The Practice Buyer's Checklist
50+ verification points covering all critical areas of practice evaluation. Use this to ensure thorough due diligence.
Use This Checklist to Ensure Thorough Evaluation
This checklist covers the key evaluation areas for any dental practice acquisition. Work through it systematically to ensure you don't overlook critical factors.
Financial Verification
- Request last 3-5 years of tax returns
- Obtain last 12 months of monthly P&L statements
- Review production reports by month (last 3 years)
- Analyze collection reports and percentages
- Obtain accounts receivable aging report
- Review insurance contracts and fee schedules
- Analyze revenue by service type (hygiene, restorative, surgical, etc.)
- Calculate adjusted profitability removing owner personal expenses
- Review accounts payable and outstanding bills
- Obtain equipment maintenance cost history
Operational Assessment
- Visit practice multiple times, including during busy periods
- Observe patient flow from check-in to checkout
- Assess schedule efficiency and booking patterns
- Evaluate operatory organization and maintenance
- Review sterilization and infection control procedures
- Assess clinical documentation and consistency
- Review clinical protocols and quality standards
- Evaluate clinical equipment condition
- Assess treatment planning and case acceptance processes
- Review supply ordering and inventory management
Team Evaluation
- Obtain current employee list with compensation
- Note tenure of each employee
- Ask about retention plans for each key staff member
- Informally interview team members (outside of formal tour)
- Review employment agreements and contracts
- Check for non-compete or confidentiality agreements
- Assess team morale through informal conversation
- Review turnover history (last 3-5 years)
- Assess training and skill development processes
- Evaluate compensation relative to market rates
Patient Base Analysis
- Obtain active patient count
- Request patient demographic breakdown (age, etc.)
- Analyze new patient acquisition rate (last 3 years)
- Review patient retention and recall compliance rates
- Assess insurance vs. self-pay patient breakdown
- Analyze insurance plan concentration
- Review average case values and treatment complexity
- Assess patient acquisition sources (referral, insurance, marketing, direct)
- Evaluate dependency on current dentist's personal relationships
- Review patient satisfaction feedback (if available)
Facility and Lease
- Review current lease terms
- Note lease expiration date and renewal options
- Understand landlord relationship and renewal likelihood
- Assess building maintenance and condition
- Identify any needed renovations or upgrades
- Evaluate parking, location, and accessibility
- Review zoning and regulatory compliance
- Check for any easements or property encumbrances
- Assess utilities and operating costs
- Evaluate HVAC, electrical, plumbing systems
Equipment and Assets
- Obtain equipment list with purchase dates
- Assess condition of operatory chairs and units
- Evaluate sterilization equipment
- Review X-ray equipment and compliance
- Assess compressor and vacuum systems
- Identify any leased equipment and terms
- Review software and technology systems
- Assess EMR/EHR system and functionality
- Evaluate practice management software
- Note any equipment requiring imminent replacement
Insurance Contracts
- Obtain copies of all insurance participation agreements
- Review fee schedules for each major plan
- Note reimbursement percentages for major procedures
- Review participation requirements and limitations
- Note termination clauses and notice requirements
- Identify renewal dates for each contract
- Assess contract modification or renegotiation opportunities
- Verify DEA credentials and active status
- Check state license and malpractice history
Legal and Regulatory
- Verify professional license in good standing
- Check state dental board for complaints or sanctions
- Review malpractice settlement history
- Verify DEA registration and status
- Research any pending lawsuits or judgments
- Review any employment-related legal issues
- Assess compliance with HIPAA and privacy regulations
- Check compliance with infection control regulations
- Verify any required permits or licenses current
Financial Projections and Feasibility
- Calculate realistic profitability under your ownership
- Project team transition costs
- Budget for needed equipment replacement
- Estimate technology system implementation costs
- Project marketing and new patient acquisition costs
- Assess financing feasibility with lenders
- Calculate debt service relative to projected income
- Assess sensitivity if patient attrition occurs
- Budget contingency for unexpected issues
Red Flags to Investigate Further
If you identify any of these, they warrant deeper investigation or may indicate the practice isn't worth pursuing. See our detailed red flags guide for thorough analysis of each warning sign.
- Declining revenue trend
- Collections below 90%
- Accounts receivable over 60 days
- High staff turnover history
- Key staff planning to leave
- Equipment in poor condition
- Lease expiring soon with uncertain renewal
- Board complaints or legal issues
- Significant facility maintenance needs
- Concentration with low-paying insurance plans
Using This Checklist
Work through this checklist systematically. For each area, ensure you have the information and documentation you need. Don't skip items because they seem routine. The details reveal the reality.
Use this checklist as part of a comprehensive due diligence process, working with your accountant, attorney, and dental consultant to verify information and interpret findings. For comprehensive practice buying guidance, see our full resources.