What Happens After You Make an Offer on a Dental Practice?

Finding a dental practice that meets your goals is an exciting step toward practice ownership.

You’ve reviewed the financial information, visited the office, met the seller, and decided that the opportunity is worth pursuing.

Now you’re ready to make an offer.

But what happens after that?

Many first-time buyers assume that once the seller accepts an offer, the hardest part is over. In reality, an accepted offer is an important milestone, but there’s still a considerable amount of work between reaching an agreement and becoming the new owner.

Understanding what comes next can help you prepare for the process, avoid unnecessary delays, and move toward closing with greater confidence.

1. The Seller Reviews Your Offer

The first step is for the seller to evaluate your proposed terms.

While purchase price is obviously important, it’s rarely the only consideration.

A seller may also evaluate:

• The buyer’s financing qualifications
• The proposed closing date
• Whether real estate is included in the transaction
• The seller’s expected transition period
• Any contingencies or special conditions

The seller may accept your offer, reject it, or respond with a counteroffer.

Sometimes the parties reach an agreement quickly. Other times, several rounds of negotiation are necessary.

Remember that the strongest offer isn’t always the one with the highest purchase price. A seller may prefer a well-qualified buyer with realistic terms and a clear path to closing over a higher offer that introduces additional uncertainty.

2. The Parties Agree on the Basic Terms

Once the buyer and seller reach an understanding, the next step is generally to document the principal terms of the proposed transaction.

This is often accomplished through a Letter of Intent (LOI) or a similar written offer document.

Depending on the transaction, the document may address:

• Purchase price and allocation between assets
• Proposed deposit
• Financing and due diligence contingencies
• Target closing date
• Real estate purchase or lease arrangements
• Seller transition expectations
• Other important conditions

The purpose is to establish a framework for the transaction before the attorneys begin preparing the definitive agreements.

An LOI is not necessarily a binding purchase contract. Some provisions, such as confidentiality or exclusivity, may be binding even when the proposed purchase itself is not. Buyers should have their attorney review the document before signing.

3. Begin the Financing Process

If you haven’t already spoken with a lender experienced in dental practice acquisitions, this is the time to do so.

In fact, I generally encourage prospective buyers to begin those conversations before making an offer.

A lender will typically request information about both the buyer and the practice.

That may include:

• Personal financial statements and tax returns
• Credit information
• Practice financial statements and tax returns
• Production and collection reports
• Proposed purchase terms
• Information about the office lease or real estate

The lender will evaluate whether the practice’s historical cash flow can reasonably support the proposed acquisition financing, along with the buyer’s personal financial qualifications.

An important distinction is that being prequalified as a buyer does not mean every practice you pursue will automatically qualify for financing.

The lender must also evaluate the specific business being purchased.

Starting early can prevent financing from becoming an unexpected obstacle later in the transaction.

4. Conduct Due Diligence

Due diligence is the buyer’s opportunity to verify the information presented about the practice and evaluate the risks associated with the acquisition.

This is one of the most important stages of the dental practice purchase process.

Depending on the practice, due diligence may involve reviewing:

• Financial statements and tax returns
• Production and collection history
• Accounts receivable
• Active patient statistics
• Procedure mix and provider production
• Employee compensation and benefits
• Equipment and technology
• Existing contracts and obligations
• Office lease terms
• Other operational and legal considerations

The goal isn’t simply to confirm that the numbers are accurate.

It’s to understand how the practice operates and whether its financial and operational characteristics support your plans as the future owner.

Your accountant, attorney, lender, and other advisors may each have a role in this process.

Buyers should also remember that due diligence is not an opportunity to renegotiate every aspect of an already agreed-upon transaction.

However, if significant information comes to light that wasn’t previously disclosed or understood, it may be appropriate to revisit certain terms.

5. Attorneys Prepare the Purchase Agreements

Once the principal terms are established, the attorneys begin preparing and negotiating the definitive transaction documents.

For a typical dental practice acquisition, these may include:

• Asset Purchase Agreement
• Noncompetition and nonsolicitation provisions
• Seller transition or employment agreement, if applicable
• Office lease or lease assignment
• Real estate purchase agreement, if applicable
• Other documents specific to the transaction

These agreements define the legal rights and responsibilities of the parties.

For example, the purchase agreement will generally address what assets are being transferred, how liabilities are handled, the conditions required for closing, and what happens if either party fails to meet its obligations.

Buyers should work with an attorney familiar with dental practice transactions.

An experienced dental attorney will understand issues that may not arise in a typical business acquisition, including patient records, professional licensing requirements, restrictive covenants, and continuity of patient care.

6. Prepare for the Transition

While the attorneys and lender are working toward closing, the buyer and seller also need to plan for the practical transition of ownership.

Depending on the circumstances, this may include:

• Coordinating credentialing with insurance companies
• Establishing business banking and merchant accounts
• Arranging professional liability and business insurance
• Planning employee communications
• Coordinating practice management software access
• Transferring utilities and vendor accounts
• Preparing patient notifications
• Establishing a transition schedule with the seller

Some of these activities must be carefully timed to preserve confidentiality and avoid disrupting the practice before the transaction is finalized.

For example, the seller may not want employees informed of the pending sale until the parties are confident that closing will occur.

The buyer and seller should agree on a communication plan rather than making announcements independently.

7. Finalize Financing and Prepare for Closing

As the transaction approaches closing, the lender and attorneys work to satisfy the remaining requirements.

These may include final loan approval, execution of agreements, lease approval, insurance documentation, and other closing conditions.

The exact requirements vary depending on the lender, transaction structure, and whether real estate is involved.

Once everything is in place, the parties can schedule the closing.

At closing, the required documents are executed, funds are distributed, and ownership of the practice transfers according to the agreements.

For the buyer, this is the moment when months of planning become a reality.

But it’s also the beginning of a new phase: operating the practice as its owner.

How Long Does the Process Take?

There’s no single timeline that applies to every dental practice acquisition.

A relatively straightforward transaction involving a qualified buyer, cooperative seller, organized financial records, and an uncomplicated lease may move efficiently.

Other transactions can take longer because of financing requirements, lease negotiations, real estate issues, due diligence findings, or delays in preparing legal documents.

The key is to establish realistic expectations and keep the process moving.

Communication and responsiveness from both parties can make a significant difference.

When a lender requests documentation, responding promptly helps prevent delays. The same is true when attorneys circulate agreements or advisors identify issues requiring clarification.

The Bottom Line

Making an offer on a dental practice is an exciting milestone, but it’s only one step in the acquisition process.

Between the initial offer and closing, buyers must navigate negotiations, financing, due diligence, legal agreements, and transition planning.

The process can feel overwhelming, particularly for a dentist purchasing a practice for the first time.

However, understanding the steps and surrounding yourself with experienced advisors can make the experience much more manageable.

Most importantly, remember that the objective isn’t simply to get to closing. It’s to make an informed purchase decision and position yourself for a successful transition into ownership.

Considering Purchasing a Dental Practice?

American Practice Consultants has been assisting dentists with practice transitions since 1985.

If you’re considering purchasing a dental practice in New Jersey or Eastern Pennsylvania, we can help you understand the acquisition process, evaluate available opportunities, and navigate the steps involved in moving toward ownership.

Contact American Practice Consultants to discuss your practice ownership goals and learn about available opportunities.