Purchase an Existing Practice

If you’re purchasing an existing practice, use the checklist below to guide your transition and develop a plan of action. Be sure to click on each action item for a list of supporting tasks and resources.

For an associateship leading to buy-out/ownership, also consider reviewing checklists for becoming an associate and/or partner as they may overlap during the hiring process. The employment agreement and buy-out agreement are entirely separate agreements, but may be presented at the same time.

Still searching for practices for sale? Start with this checklist.

Please note: This checklist is for your informational use and not intended to replace the advice of professional advisors and specialists, including, but not limited to, attorneys and certified public accountants.

Establish relationships with industry-specific advisors and specialists
  • A practice transition specialist to represent your interests, locate a practice for sale, and assist with the valuation and purchase/sale agreement
  • An orthodontic/dental consultant to assist with the due diligence analysis to ensure accurate representation of practice details
  • An attorney to review the purchase/sale agreement
  • An accountant to assist with the analysis of the practice from a financial and tax perspective
  • A lender to finance the purchase
  • An insurance agent to determine insurance needs and coverage limits

Helpful Resources:

Expect to sign a non-disclosure agreement prior to receiving specific information about a practice in order to maintain confidentiality of seller and his or her practice
Helpful Resources:

Prepare for possible interviews via phone or web conferencing software
  • Learn as much as you can about the practice (e.g., mission statement, philosophy, goals, community, patient-base, staff information, etc.)
  • Write a list of questions to ask during the interview
  • Anticipate potential interview questions and make note of specific examples to support your responses

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Schedule a visit/interview to the practice
  • Request an itinerary before the visit
  • Gather documents to bring with you (CV/résumé, credentials and certifications, references, letters of recommendation)
  • Tour the office or facility including satellite locations (consider the office/facility size and design, equipment, operations, the ability to accommodate another orthodontist, accessibility, parking, surrounding neighborhood, transportation, and businesses nearby)
  • Ask questions about the practice and get to know your potential colleagues and staff
  • Explore the community (consider educational, recreational, and cultural facilities, cost of living, availability of housing, and climate)
Send “thank you” emails or handwritten letters after each interview or visit
  • Show appreciation for the seller’s time and consideration
  • Reiterate your interest in the opportunity and the practice
  • Restate your qualifications for the position
  • Provide any information that may have been requested during the interview
Work with an advisor to analyze the practice purchase opportunity
  • Obtain a practice valuation report to determine the fair market value (FMV), learn more about the practice, as well as review economic conditions, financial statements, and tax returns
  • Conduct cash flow projections to understand the financial outcome of the practice purchase
  • Visit the practice to meet with the seller and staff
  • Evaluate other factors such as your compatibility with the seller’s practice philosophy, work ethic, and reputation; location, design, and condition of office; age and condition of equipment; lease and real estate information; gross revenue, production, collections, and profitability; patient volume and flow; patient chart information; fee schedule; staff information; management systems; and marketing, etc.
  • Determine if the purchase price is reasonable

Helpful Resources:

Develop a transition plan to outline how you will retain the current patient base and ongoing management of the practice
  • Consider the length and type of transition (e.g., buy-in, buy-out, outright sale)
  • Discuss transition plan with seller

Helpful Resources:

Work with an advisor to prepare a binding or non-binding letter of intent (LOI) that outlines the agreed upon purchase price as well as terms and conditions set forth in the practice sale agreement
  • The letter may include the purchase price, accounts receivable, assets to be purchased, allocation of the sale price, real estate purchase details, management of patient records, non-compete clause, etc.

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Work with a lender to secure financing for the practice purchase
  • You may need to provide your transition plan, CV/résumé, a net-worth statement, income tax returns for the previous two years, consent to conduct a credit check, and licenses such as dental, driver’s and controlled substance license
  • The seller may need to provide a practice valuation, income tax returns, profit and loss statements, historical depreciation schedule, active patient count, and a business plan or projected two-year budget for the practice

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Work with an attorney to determine the legal structure of your practice (e.g., sole proprietorship, limited liability company, partnership, etc.) and draft necessary documentation
  • Consider how each structure will affect day-to-day operations, taxes, and personal assets

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Understand federal and state laws, regulations, and requirements affecting the practice and obtain necessary business licenses and permits
  • Obtain your state dental license and DEA license (if needed)
  • Choose your business name and register with the state government
  • Apply for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS)
  • Apply for National Provider Identification (NPI)
  • Register for local occupancy, zoning, and building permits
  • Check with local government offices for inspection requirements
  • Understand HIPAA, OSHA, infection control, and waste management regulations
  • Apply for life, health, disability, malpractice, general liability, property, and workers’ compensation insurance
  • Understand anti-kickback statutes and self-referral (“Stark”) laws that may apply to you

Helpful Resources:

Open a business checking account
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Work with an advisor and attorney to prepare the practice sale agreement and purchase or lease of real estate
  • The agreement may include details of the sale, buyer and seller warranties, stock or assets sold, allocation of the sale price, management of patient records, and non-compete clause
  • Other legal documents may include a bill of sale, asset or stock purchase agreement, promissory note, security agreement, lease agreement, and post-sale employment agreement

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Collaborate with the seller to write patient and referral notification letters to be prepared for mailing as soon as the closing is completed
Learn current practice management structures and systems and implement changes as necessary
  • Rehire staff and establish payroll under the new entity
  • Update practice name on all electronic and printed materials
  • Transfer practice management software, utilities, and other service agreements
  • Join insurance plans currently accepted by the seller (e.g., HMO, PPO, HSA, etc.)
  • Review and update employee handbook, office policies, and standard operating procedures (SOPs)
  • Consider waiting to implement any major changes to gain support of staff and patients
  • Establish key performance indicators (KPIs) to track the overall health of the practice

Helpful Resources:

Access Additional Checklists

Build a Practice from Scratch

Become an Educator

Become a Partner
Become a Partner

Practice in the Military

Expand an Existing Practice

Explore Your Options

Become an Associate or Independent Contractor

Search for Existing Opportunities

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