Buying a dental practice can be a smart path to ownership, but it also carries legal, financial, and operational risks if key details are missed. The most successful buyers evaluate the deal structure, compliance issues, and transition planning early, before signing a purchase agreement or committing to financing.
Below are the most important factors to consider when buying a dental practice, along with common mistakes that can create problems long after closing.
Understand What You Are Actually Buying
One of the first decisions is whether the transaction is structured as an asset purchase or an entity purchase. Most dental practice acquisitions are asset deals, where you buy selected assets rather than the seller’s legal entity.
- Which assets are included, such as equipment, patient records, intellectual property, and goodwill
- Which liabilities you are assuming, if any
- How accounts receivable will be handled
- Whether existing contracts transfer automatically or require consent
A common mistake is assuming “everything transfers” without reviewing each asset and obligation category individually.
Review Financials Beyond the Top-Line Numbers
Practice revenue alone does not tell the whole story. Buyers should review multiple years of financial records to understand trends, not just current performance.
- Adjusted cash flow and add-backs
- Hygiene production versus doctor production
- Staffing costs and payroll structure
- Lease expenses and escalation clauses
- Equipment maintenance and replacement needs
Failing to normalize financials can lead to overpaying or unrealistic expectations about post-closing income.
Evaluate the Lease Before You Commit
The lease is one of the most critical and often overlooked parts of a dental practice purchase. Even a strong practice can become a poor investment if the lease terms are unfavorable.
Before closing, confirm:
- That the lease is assignable to you as the buyer
- The remaining lease term and renewal options
- Rent increases, operating expenses, and CAM charges
- Whether the landlord’s consent is required and properly documented
A frequent mistake is finalizing the purchase agreement before securing acceptable lease terms or landlord approval.
Confirm Regulatory and Ownership Compliance
Dental practices are subject to state-specific ownership and control rules, including corporate practice restrictions. Buyers must ensure the ownership structure complies with applicable laws from day one.
This includes confirming:
- The seller’s entity is properly formed and in good standing
- Licensure requirements are met for ownership and operation
- Management arrangements do not improperly transfer clinical control
- Billing and compliance practices align with current regulations
Overlooking compliance issues can result in forced restructuring or disciplinary exposure after the transaction closes.
Plan for the Transition, Not Just the Closing
A smooth transition protects both patient retention and revenue. Buyers should understand what support, if any, the seller will provide after closing.
Important transition questions include:
- Will the seller stay on temporarily to introduce patients?
- How will staff be informed and retained?
- Who controls branding and marketing post-closing?
- How patient records and systems will be transferred
Many deals struggle because transition planning is treated as an afterthought rather than a core part of the transaction.
Avoid Relying on Verbal Assurances
Another common mistake is relying on informal promises instead of written agreements. If something matters to you as a buyer, it should be documented.
This includes:
- Non-compete and non-solicitation terms
- Representations about patient numbers and collections
- Equipment condition and warranties
- Seller obligations during the transition period
If it is not in the contract, it is challenging to enforce later.
Assemble the Right Advisory Team Early
Buying a dental practice involves legal, financial, and operational considerations that overlap. Bringing in advisors early helps identify risks before they become expensive problems.
Your advisory team may include:
- A dental-focused attorney
- A CPA familiar with practice acquisitions
- A lender experienced in dental financing
- A practice broker or consultant, when appropriate
Waiting until the deal is nearly complete limits your ability to negotiate or restructure unfavorable terms.
Why Legal Review Matters in a Dental Practice Purchase
Every dental practice transaction is different, even when the numbers look similar on paper. Legal review helps ensure the structure, contracts, and compliance framework align with your long-term goals as an owner.
At Polished Legal, we work with dentists at every stage of the acquisition process, from initial letter of intent through closing and transition. Trust us to identify risks early, clarify your obligations, and support a purchase that positions your practice for sustainable growth. Connect with us today for guidance on buying a dental practice.
