Acquiring a dental practice is one of the most significant professional and financial steps a dentist can take. The process involves complex legal, financial, and operational considerations, and mistakes can be costly. With the right guidance, however, you can shorten the learning curve, avoid common pitfalls, and move forward with confidence.
At Duckett Ladd, we emphasize the importance of building a strong “board of directors” — trusted advisors such as attorneys, lenders, and consultants — who can help you navigate every stage of ownership. No one can do it all alone, and surrounding yourself with the right expertise allows you to focus on delivering excellent patient care while building a thriving business.
Financial Preparation Before a Dental Practice Acquisition
One of the most overlooked aspects of dental practice acquisitions is financial readiness. Buyers should have a clear understanding of personal finances, debt-to-income ratios, and the capital required for down payments, working capital, and any initial improvements. Being financially prepared ensures you approach an acquisition from a position of strength rather than scrambling to secure funding at the last minute.
Lenders who specialize in dentistry are particularly valuable partners. They understand the nuances of practice ownership and can help structure favorable terms that align with your goals. Solid financial preparation creates confidence — for both you and the institutions financing your purchase.
The Current Climate for Dental Practice Acquisitions
The COVID-19 pandemic and the regulatory responses that followed reshaped the environment for dental practice acquisitions. Patient volumes fluctuated, operational expenses increased, and lenders became more cautious when reviewing transactions.
Some sellers continue to hold on to pre-pandemic expectations, assuming practices will be valued and purchased at the same levels as before. Buyers and banks, however, require updated financial statements and proof of stability before moving forward. Because much of a dental practice’s value lies in goodwill — patient relationships and continuity of care — any disruption in operations directly affects valuation. Recognizing these realities is essential for both parties in today’s market.
Dental Practice Acquisitions: A Note for First-Time Buyers
First-time buyers should approach acquisitions with patience and objectivity. It can be tempting to pursue the first opportunity that looks appealing, but rushing into a deal increases the risk of overlooking red flags. Once you commit to a poor acquisition, unwinding the transaction can be extremely difficult.
A structured approach helps avoid costly missteps. Using a buying a dental practice checklistensures you evaluate all aspects of the practice before committing. Remember that not every deal is the right one. Surround yourself with trusted advisors, listen to their input, and remain willing to walk away if the numbers or circumstances do not align with your goals.
The Role of Valuation in Dental Practice Acquisitions
An accurate valuation is one of the most important elements of a successful acquisition. Overpaying can place long-term strain on cash flow, while undervaluing a practice may prevent a deal from closing. A professional dental practice valuationconsiders production history, patient base, goodwill, equipment, and location to provide a fair market estimate.
With this knowledge, buyers are better positioned to negotiate terms, secure financing, and ensure the purchase aligns with long-term financial stability. Sellers, meanwhile, benefit from realistic pricing that reflects current market conditions.
Red Flags and Goodwill in Dental Practice Acquisitions
Every acquisition carries potential warning signs. Common red flags include inconsistencies between verbal statements and written documentation, unstable real estate or lease agreements, or practices that require extensive changes to fit your vision.
Another critical consideration is goodwill. Dental practices are often referred to as “transitions” rather than simple sales because so much of their value lies in the transfer of relationships from seller to buyer. The smoother the goodwill transition — with patients, staff, and community — the more valuable the practice becomes. Conversely, challenges in transferring goodwill increase risk and can reduce the practice’s overall worth.
Why Legal Guidance Matters in Dental Practice Acquisitions
Legal guidance is essential at every stage of an acquisition. An experienced dental attorney helps ensure the terms of the agreement align with your goals, safeguards your interests, and prevents costly oversights.
From reviewing contracts to negotiating terms, your attorney should be an integral part of your advisory team. Having legal counsel also creates a buffer between you and the seller, allowing difficult conversations to be handled professionally without harming relationships that will be important during the transition.
Letters of Intent (LOIs) in Dental Practice Acquisitions
A letter of intent (LOI) may not be legally binding, but it serves as the framework for the transaction. Key terms outlined in the LOI often carry through to the final agreement, making it critical to get this step right.
If important provisions are left out of the LOI, they can be difficult to add later. Likewise, if unfavorable terms are included, they can be challenging to remove. Working with legal counsel during this stage ensures your LOI sets a strong foundation for the acquisition.
Handling Difficult Conversations During a Dental Practice Acquisition
Acquisitions often involve sensitive discussions about terms, finances, or expectations. Having your attorney manage these conversations helps preserve professional relationships. This is particularly important in buy-in situations where the buyer and seller will continue working together.
By allowing your attorney to serve as a buffer, you can protect goodwill while addressing key issues objectively. A collaborative approach during negotiations ensures smoother transitions and better outcomes for all parties involved.
The Dangers of DIY in Dental Practice Acquisitions
Attempting to manage an acquisition without professional support can be risky. While it may seem cost-effective to handle legal, financial, or operational tasks independently, these shortcuts often result in expensive mistakes. Consultants, CPAs, lawyers, and marketing experts all play critical roles in setting your acquisition up for success.
As a dentist, your long-term profitability comes not from the eventual sale of your practice, but from the consistent cash flow generated year after year. Protecting that revenue stream begins with making informed, strategic decisions during the acquisition process. Resources such as our guide to dental practice loanscan also help you understand financing strategies before moving forward.
Post-Acquisition Integration Strategies
Closing the deal is just the beginning. The first year of ownership is critical to long-term success. Effective integration strategies include retaining staff, communicating with patients, updating technology, and aligning financial systems.
Smooth integration preserves goodwill and builds trust with patients and team members. By working closely with advisors during this stage, you can avoid common pitfalls and create momentum for sustainable growth.
Setting Yourself Up for Success in Dental Practice Acquisitions
If you are considering ownership, preparation is key. Seek mentorship from experienced professionals, connect with others in the dental industry, and take advantage of available resources. Learning from leaders who have successfully navigated acquisitions can help you avoid missteps and accelerate your own success.
For long-term planning, dental practice succession planningensures smooth ownership transitions and protects your financial legacy. With the right preparation and support, your acquisition can position you for stability, growth, and professional satisfaction.
At Duckett Ladd, we help dentists confidently navigate every stage of practice ownership. Our accounting, tax planning, and business advisory services are designed to provide clarity, reduce risk, and set the foundation for long-term success Let’s work togetherto create the practice you deserve.
Duckett Ladd, LLP does not provide tax, legal, or accounting advice. This content has been prepared for informational purposes only and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Tax law is ever-changing, and every effort should be made to seek out the most current information.
Duckett Ladd, LLP does not provide tax, legal, or accounting advice. This content has been prepared for informational purposes only and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Also, tax law is ever-changing and every effort should be made to seek out the most current information. Make sure to check the date of published content to ensure the most current information.
