The Practice Guide → Acquisition
Track 2From deciding whether ownership is right for you through closing day. The parts brokers won't volunteer and lenders assume you already know.
Practices come to market through a few channels, and each has different dynamics.
Dental practice brokers list most practices that are formally for sale. The critical thing to understand: the broker is almost always paid by the seller, as a percentage of sale price. They are not your advocate, even when they're helpful and pleasant. Use them for access; get your own advisors for evaluation.
Direct outreach to retiring dentists finds practices before they hit the market, often at better terms and without broker fees. This works, but requires patience and tact, a letter expressing genuine interest in continuing someone's practice lands very differently from one that reads like a form letter.
Buying in where you work is the smoothest path when it's available, because you already know the practice, the staff, and the patients. The risk is that informal partnership promises frequently don't materialize, get any buy-in path documented.
A good practice in a bad market is still a bad purchase. Before falling for a specific listing, assess: population trends in the area, competition density (how many dentists per capita), insurance saturation (heavily PPO-dependent markets compress margins), and demographic fit between the patient base and the dentistry you want to do.
Dental practices are commonly valued using a percentage of annual collections, or a multiple of EBITDA (earnings before interest, taxes, depreciation, and amortization). Different methods yield different numbers for the same practice, which is why the asking price is a starting point, not a fact.
You want at least three years of: profit and loss statements, production and collections reports by provider, an aging report, and tax returns. Tax returns matter because they're the number the seller reported to the IRS, if the P&L shows meaningfully more income than the tax return, ask why.
Red flags in the books: a sharp production increase in the year before sale (possible over-diagnosis to inflate the number), large "one-time" adjustments, unusually low overhead compared to benchmarks (often means expenses are being reported elsewhere), and a significant gap between production and collections.
This is where deals should be evaluated seriously, and where buyers most often rush. Budget real time for it.
Build your team before you need it: a dental-specific CPA, a dental-specific attorney, and a lender who does dental deals. Each will catch things the others miss. Trying to save money by skipping one of these is the most expensive decision buyers make.
Dentistry is well regarded by lenders, practices have predictable cash flow and low failure rates relative to most small businesses, so terms are generally favorable compared to other industries.
Your credit, the practice's cash flow relative to the debt service, your clinical production history, and increasingly, your business plan for the practice. Student debt is generally expected and doesn't disqualify you, though it affects how much you can borrow.
Working capital. Beyond the purchase price, you need cash to run the practice through the transition, payroll, supplies, lab bills, and your own living expenses, while collections catch up. Insurance credentialing under new ownership can delay revenue meaningfully. Underfunding working capital is one of the most common and most avoidable causes of trouble in the first year.
Lease terms that matter, site selection, and buildout costs.
Read the track →Educational content only. Practice valuation, financing terms, and transaction structures vary by situation and market. Consult your own CPA, attorney, and lender before entering any purchase agreement.