation and growth around the practice. It does not review financials, appraise practices or give legal advice.

How Dentagraphics helps

Single-Site Study ($695): the market around the practice you are buying, with handwritten analysis by a demographer.
Start/Buy membership ($149 per month): unlimited address and area searches, plus practice listings from many brokers in one place.
Free plan: national, state and county overviews.

Our competition data covers 118,330 US dental practices verified by hand. We do not broker practices and hold no stake in any location.

Keep reading: How to buy a dental practice, questions to ask a seller, and how market data tests a valuation.

Checking a practice right now? See a free sample report to see exactly what a market review covers, or create a free account to look up the county around the practice today.