Due diligence on a dental practice is a document exercise before it is anything else. You ask for a specific list of items, you track what arrives and what does not, and you read them with a structured set of questions. The things that kill deals or reprice them, a lease that cannot be assigned, a hygiene department that is one retiring hygienist, a compressor at the end of its life, a fee schedule that has not been raised in six years, are all visible in the documents if you know to ask for them.

How to use this template

Send the document request sections to the seller or broker as your initial list, then use the tracking column to record what actually arrived.
Sign a confidentiality agreement first, and expect the seller to stage sensitive items (staff names, patient-level data) until later in the process.
Work in order: financial and legal first, because those decide whether there is a deal, then clinical, staff, equipment, and real estate.
Every "not provided" is a finding. Write it down and decide whether it is a timing issue or a red flag.
Your CPA, a dental-specific attorney, and an equipment technician each own a portion of this list. Send them their sections directly.

Practice Acquisition Due Diligence Checklist

Deal summary

Field	Entry
Practice name and location
Seller and entity name
Broker (if any)
Asking price
Asset sale or stock sale
Letter of intent signed (date)
Confidentiality agreement signed (date)
Due diligence period ends
Target closing date
My CPA
My attorney
My lender and loan officer
Equipment technician

Financial documents

Document	Period	Requested (date)	Received (date)	Reviewed by	Notes
Federal tax returns for the practice entity	3 years
Profit and loss statements	3 years plus year to date
Balance sheets	3 years
General ledger or detailed expense report	2 years
Production and collections reports by provider	3 years monthly
Adjustment and write-off reports	2 years
Accounts receivable aging	Current
Production by procedure code (CDT) summary	2 years
Current office fee schedule	Current
List of PPO plans and contracted fee schedules	Current
Payer mix report (percentage by plan, plus fee for service)	2 years
Payroll register and benefit costs by employee	2 years
Supply and lab expense detail by vendor	2 years
List of owner discretionary expenses (add-backs) with support	3 years
Equipment loans, lines of credit, and lease obligations	Current
Unearned revenue: prepaid treatment, membership plan liabilities	Current

Financial review questions

Do the tax returns, P and L, and practice software reports agree? Explain any gap.
What is the collection percentage against production, month by month?
Is production trending up, flat, or down over three years, and why?
How much of production comes from the owner personally, and what happens when they leave?
How much comes from procedures I do not plan to do, or will need to refer out?
Are the add-backs defensible and documented, or wishful?
How old are the fee schedules, and when were office fees last raised?
What percentage of collections is written off to PPO contracts?
Are there large one-time items in either direction?
Does the practice have deferred maintenance or deferred equipment replacement hiding in a healthy P and L?

Clinical and patient base

Item	Requested	Received	Finding
Active patient count and how "active" is defined
New patients per month, 24 months
Patient attrition and reactivation reports
Hygiene reappointment rate
Recall list size and overdue count
Unscheduled treatment plan value
Referral out patterns (endo, oral surgery, perio, ortho, implants)
Procedure mix by category
Average patient age and geographic spread
Chart review sample (with identifiers removed or per counsel's guidance)
Radiograph quality and documentation standards observed
Membership plan terms and enrollee count
Online reviews and reputation summary
Marketing spend and sources of new patients

Legal, licensing, and compliance

Document	Requested	Received	Reviewed by counsel	Notes
Entity formation documents, operating agreement, and good standing
Seller's dental license and any disciplinary history
Pending or past malpractice claims and carrier history
Malpractice tail coverage plan for the seller
Pending litigation, liens, judgments, UCC filings
All vendor and service contracts with termination terms
Practice management and imaging software license and transfer terms
PPO participation agreements and assignability
OSHA written exposure control plan and training records
HIPAA policies, risk analysis, BAAs, and breach log
Infection control policies and sterilization monitoring logs
X-ray registrations and most recent state inspection reports
Amalgam separator compliance report and 3 years of records
Regulated waste and amalgam disposal records
Any board complaints, inspections, or citations in the last 5 years
Insurance policies: property, liability, cyber, business interruption

Compliance transfer reminders

X-ray equipment registration follows the equipment and the address; confirm what must be filed and when
A new owner must submit a new one-time amalgam separator compliance report to the control authority within 90 days of the transfer
Insurance credentialing under the new owner or entity takes time; start it early
The seller's malpractice tail coverage should be confirmed in writing before closing
Records retention obligations transfer with the patient records; confirm your state's rules
Gaps in the seller's compliance binder are rarely deal killers but they define your first ninety days

Staff and employment

Item	Requested	Received	Notes
Roster by role with hire date, hours, and tenure (names may be withheld until late)
Wage rates, bonus arrangements, and benefit costs
Employment agreements, non-competes, or non-solicits with staff
PTO balances and accrual policy
Retirement plan and any employer contribution obligations
Employee handbook and any policies in force
Licenses, registrations, and radiography credentials for each employee
Turnover history for the last 3 years
Associate agreements, if any, and their restrictive covenants
Workers' compensation claims history
Any pending employment disputes
Seller's post-closing role: days, duration, compensation

Equipment and technology

Item	Brand / model	Age	Condition	Service records?	Replacement cost estimate
Chairs (count)
Delivery units
Operatory lights
Air compressor
Vacuum system
Amalgam separator
Sterilizers and ultrasonic
Intraoral x-ray units
Sensors or PSP scanner
Panoramic or CBCT
Intraoral scanner or mill
Handpieces (count and condition)
Nitrous system
Servers, workstations, network gear
Emergency kit, oxygen, AED

Equipment diligence steps

Walk the utility room with a technician, not just the operatories
Request maintenance and service records for the last three years
Confirm software licenses transfer and get the cost in writing
Ask what has failed or been repaired in the last 24 months
Build a first-24-months capital replacement estimate and factor it into your offer
Verify serial numbers against any equipment list attached to the purchase agreement
Confirm nothing on the list is leased or subject to a lien

Real estate and facility

Document or item	Requested	Received	Notes
Current lease and all amendments
Remaining term and renewal options
Assignment and change of control provisions
Base rent, escalations, CAM, and taxes
Personal guaranty required?
Landlord consent process and timeline
If buying the building: appraisal, title, survey, environmental
Square footage, operatory count, plumbed but unbuilt ops
Certificate of occupancy and ADA accessibility
HVAC, plumbing, electrical age and condition
Parking, signage rights, and visibility
Deferred repairs and who is responsible
Utilities and average monthly cost

Findings and adjustments

Finding	Category	Estimated cost or risk	Price adjustment, escrow, or condition	Resolved?

Go or no-go

Field	Entry
Items still outstanding
CPA's conclusion on cash flow after debt service
Attorney's open issues
Lender conditions remaining
Capital needed in the first 24 months
Revised offer or conditions
Decision and date
Buyer signature

How to run due diligence

Start with a signed confidentiality agreement and a written document request. Send the financial and legal sections first, because those determine whether there is a deal at all. Clinical, staff, equipment, and real estate follow. Sellers are usually cooperative but slow, and brokers stage information, so build the request into your letter of intent with a diligence period long enough to actually finish. Thirty to sixty days is typical for a single-location general practice, longer if real estate or multiple locations are involved.

Track everything in the requested and received columns. This sounds bureaucratic until week four, when you are trying to remember whether you ever got the adjustment report. A document you asked for three times and never received is a finding in its own right, and it belongs in the findings table with a note.

Distribute the work. Your CPA takes the financial section and reconciles tax returns against practice software reports. Your attorney takes the legal section, the lease, and the purchase agreement. An equipment technician walks the operatories and the utility room. You take the clinical and staff sections, because those are judgment calls about whether this is a practice you want to run. Trying to do all four yourself is how things get missed.

What good looks like

Good diligence ends with three numbers you trust: what the practice actually collects, what it actually costs to run, and how much capital you will need to spend in the first two years. The first two come from reconciling the tax returns, the profit and loss statements, and the practice software reports until they tell the same story. Small differences are normal. Large unexplained ones mean you keep asking. Our guide to how dental practices are valued explains how those numbers become a price, and the practice acquisition loan calculator lets you test whether the cash flow supports the debt.

Good also means you understand where production comes from. A practice where the selling dentist personally produces most of the revenue, does procedures you do not do, or holds the relationships that keep patients coming is a different asset from one with a broad patient base and a strong hygiene department. Look at production by provider and by procedure category, and ask honestly what happens to each piece after the seller leaves.

Finally, good diligence leaves you with a written list of first-ninety-day projects. Compliance gaps, an expiring x-ray registration, a fee schedule that has not moved in years, a vacuum pump on borrowed time. None of those have to stop the deal. They just need to be known, priced, and scheduled.

Common mistakes

Accepting a summary instead of the source. A broker's one-page practice profile is marketing. Ask for the underlying reports and the tax returns, and reconcile them yourself or through your CPA.

Ignoring the lease. A practice is worth much less if the lease cannot be assigned, has two years left with no options, or gives the landlord broad rights on a change of control. Landlord consent can also be the slowest item in the entire closing. Read dental office lease terms that matter before you get to this stage.

Skipping the equipment walk. Buyers inspect the operatories and skip the utility room, then discover a compressor and vacuum pump both near the end of their service life. Use the equipment inspection checklist and bring a technician.

Underestimating credentialing time. Insurance participation does not automatically follow a change of ownership. Starting credentialing late can mean months of claims you cannot bill normally, which hits cash flow exactly when you have new debt service.

Not talking to the seller about the transition. How the seller introduces you, how long they stay, and what they say to patients affects retention more than almost anything else. Get the post-closing arrangement in writing: days, duration, and compensation.

Falling in love with the practice. By the time you are deep in diligence you have invested weeks and you want it to work. That is exactly when findings get rationalized. Write your walk-away conditions down before you start, and read them again at the end.

This template is educational and is not legal, tax, or financial advice. Engage a dental-specific attorney and CPA for any practice acquisition.

This guide is educational content and does not constitute legal, financial, tax, or clinical advice. Laws and regulations vary by state and change over time. Consult your own dental-specific attorney, CPA, and state dental board before acting.

Practice Acquisition Due Diligence Checklist