Completing Due Diligence Before Buying a Dental Practice

When considering the purchase of a dental practice, the dentist must perform the required due diligence. The dentist, his/her accountant and lawyer should educate themselves doing due diligence before ever signing a letter of intent. The potential buyer should always ask for the following reports:
• A detailed description of the office including whether or not the current seller owns the underlying building
• A statement that describes whether the practice owner owns or leases the equipment that is being sold
• A description of any contractual relationships of the patients, employees, or insurance companies
• Profit and loss statements, balance sheets, and income tax returns (for the last 3 years)
• A breakdown of practice expenses (Practice Profit and Loss)
• Percentage of collections
• A production and collections report broken down by each dentist and hygienist
• An accounts receivable and aging report
• The total number of active patients and the number of new patients per month
• A list of referring dentists if the practice is a specialty practice
• A report on how much revenue is based on insurance reimbursements