Don’t Buy Blind: What Every Dentist Should Know Before Buying a Practice
TL;DR:
Buying a dental practice is one of the biggest career and financial moves you’ll ever make. Beyond price and patient charts, success depends on understanding what you’re really buying, goodwill, staff culture, and a functioning business. Take your time, do your due diligence, and get the right team behind you before signing.
1. Why Buying a Practice is a Big Deal, and a Smart One
If you’ve been working as an associate, the idea of owning your own practice can feel exciting and intimidating at once. Ownership means autonomy, equity, and long-term wealth-building, but it also comes with risk.
Unlike buying a house, a dental acquisition involves a living, breathing business: real people, patients, contracts, and systems that make the practice tick. When it’s done right, you’re not just buying equipment, you’re buying cash flow, reputation, and a brand that patients already trust.
2. Step One: Understanding What You’re Buying
Every dental practice has three main components:
Tangible assets: Equipment, furniture, supplies, and leasehold improvements.
Intangible assets: Goodwill, patient charts, phone numbers, online reviews. Essentially the practice’s reputation and ongoing relationships.
Liabilities: Leases, staff obligations, and possibly contracts with vendors or plans.
A fair purchase price should reflect both the tangible and intangible value. But remember: not all production is created equal. High production numbers don’t mean much if they’re driven by one-time cases or if collections lag behind.
Common Pitfall #1: Rushing the Process
Many buyers get emotionally invested early, they fall in love with the location or the idea of “their” office and skip steps. Slow down.
Take the time to:
Review at least three years of tax returns and production/collection reports.
Confirm that key staff members plan to stay.
Understand the payer mix, how much revenue comes from insurance vs. fee-for-service.
Buying too fast can lead to surprises like unexpected lease terms, inflated revenue reports, or staff turnover right after closing.
Common Pitfall #2: Ignoring the Lease
The office lease can make or break your deal. A great price doesn’t matter if your landlord won’t approve the transfer or the rent will double in two years.
Watch for:
Assignment clauses: Does the landlord have to approve you as the new tenant?
Term length: Ideally, you want a lease term (including renewals) of at least 7–10 years.
Restrictions: Some leases prohibit adding associates or specialists, check before you sign.
Common Pitfall #3: Misunderstanding the Seller’s Role After Closing
You’ll often hear that the seller will “stay on to help transition.” That can be great, or not.
Make sure your purchase agreement clearly defines:
How long the seller will stay and in what capacity (employee vs. independent contractor).
Compensation structure (hourly, daily, percentage).
Non-compete and non-solicit terms so the seller can’t open next door or take key staff.
A clear transition plan helps patients and staff feel confident that nothing’s changing, even though everything is.
3. Due Diligence: What It Really Means
Due diligence is the homework phase, your chance to confirm that what you’re buying is what’s actually being sold.
Your professional team should include:
Dental CPA: to verify numbers, collections, and trends.
Dental attorney: to review contracts, structure, and compliance.
Lender: to help you understand what banks are looking for (and what terms you can negotiate).
Key questions to ask during diligence:
Are all patient balances current and collectible?
What percentage of revenue comes from hygiene vs. doctor production?
Are staff properly classified as W-2 or 1099?
Are there any pending disputes or regulatory issues?
If something feels off, production spikes, unexplained expenses, or sudden staff changes, pause. Better to walk away than buy a headache.
4. Deal Structure 101: Asset vs. Stock Purchase
Most dental acquisitions are asset purchases, meaning you’re buying the assets of the business, not the legal entity itself. This protects you from the seller’s old liabilities.
A stock purchase may make sense in limited situations (like large group practices), but it usually comes with more risk. Your lawyer can help you understand which structure fits your deal.
5. The Human Side of the Transition
Don’t underestimate how much the practice’s success depends on its people, the staff and patients who trust the brand.
Plan for:
Culture continuity. Keep familiar systems in place for at least a few months before making changes.
Staff introductions early. Consider meeting key team members before closing if the seller allows.
Patient communication. A warm, reassuring letter from the seller goes a long way.
You’re not just taking over a business; you’re inheriting a community.
6. Key Takeaways for Dental Buyers
Don’t fall in love with the deal too early, stay objective.
The lease and staff are just as important as the purchase price.
Hire a dental-specific CPA and attorney, generalists miss critical details.
Ask questions until you fully understand what you’re signing.
Remember: you’re buying peace of mind, not just production numbers.
7. Final Thoughts
Buying a practice can be life-changing, in the best way, when you approach it with patience and the right guidance. You’ll never eliminate every bit of risk, but you can make informed, confident decisions.
If you’re considering a dental acquisition, start early, build your team, and don’t rush the process. The right practice, at the right time, can set you up for decades of professional satisfaction and financial stability.