Buying or Selling a Dental Practice: Key Legal Considerations Every Dentist Should Know

The purchase or sale of a dental practice is one of the most significant decisions a dental professional will make during their career. Whether you are retiring, relocating, expanding, or starting out as a new owner, the legal and financial implications of a practice transition are substantial—and often underestimated.

At Oberman Law Firm, we specialize in helping dental professionals navigate the complex legal landscape of practice transactions. Here are the key legal considerations every buyer and seller should understand before moving forward.

Letter of Intent (LOI): The First Step, Not the Final Word

The Letter of Intent (LOI) outlines the basic terms of the deal—purchase price, assets involved, transition timeline, and other high-level points. While not typically binding, it sets the tone and framework for the final agreement.

Never sign an LOI without legal review. Even non-binding terms can shape negotiations and create expectations that are hard to unwind later.

Asset Purchase vs. Stock/Entity Purchase

The legal structure of the sale has tax, liability, and regulatory consequences:

• Asset Purchase: The buyer acquires only specific assets (equipment, patient records, goodwill, etc.) and avoids assuming most liabilities.
• Stock or Membership Interest Purchase: The buyer takes over ownership of the entire entity, including liabilities and contracts.

Due Diligence: Know What You are Getting (or Selling)

For buyers, due diligence is your chance to verify the practice’s value and identify red flags. This includes:

• Reviewing financial statements and tax returns
• Confirming active licenses and permits
• Inspecting lease agreements and vendor contracts
• Evaluating staff employment terms and benefits
• Ensuring proper billing and coding practices

For sellers, it's critical to prepare for this process well in advance—clean books, documented policies, and updated compliance records can significantly improve your practice’s value and appeal.

Employee and Associate Transitions

Employee-related issues are often overlooked but can cause major headaches post-sale. Legal considerations include:

• Drafting new employment agreements or offer letters
• Addressing non-compete and non-solicitation clauses
• Complying with state labor laws during terminations or transitions
• Communicating clearly and lawfully with staff about the ownership change

Early planning ensures continuity of care and minimizes staff turnover risk.

Lease Assignment or Renegotiation

If the dental practice operates in a leased space, the buyer must secure either a lease assignment or negotiate a new lease.

Watch out for:

• Personal guarantees
• Hidden costs (e.g., maintenance obligations)
• Restrictions on transfer or signage
• Remaining term (short leases can impact financing and valuation)

Legal review of lease terms is critical to prevent future disputes or unexpected costs.

Restrictive Covenants (Non-Compete, Non-Solicit)

Both buyers and sellers have a stake in restrictive covenants:

• Buyers want protection against the seller opening a competing practice nearby.
• Sellers must ensure restrictions are reasonable and enforceable under state law.

Courts may strike down overreaching non-competes, so it’s essential to draft these carefully.

Regulatory and Licensing Compliance

Before closing, ensure compliance with:

• State Dental Board requirements for ownership changes
• DEA registration transfers (if applicable)
• Medicare/Medicaid and insurance credentialing updates
• Business and professional licenses

Failure to handle these transitions properly can delay operations or create regulatory violations.

Purchase Agreement: The Deal in Writing

The Purchase Agreement is the core legal document that outlines all transaction terms, including:

• Purchase price and payment structure
• Allocation of assets
• Representations and warranties
• Indemnification provisions
• Closing conditions
• Transition support agreements (e.g., seller working for 3–6 months post-sale)

This agreement must be customized to the specific needs and goals of the parties—not pulled from a template.

Transition Planning: Beyond the Legal Paperwork

A successful transition isn’t just about contracts—it’s also about planning:

• How will the seller introduce the buyer to patients and staff?
• Will there be a handoff period or consulting agreement?
• What marketing or branding changes will occur post-closing?

A thoughtful transition plan increases patient retention and protects the value of the practice.

Work With Experienced Legal Counsel

Buying or selling a dental practice is not a DIY project. From negotiating fair terms to protecting against hidden liabilities, the right legal team ensures your interests are safeguarded from start to finish.

At Oberman Law Firm, we bring deep experience in dental practice transitions—from solo practitioners to multi-location groups. We coordinate with your CPA, lender, broker, and other advisors to create a seamless, compliant, and profitable transacti

Thinking About Buying or Selling a Practice? Let’s Talk.

Whether you're preparing to sell your life’s work or evaluating the right opportunity to buy, the earlier you involve legal counsel, the better the outcome.

Contact Oberman Law Firm today to schedule a confidential consultation and take the first step toward a smooth, successful dental practice transition.