Buying a practice is likely the largest financial decision of your career, and excitement is exactly when independent analysis matters most. This guide covers the financial due diligence that protects the decision — before you sign.
What should you check before buying a dental practice?
The seller’s numbers tell a story; your job is to test it. Start with the financials behind the price: collections trends, overhead ratios, provider and hygiene production, patient counts, and the assumptions built into the asking price. A price can be well-supported or aspirational, and the difference is worth a great deal of money.
- Three years of collections and production, by provider and by hygiene.
- Overhead breakdown (staff, lab, supplies, occupancy) versus benchmarks.
- Payer mix and fee schedules; reliance on any single referral source.
- Equipment age and deferred capital expenses.
- Reason for sale and the seller’s transition plan.
How much does a dental practice cost?
Practice prices are commonly expressed as a percentage of annual collections or as a multiple of earnings, but those are shorthand, not valuation. What matters is what the practice earns after a market-rate associate salary and true overhead. For a deeper treatment, see how to value a dental practice and how much a dental practice costs.
What will the practice actually put in your pocket?
This is the question that matters most and gets asked least. Model debt service, taxes, and owner compensation together. Many buyers focus on the loan payment while underestimating taxes and the working capital needed to run the practice in the first months.
How do you prepare for practice financing?
Lenders want to see your personal financial picture, the practice’s financials, and a credible plan. Preparing well can improve your terms. See financing a dental practice purchase for what lenders look for and how to structure the loan.
Who should be on your team?
A practice purchase is a team sport: a financial advisor who models the deal and your personal picture, a CPA for tax and entity structure, an attorney for the purchase agreement, and a lender. Coordinating them into one strategy — rather than getting siloed advice — is where good outcomes come from.
Frequently asked questions
As early as possible — ideally before you make an offer, while terms are still negotiable. The most valuable analysis happens before you’re committed.
Often, yes — especially when independent analysis shows the price rests on optimistic assumptions. Understanding the numbers gives you a basis to negotiate.
A formal valuation is sometimes required for lending. Separately, independent financial analysis of the deal protects your decision. The two are different; both can matter.
Founder & Financial Planner · Investment Adviser Representative · Series 63 & 65
Ian McGinnis is the founder of Dental Wealth Partners and a fee-only financial planner dedicated to dentists. As an investment adviser representative (Series 63 and 65), he built the firm to give dentists coordinated, fiduciary advice across their practice, taxes, investments, retirement plans, and long-term goals — the whole picture in one strategy. A graduate of Belhaven University, Ian previously worked at Davis Private Wealth, MML Investors Services, and Northwestern Mutual, and is based in the Jackson, Mississippi area. He is the author of The Wealthy Dentist and hosts the Smiles & Cents podcast.
Keep reading
- How to value a dental practiceThe main methods used to value a dental practice, what drives value, and how buyers and sellers should think about the number.
- How much does it cost to buy a dental practice?What dental practices sell for, how prices are calculated, and how to tell whether an asking price is reasonable for your situation.
- Financing a dental practice purchase: what lenders wantHow dental practice loans work, what lenders look for, and how to prepare so you get better terms on your practice purchase.