First-Time Dental Practice Buyer's Guide: What to Look For

Buying your first dental practice is the biggest financial decision you will make. Here is what actually matters during due diligence, and what most buyers overlook.

Due Diligence Hierarchy

1. Patient base: Active patient count, new patient flow, retention rate
2. Cash flow: Collections trend, overhead ratio, profitability
3. Lease: Remaining term, assignment clause, renewal options
4. Staff: Key employee retention risk, hygienist productivity
5. Equipment: Age, condition, replacement timeline

Red Flags

• Declining collections for 2+ consecutive years
• Over-reliance on one insurance plan (over 40% of revenue)
• Short lease with no assignment clause
• Seller unwilling to provide 3 years of tax returns