The Deal Isn’t Done Yet
You’ve found a buyer, signed a Letter of Intent (LOI), and agreed on a price. Congratulations — but the finish line is still a few steps away.
Next comes one of the most important (and often misunderstood) parts of the transition:
- Buyer due diligence.
This is the phase where the buyer and their advisors take a deeper look at your practice’s operations, financials, and compliance history to verify what’s been presented. It’s a normal—and necessary—step in every practice sale.
In this post, we’ll walk you through what to expect when a buyer conducts due diligence, how to prepare without creating chaos, and how to keep the process moving smoothly to a successful closing.
What Is Due Diligence — and Why Does It Matter?
Due diligence is the buyer’s opportunity to:
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Confirm that your financials are accurate
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Assess operational systems and staff structure
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Identify potential risks or red flags
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Understand how the practice runs day to day
From your perspective as the seller, it’s your chance to build the buyer’s confidence—and ensure the deal you’ve worked so hard to structure actually gets across the finish line.
What Buyers Typically Review
Here’s what most buyers and their professional advisors (CPA, attorney, lender) will want to examine during due diligence:
Financial Information
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3 years of tax returns
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Profit & Loss (P&L) statements
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Year-to-date financials
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Production and collections by provider
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Fee schedules and accounts receivable
Staff & HR
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Staff list with roles, tenure, hours, and compensation
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Benefits offered (e.g., health insurance, 401k)
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Employment agreements or independent contractor contracts
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Bonus structures or incentive plans
Patient Data & Clinical Systems
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Active patient count (typically defined as seen within last 18–24 months)
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New patient flow by year
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Treatment types and referral patterns
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Hygiene program statistics
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Chart documentation practices (paper or digital, completeness)
Lease, Equipment & Facility
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Office lease agreement (if applicable)
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Real estate details (if owned and for sale)
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Equipment list and ownership
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Details of any outstanding equipment leases
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Notes on recent upgrades or known maintenance issues
Legal, Regulatory & Compliance
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Malpractice insurance policy
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Licensing and permits
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Insurance participation agreements
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HIPAA and OSHA compliance
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Pending or past legal issues (if any)
How to Protect Confidentiality During Due Diligence
It’s natural to worry about staff finding out about the sale too soon. Here’s how to keep things discreet:
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Only share documents with the buyer once an LOI and confidentiality agreement are signed.
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Use a secure digital “data room” (e.g., Google Drive or Dropbox) to control access.
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Work with your broker to manage timing and flow of information.
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Don’t involve staff until absolutely necessary, unless you’re planning a formal announcement with the buyer.
What Questions Buyers May Ask
Beyond documents, the buyer may ask you things like:
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“Why are you selling?”
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“What procedures do you refer out?”
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“How does your recall system work?”
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“Tell me about your team—who are the key players?”
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“Are there any equipment issues I should know about?”
These aren’t trick questions—they’re smart business questions.
- Be honest, be prepared, and don’t take them personally.
How Long Does Due Diligence Take?
Most due diligence periods last 2–4 weeks, depending on the buyer’s schedule and how quickly documents are shared. Delays in providing info can lead to delays in closing—or worse, eroded trust.
Stay responsive and organized to keep the momentum going.
Common Mistakes Sellers Make During Due Diligence
Avoid these common pitfalls:
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Sharing incomplete or outdated financials
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Inflating patient numbers (e.g., including inactive charts)
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Withholding negative info that may surface later
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Being slow to answer questions or provide documents
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Trying to “wing it” without your CPA, attorney, or broker
Buyers want to feel confident that they’re walking into a stable, transparent situation. If they sense uncertainty, they may back away—or try to renegotiate.
Final Thoughts: Be Transparent, Be Prepared, Be Professional
Due diligence can feel a little invasive—but it’s a standard part of selling your practice. Buyers aren’t looking for perfection—they’re looking for clarity.
- The more organized, honest, and cooperative you are, the more likely the sale will close smoothly and at full value.
Thinking About Selling Your Practice?
At American Practice Consultants, we guide sellers through every step of the transition process—from preparing your financials to navigating due diligence with confidence.
Contact us today for a confidential consultation and learn how to position your practice for a smooth, successful sale.