Due Diligence: What to Verify Before Buying a Dental Practice
Due diligence is your opportunity to look under the hood before committing to the purchase. Financial, operational, legal, and regulatory checks specific to dental practice acquisitions.
Buying a dental practice is a significant financial commitment. A thorough due diligence process — specific to the dental industry — is the only way to know what you are actually purchasing. This is part of our work on every dental practice acquisition.
Financial Due Diligence
Typical requests: practice financial statements (3–5 years), tax returns, production and collection reports, accounts receivable and payable summaries. Buyers should analyze revenue trends, overhead ratios, and the split between hygiene and restorative production.
Operational Due Diligence
Patient demographics and visit patterns, hygiene program strength (percentage of production from hygiene), staffing levels and compensation, key referral sources, new patient flow trends. These factors directly affect the practice valuation and post-acquisition performance.
Legal and Regulatory Due Diligence
Review the lease and any subleases, employment agreements with staff and associates (including restrictive covenants), service contracts (IT, lab, maintenance), any outstanding claims, complaints, or regulatory issues, corporate records and minute books, and insurance policies and coverage.
Site Visit and Chart Review
Subject to PHIPA and RCDSO requirements, the buyer may conduct a limited chart review to confirm record-keeping quality, treatment planning consistency, and alignment between reported production and actual clinical work. This must be conducted with appropriate confidentiality safeguards, including a signed NDA and limited data access.
Seller Checklist
- Prepare financial statements and practice data
- Review corporate structure and tax planning
- Review the lease and key contracts
- Confirm regulatory compliance
- Prepare for due diligence requests
Buyer Checklist
- Arrange financing and understand lender requirements
- Determine transaction structure (asset vs. share)
- Conduct financial, legal, and operational diligence
- Review staff and associate arrangements
- Plan for transition and integration