Category Archives: Selling

The Deal Isn’t Done Until It’s Verified

So you’ve listed your practice, found a serious buyer, and agreed on the terms. You’re almost at the finish line—but before you can close, the buyer will need to take a closer look.

This phase is called due diligence, and it’s where they’ll confirm that everything you’ve represented about your practice is accurate.

• Think of it as the buyer’s version of a clinical exam—checking under the surface before committing.

In this post, we’ll explain what to expect during buyer due diligence, how to prepare, and why a little extra effort now can help avoid delays, renegotiation, or even deal collapse later.

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What Is Due Diligence in a Dental Practice Sale?

Due diligence is the buyer’s opportunity to verify:

• Financial health

• Patient flow and retention

• Staffing structure

• Operational systems

• Legal and compliance standing

It typically happens after a Letter of Intent (LOI) or Offer Letter is signed but before closing.

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Why It Pays to Be Prepared

Buyers—and their advisors (CPAs, attorneys, lenders)—need to see organized, credible records. If your documents are missing, incomplete, or inconsistent, it can:

• Create doubt or mistrust

• Trigger price renegotiations

• Delay financing approval

• Lead to deal fatigue or cancellation

Solid preparation helps keep the process smooth, builds buyer confidence, and protects the value of your practice.

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Documents Buyers Commonly Request

Here’s what most buyers will expect to review. It’s best to start organizing this before you go to market—or as soon as you’ve accepted an LOI.

Financials

• Last 3 years of Profit & Loss Statements

• Last 3 years of Federal tax returns

• Year-to-date financials

• Accounts receivable report

• Production and collections breakdown by provider and procedure

• Owner compensation and any personal expenses paid through the practice (for add-back calculations)

Patient Base

• Active patient count (seen in last 18–24 months)

• New patient numbers by year

• Hygiene recall reports

• Sample of anonymized patient charts (to confirm treatment plans and recordkeeping)

Staffing

• Staff list with roles, tenure, hours, and wages

• Benefits offered (health, retirement, PTO, etc.)

• Any employment agreements or independent contractor arrangements

• Bonus plans, if applicable

Facility and Equipment

• Lease agreement or real estate ownership documents

• Equipment list with approximate ages

• Notes on upcoming maintenance or upgrades needed

• Any leased equipment agreements

Legal and Operational

• Practice license and DEA registration

• Copies of insurance participation agreements

• Malpractice insurance policy

• Any current or past legal disputes or audits

• OSHA and HIPAA compliance documentation

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Tips for Making the Process Smoother

Create a Digital Data Room

Use a secure cloud folder (e.g., Google Drive, Dropbox) to upload documents and share access. Organize it with clear folders and file names.

Be Transparent and Accurate

If there’s a down year or production dip, explain it upfront. Buyers respect honesty—and often understand when issues are well-documented.

Don’t Share Everything at Once

Only share information after an LOI is signed and a confidentiality agreement is in place. Work with your broker to control the flow and timing.

Work With Professionals

An experienced dental CPA and practice broker can help you prep documents, explain add-backs, and avoid red flags that may raise buyer concerns.

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Common Seller Mistakes During Due Diligence

Avoid these missteps that can stall or jeopardize a sale:

• Inconsistent reporting (e.g., P&L vs. tax return numbers)

• Incomplete patient data or inflated “active patient” counts

• Unclear staff roles or undocumented pay structures

• Missing lease agreements or surprise facility issues

• Being slow to respond to buyer questions or document requests

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What Buyers Take Away From This Process

It’s not just about the numbers. Due diligence helps buyers understand:

• How the practice really operates

• Where the strengths and risks lie

• Whether the seller is organized and transparent

• How easily they can step in as the new owner

The smoother this process is, the more confident they’ll feel about the investment—and the more likely they’ll follow through.

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Preparation Protects Value

Preparing for due diligence might feel tedious, but it’s one of the most important steps in selling your practice. It protects the price you’ve negotiated, speeds up the closing timeline, and helps the buyer trust that they’re getting exactly what you’ve promised.

Remember: a buyer’s confidence is your leverage.

Be prepared, be transparent, and let your practice speak for itself.

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Thinking of Selling? Let’s Get You Ready.

At American Practice Consultants, we guide sellers through the entire process—from preparing your financials to managing due diligence to closing with confidence.

Contact us today for a confidential consultation and learn how we help dentists sell smoothly and successfully.

What Happens After You Sell?

When selling your dental practice, you’re not just transferring equipment, charts, and lease rights—you’re also selling your goodwill: the patient loyalty, brand reputation, and trust you’ve built over time.

That goodwill is one of the most valuable assets in the sale—and it’s why restrictive covenants are a standard part of most dental practice transactions.

In this post, we’ll break down what restrictive covenants are, why they’re essential to protecting the buyer’s investment, and what sellers need to consider before signing.

What Is a Restrictive Covenant?

A restrictive covenant is a legal agreement that limits a seller’s ability to compete with the practice after the sale. In dental transactions, this typically includes:

• A non-compete clause (restricts practicing within a geographic radius)

• A non-solicitation clause (prevents the seller from recruiting patients or staff)

These provisions are intended to preserve the value of the practice by ensuring patients and staff remain loyal to the new owner.

Why Restrictive Covenants Protect Goodwill

In most dental practice sales, goodwill makes up the majority of the purchase price. Goodwill includes:

• The seller’s reputation and patient relationships

• Long-term recall systems and preventive care schedules

• Referrals and local professional credibility

If a seller opens a new office nearby or takes patients to another practice, the buyer’s investment is immediately undermined.

Restrictive covenants provide legal protection to ensure that goodwill stays with the practice—not the seller.

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What’s Typical in Dental Practice Sales?

Covenant Type	Common Terms
Non-Compete	5–10 mile radius for 3–5 years
Non-Solicitation (Patients)	2–3 years
Non-Solicitation (Staff)	1–2 years
Carve Outs	May allow the seller to teach at a local school or cover another local dentist in an emergency or during vacation for a liminted number of days per year.

These terms can vary based on practice location and local competition. Urban practices may use a smaller radius (e.g., 3 miles), while rural ones may require 15 miles or more.

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Key Points Sellers Should Be Aware Of

Know What You’re Agreeing To

Don’t assume the non-compete is “standard.” Review:

• The geographic scope: Does it reflect realistic patient draw?

• The duration: Is it longer than your transition period or consulting agreement?

• The definition of “practice”: Does it restrict teaching, consulting, or part-time work?

Clarify Post-Sale Roles

If you plan to:

• Continue working part-time

• Teach at a dental school

• Join a spouse’s or child’s practice elsewhere

  … be sure these activities are clearly permitted and carved out from the covenant.

Understand Enforcement

Restrictive covenants are enforceable in most states if they are reasonable in scope and duration. Courts typically uphold them if they are:

• Clearly written

• Narrowly tailored to protect legitimate business interests

• Consistent with state laws and public policy

Tip: Your attorney should review the covenant to ensure it’s both fair and enforceable.

Restrictive Covenants Are a Sign of a Serious Deal

Some sellers feel uneasy about signing a non-compete—but it’s important to understand that buyers (and lenders) expect these protections to be in place.

In fact:

• Many lenders require restrictive covenants to fund the loan.

• Buyers will walk away from deals that don’t protect their investment.

• Well-structured covenants make the deal stronger, not riskier.

Protect the Deal—And Your Legacy

A restrictive covenant isn’t just a legal formality—it’s a vital tool that protects the value you’ve worked so hard to build. When structured fairly, it allows you to step away from practice ownership with confidence while giving the buyer peace of mind.

At American Practice Consultants, we help sellers understand every part of the deal—not just the numbers. That includes structuring restrictive covenants that are reasonable, enforceable, and aligned with your personal goals after the sale.

Thinking About Selling? We Can Help.

Let’s start the conversation. We’ll walk you through the selling process, help evaluate your practice, and ensure your transition agreement—including any restrictive covenants—works for both parties.

📞 Contact us today for a confidential consultation.