Get Organized and Get Ahead of the Game

In order for a sale to proceed smoothly, you will need to have a number of documents ready to present to a dentist in order for them to make an offer on your practice. Although some of this information will need to be updated when a buyer is found, you should have the following documents ready to hand to a potential buyer. You want to show that you and your practice are organized and efficient.

What buyers need from you for financing

Buyers, and their lender, will need access to several financial documents as a first step of the sale. You will need to gather all of the following:

  • Tax returns (last five years)
  • Employee list with compensation, dates of hire and job descriptions
  • Financial statements (last five years and YTD including P&L’s)
  • Description of services offered and referred, broken out by treatment codes
  • Copy of current lease and renewal amendments, or mortgage
  • List of all dental equipment with age and condition
  • List of all office equipment and furnishings to include in the sale
Documents for due diligence

Due Diligence is the time for the buyer to understand the inner workings of the practice and ensure that they are getting what they are paying for. Let's look at how the buyer will be looking at your practice during this critical time. The buyer's due diligence checklist should include answering questions regarding the following:


First and foremost, are the philosophies of care in alignment? The buyer may want to ask you questions about how you would approach certain cases, or whether you share an enthusiasm for certain protocols. Additionally, do you share a work ethic and personal values? This may be harder to determine, but can be very telling.

Treatment philosophy 

The buyer may ask to see work in progress, including lab work, x-rays, doctor treatment plans, impressions and before/after photos.


 How is the practice viewed in the community? Are you well regarded by other dentists? How do specialists view the practice? The buyer will probably even look at online reviews to get a sense of the practice’s reputation.


Is the practice in strong financial shape? An informed buyer will ask about gross production and collections by doctor and hygienist (over 5 years and year-to-date) and other financial markers.

Practice facility

What is the overall appearance of the facility? Fresh and modern or dated and worn? Is the equipment up-to-date or will the practice need expensive upgrades? Is there sufficient parking or is it near public transit? The buyer will need information about the length and terms of the current lease.


How many new patients join each month? How many active patients does the practice have – and how many inactive? What is the recall system? Is the current fee schedule competitive for the area? When was it last updated? Which procedures are offered, and which are referred? Which insurance policies are accepted? The buyer may ask to review some charts to assess the quality of record keeping.

Legal matters

Are there any pending or threatened litigation matters? Is the practice in good standing with its liability insurance provider (and the IRS)?

Patient relationships

 Do not be surprised if the buyer calls the office as a patient to see how the staff treats the average person. They will want to understand the practice from the patients point of view as well as the clinical operations.


Documents needed for a practice valuation

To help your practice valuator determine an accurate estimate, you will need to show detailed practice information.

Typically, a valuation professional will want to see:

  • Three to five years of financial statements, plus current year-to-date, including income statement, balance sheet, and cash flows
  • Five years of new patient flow, collections, and production
  • Insurance and billing information
  • Accountant prepared statements (if available)
  • The number of active and inactive patients 
  • A list of all your equipment and fixtures that will be included in the sale with the date of purchase, the price paid, maintenance or repair records, and depreciation schedule
  • Depreciation schedule for equipment
  • Five years of tax returns
  • Mortgage and appraisal OR or current lease 
  • Organization chart by role and employee
  • Location and demographic information
  • Any marketing materials (website, brochures)

Download our free checklist to help you gather documents pertaining to your practice finances, practice statistics, and practice assets.

Confidentiality agreements

Before a potential purchaser can review valuation, financials or patient information, they must sign a confidentiality agreement. The confidentiality agreement is a legal, non-disclosure document that disallows the dentist viewing confidential or proprietary information from sharing any of the details they see. You will have the opportunity to access and review a template NDA when you have a potential buyer. Always make sure to have documents reviewed by your legal counsel.

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