Key Factors to Consider when Buying or Selling a Dental Practice – NaviPath Financial
April 28, 2021

Key Factors to Consider when Buying or Selling a Dental Practice

Ryan Whitley

by Ryan Whitley

Whether you are an associate dentist looking to purchase your first practice, an existing practice owner purchasing additional practices, or a later career dentist who is selling to the next generation; knowing the following factors when buying or selling a practice can make a huge difference…

General Practice Information

  • Practice profile – an information sheet about the practice, building, employees, office hours, procedures, and makeup of the practice, etc...
  • Surrounding development / business - Investigate what is going on in the immediate area as far as development or changes.
  • Research the area demographics, growth, and existing competition.
  • Contact the city office that handles development or access the city or county web site to read about the community master plan. This is a long-term plan that maps the county's future growth and where it is to occur. It will list all the areas of future development and expected zoning changes. A very good resource for the long-term potential of any practice.

Financial Data

  • Request a recent Profit & Loss statement to measure current income and expenses.
  • Request a production report by department and provider to determine where revenue is generated.
  • Ask for the past 3 years of complete tax data is this is a good reference to establish past performance, but the last 12-18 months of data offers more information as to the health of the practice.
  • Request a report to determine how many patients were seen in the last 12 to 18 months.

Building Lease / Purchase

  • Is the office in a setting where it can be expanded if needed rather than having to relocate?
  • Is the building lease an assignment to you or will the landlord require a new lease?
  • If a new lease - will the terms and costs change?
  • Inquire about renewal options for both an assignment and a new lease.
  • A minimum lease of 10 years will be required by most lenders but you should also secure as many options as possible to best allow for your future growth plans.

Employees / Associates

  • Ask for the payroll records to determine what that employee/position was paid for the last few years and the current year. This is helpful to accurately understand the net cash flow and if there have been any recent changes.
  • If the office manager, associate doctor, or any other key employees are new, why did the prior employees leave?
  • Determine if there has been any patient erosion since the departure of these key employees.
  • Based on the cash flow of the practice, will there be a required payroll change?
  • If the cash flow is weak, what options are there to reduce the immediate costs without losing staff?
  • If it is known in advance that a reduction in staff will occur determine the potential risk of patient loss.

Associate Doctors

  • If the seller employs an associate, make sure there is an assignable non-compete in place or if the associate will sign a non-compete before the closing. This is normally required by a lender to ensure minimum impact on the patients and practice revenue post-sale.

Procedures and Patient Approach

  • Does the seller seem to have a similar philosophy as to patient treatment and procedures?
  • Is the office adequately equipped for the procedures you plan to offer, and will there be any additional equipment needed and at what cost?


  • Will the seller offer you a comfortable transition as you feel is needed to get familiar with the practice operation, systems, patients, and staff?
  • Is the seller available to provide support for several months after the sale?
  • How long is the seller willing to help or possibly fill in for you after the sale?

We encourage you to leverage a team of experienced advisors to help with any transition. If you would like to discuss in more detail, please feel welcome to connect.

Ryan Whitley, CFP®, is a Certified Financial Planner and Co-Founder of NaviPath Financial. His firm specializes in ongoing and comprehensive financial guidance to dental practice owners. They are independent and act as fiduciaries to serve their clients best interest.