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.
What Is Due Diligence in a Dental Practice Sale?
Due diligence is the buyer’s opportunity to verify:
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Financial health
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Patient flow and retention
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Staffing structure
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Operational systems
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Legal and compliance standing
It typically happens after a Letter of Intent (LOI) or Offer Letter is signed but before closing.
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:
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Create doubt or mistrust
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Trigger price renegotiations
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Delay financing approval
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Lead to deal fatigue or cancellation
Solid preparation helps keep the process smooth, builds buyer confidence, and protects the value of your practice.
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
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Last 3 years of Profit & Loss Statements
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Last 3 years of Federal tax returns
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Year-to-date financials
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Accounts receivable report
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Production and collections breakdown by provider and procedure
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Owner compensation and any personal expenses paid through the practice (for add-back calculations)
Patient Base
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Active patient count (seen in last 18–24 months)
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New patient numbers by year
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Hygiene recall reports
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Sample of anonymized patient charts (to confirm treatment plans and recordkeeping)
Staffing
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Staff list with roles, tenure, hours, and wages
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Benefits offered (health, retirement, PTO, etc.)
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Any employment agreements or independent contractor arrangements
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Bonus plans, if applicable
Facility and Equipment
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Lease agreement or real estate ownership documents
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Equipment list with approximate ages
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Notes on upcoming maintenance or upgrades needed
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Any leased equipment agreements
Legal and Operational
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Practice license and DEA registration
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Copies of insurance participation agreements
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Malpractice insurance policy
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Any current or past legal disputes or audits
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OSHA and HIPAA compliance documentation
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.
Common Seller Mistakes During Due Diligence
Avoid these missteps that can stall or jeopardize a sale:
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Inconsistent reporting (e.g., P&L vs. tax return numbers)
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Incomplete patient data or inflated “active patient” counts
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Unclear staff roles or undocumented pay structures
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Missing lease agreements or surprise facility issues
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Being slow to respond to buyer questions or document requests
What Buyers Take Away From This Process
It’s not just about the numbers. Due diligence helps buyers understand:
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How the practice really operates
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Where the strengths and risks lie
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Whether the seller is organized and transparent
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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.
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.
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.