When you’re considering the purchase of a dental practice, one of the most important steps you’ll encounter is due diligence—the process of reviewing, verifying, and understanding the details of the practice before you officially buy it.
The First Step: Initial Information Packet
After signing a Non-Disclosure Agreement (NDA), you’ll usually be provided with an initial packet of information.
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With a broker: This packet is often complete and well-organized.
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Without a broker: You may receive limited details, and it will be up to you to request missing information.
Typical documents include:
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Profit & Loss Statements (last 3 years + Year-to-Date)
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Production Reports (charges & collections by ADA code)
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Accounts Receivable Aging Report
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Employee details
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Fee Schedule
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Patient demographics
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Seller questionnaire with background information
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Tax returns (often requested later during financing)
This review, combined with an office visit and meeting with the Seller, often gives you enough information to decide whether to submit an offer. Having preliminary financing approval will increase your chances of having your offer accepted.
After the Offer: Entering Due Diligence
If your offer is accepted, an Asset Purchase Agreement (APA) (or other sale contract) is drafted, and a closing date is set.
Within that agreement, you’ll be granted a due diligence period—a window of time to verify that the practice is everything you expect it to be.
What Due Diligence Includes
1. Patient Charts
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Review how treatment plans and records are maintained
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Understand charting systems (paper or digital)
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Verify record-keeping quality and completeness
2. Equipment & Technology
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Does everything function properly?
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Has it been well maintained?
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What equipment upgrades will be needed?
Tip: Bring in an equipment rep for an expert evaluation.
3. Financial Review
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Confirm accuracy of financials with your accountant
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Reconcile production and collections
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Understand true overhead and profitability
Why It Matters
Due diligence ensures you have a clear, accurate picture of what you’re buying—financially, operationally, and clinically. It reduces surprises, minimizes risk, and helps you move into ownership with confidence.
Download Our Free Buyer’s Guide
The steps above are only the beginning. A full due diligence process includes dozens of checkpoints. To help, we’ve created the Otten-Rey Dental Practice Buyer’s Guide, complete with detailed checklists for you and your advisors.
