Buying a dental practice: steps, financing and due diligence

This guide explains how buying a dental practice works. It comes from Copeland Consulting Services and uses public sources. It is general education. It is not legal, tax or financial advice. Contracts, taxes and loans depend on your facts and on state law, so involve an attorney, a CPA and a lender before you sign anything.

This page is part of the wider dental practice ownership guide. Read that first if you are still choosing between buying, starting, buying in as a partial owner, or staying an associate.

Why do dentists buy a practice instead of starting one?

Many dentists buy because they want patients, staff and cash flow that already exist. The SBA describes the main advantage of buying any existing business as “an existing blueprint that can include important factors like an established customer base, defined operating expenses, and fully trained employees.” You trade that head start for a purchase price and for the habits of the previous owner.

Ownership itself is common, but it often comes later in a career now. The ADA Health Policy Institute reports that 73 percent of dentists were practice owners as of 2023, down from 85 percent in 2005. The same brief finds that the drop is mostly an early career effect. Its authors write, “In a nutshell, most roads still, eventually, lead to practice ownership.” See the practice ownership trends post for more detail.

If you are weighing a purchase against a de novo practice, read the guide to starting a dental practice alongside this one.

What are the steps to buy a dental practice?

Most purchases follow six stages. The names and order change from deal to deal, but the work is similar. Treat this table as a checklist to review with your advisers, not as a schedule.

A letter of intent sets the main deal terms before the long legal work starts. Whether any part of it is binding depends on how your attorney drafts it. Ask your attorney to explain each clause in plain words.

Stage 1: Set your goals

Write down what you need before you look at listings. Common items include location, number of operatories, hygiene capacity, payer mix, staff you want to keep, and how much debt you can carry. Your CPA can help you test how a purchase price and loan payments fit your own finances. Your goals also tell a broker what to search for.

Stage 2: Line up financing early

Talk to a lender before you make an offer. A lender can tell you what documents it wants and how much it may lend. That shapes which practices are realistic. The next section covers one common route, the SBA 7(a) program.

Stage 3: Search and value

Brokers and listing services present practices for sale. Ask for the practice’s financial statements and tax returns. Then get an independent value. The guide to valuing a dental practice explains common methods and what each one needs as input. A seller’s asking price is not a valuation.

How does SBA 7(a) financing work for a dental practice purchase?

The SBA does not lend money to you directly. It guarantees part of a loan made by a participating lender. The SBA states, “You will always work directly with your lender and not with SBA.” Because a lender makes the credit decision, two lenders may give you different answers on the same deal.

The SBA lists the allowed uses of 7(a) loans. They include changes of ownership, either complete or partial. They also include working capital, equipment, and real estate. The SBA page gives a maximum loan amount of $5 million as of 2026.

Eligibility depends on the borrower and the business. The SBA says businesses must, among other things, be an operating business, operate for profit, be located in the United States, and be small under SBA size standards. The lender page adds that applicants “must be credit worthy” and that “loans must be sound with a reasonable assurance of repayment ability.”

Terms such as interest rate, maturity and collateral change by loan type and by lender. For 7(a) loans, the SBA says rates are negotiated between borrower and lender, within SBA maximums. This guide does not quote rates or typical down payments because rates change and a lender must quote them. The post on financing a practice purchase covers the wider options.

Questions to ask a lender:

• Does my deal qualify as a change of ownership under the program?
• Which documents do you need from me and from the seller?
• Do you lend against goodwill, equipment and real estate, and how?
• How does your appraisal or valuation requirement work?
• What does the lender require as collateral and personal guarantees?
• What fees apply, and when do I pay them?
• How long does your process take from application to closing?

You can find lenders through the SBA’s Lender Match tool or a local SBA District Office. Both are listed on the SBA 7(a) page.

What does due diligence cover?

Due diligence is the buyer’s check of the practice before closing. The ADA calls it work that “may seem time-consuming and tedious” but “can minimize delays in finalizing the transaction.” Plan time for it. Your attorney and CPA should review what you receive.

The ADA’s seller tip sheet lists documents a practice should be ready to produce. A buyer can use that list as a request list:

Use due diligence as a chance to compare the seller’s story with the records. Ask how each number was calculated. Production and collections are different measures, so confirm which one a figure uses. For the full checklist, see the due diligence checklist post and the KPI guide.

Compliance items worth a look

Ask whether the practice keeps its safety and privacy paperwork current. OSHA states, “There are currently no specific OSHA standards for dentistry,” but general industry standards still apply to dental offices. Read the OSHA requirements post and the HIPAA post, and use the compliance checklist guide as a starting list. Ask your attorney how the contract assigns the risk of past compliance problems after closing.

What should the purchase agreement address?

The purchase agreement allocates risk between buyer and seller. Your attorney writes or reviews it. The ADA’s seller tip sheet lists topics that both sides should read closely. A buyer should ask about each one:

1. Patient records and who has access to them.
2. Whether any restrictive covenants bind the seller after the sale.
3. How goodwill transfers.
4. Tax consequences for each side.
5. Collection of accounts receivable.
6. Lease terms, and whether the landlord must consent.
7. Which equipment is owned and which is leased.
8. Whether current staff stay, and for how long.
9. Continued care for active cases, including retreatment.

The ADA also states that each side should have its own attorney review the contract. Ask your attorney whether one lawyer should ever act for both sides.

Taxes deserve a separate conversation with a CPA. The IRS says, “Both the seller and purchaser of a group of assets that makes up a trade or business must use Form 8594 to report such a sale” when goodwill or going concern value attaches to the assets. How the price is divided among assets affects both parties. This guide does not explain how to allocate. Your CPA does that.

What about buying in as a partial owner?

A buy-in means you purchase part of an existing practice, often while you work there as an associate. The SBA says 7(a) loans can fund partial changes of ownership, so a lender may be willing to discuss it. The steps are similar to a full purchase, with added questions about decision rights, how profits are shared, and how a later full sale works.

A buy-in is normally governed by a written agreement among the owners. Ask an attorney about:

• How the price of your share is set and who sets it.
• What happens if you or the other owner leaves, becomes disabled or dies.
• How you can sell your share later, and to whom.
• Who controls hiring, spending and clinical decisions.

If you start as an employee first, review the associate contracts guide before you sign, because the terms of your current contract can affect a later purchase.

What mistakes should buyers watch for?

The sources do not list “common mistakes,” so this section lists questions rather than claims. Use them to test your plan.

• Skipping your own advisers. The SBA suggests buyers consider “an attorney and an accountant.” The ADA says each party should have an attorney review the contract of sale.
• Treating the asking price as the value. Get an independent view. See the valuing guide.
• Not checking payer contracts. If the practice relies on insurance plans, ask how those contracts transfer. The PPO participation guide explains the factors involved.
• Ignoring cash needs after closing. Working capital pays for staff, supplies and loan payments while patients and revenue settle. Ask your lender and CPA how much to plan for.
• Leaving the lease for last. The practice’s space matters. Review lease terms early and ask the landlord’s requirements for a transfer.

The DSO versus private practice guide is useful if you are also considering selling or joining a group later.

Questions to bring to your attorney, CPA and lender

Copy this list into your notes.

Attorney

• Have you handled dental practice purchases before?
• How should the purchase be structured, and what are the risks of each option?
• Which seller promises should be written into the agreement?
• What happens to patient records, and who is responsible for them?
• Do any restrictive covenants apply, and how are they enforced in Missouri or my state?

CPA

• How does the price affect my taxes and cash flow?
• How should the price be allocated among assets?
• What does the practice’s tax history show?

Lender

• What do you need to evaluate the loan?
• What are the rate, term, fees and collateral?
• How does a change of ownership loan differ from a start-up loan?

Next step

For the full picture of ownership paths, read the dental practice ownership guide. To ask about practice ownership, contact Dr. Jon Copeland, DDS, a general dentist in Wildwood, Missouri: contact Dr. Copeland about consulting.