How to Buy a Dental Practice
By Practice MLS Team · 2026-10-01
Purchasing a dental practice is no small feat. Many industry experts will tell you it’s not that complicated. Simply follow their lead, they’ve done this a million times. This is probably true, there are a lot of experts available willing to help dentists through practice transitions. The list of professionals includes dental practice brokers, attorneys, real estate brokers, CPA’s, buyer’s advocate/ buyer’s representative, bankers, and consultants.
It is a transaction that takes place all over the country and on a daily basis, but there are some major key factors to consider in order to be prepared before jumping in and fully trusting a professional without asking questions. This article will help prepare you as you begin to have meetings and discuss your career goals with your team of partners. Buying a dental practice is probably one of the biggest decisions you will make beyond deciding to go to dental school, so get informed with this article. Get the guidance and confidence you need to move through this process of buying a dental practice!
Finding the Right Dental Office For Sale
First off, how can you tell the difference between a good practice and a bad one? The information given to you by a practice broker only summarizes and doesn’t give you the full picture of data that you need to make a sound decision. Many factors need to be taken into consideration to know if a practice is worth pursuing and putting your time and energy into going through this process. This guide will give you some perspective on conducting a financial valuation of a dental practice for sale.
But before doing a valuation, it is important to understand the surrounding market in which the practice is located. Look at the competition in the area, the type of community it’s serving, how easy is it to get around in this location from various neighborhoods in the area, travel times, and the population density. By working with an experienced buyer's representative or practice broker, they should be guiding you using a demographics analysis. These studies provide valuable insights into the areas you are looking to purchase a dental practice.
The Dental Practice Valuation
Before submitting an LOI (letter of intent) or your official request to purchase the practice to a practice broker, you need to gather as much information from the broker as possible. This generally involves signing a confidentiality agreement. Dental practice brokers can't possibly publish all the data and information on a website for everyone to read. So you must request that information in order to evaluate the dental practice for sale.
Your first step really is to objectively determine what kind of clinical dentistry is being practiced and does it align with your goals, vision, or type of dentistry you see yourself doing in this location. For example, the current practice owner may not be doing periodontal treatment or endodontic procedures, yet you might specialize in this area or be developing your skills in order to offer these treatments. Consider the pros and cons of buying this practice with all the data available to you.
Ultimately, when valuing a practice for sale, you want a clear picture of value by carefully looking at the cash flow and liabilities. You need to observe production and collections, with ideally three years of data. If you are unfamiliar with what good numbers should look like, talk to someone who has seen what successful practices look like or who has evaluated more than one. A buyer representative or consultant can give you a very clear, understanding of what is good or not so good. You can leverage the expertise of a buyer's representative or CPA who has seen many practices' financials. A professional with experience will help you better understand these critical financial figures. Ultimately, you need to find a practice with good cash flow and low liabilities in order to support you and the business moving forward. Also to secure financing and get favorable conditions on a loan. These two things are the biggest factor determining how much it costs to buy a dental practice.
Build a Team of Trusted Advisors When Buying a Dental Practice
It’s wise to have outside counsel when making big decisions in your life. You also should have people you can trust who are knowledgeable giving you the most valuable and accurate information. Buying a dental practice is one of the biggest decisions you will make in your career. So, having a trusted individuals helping you make big decisions is critical to being successful during or after the acquisition and transition. Your team may consist of a buyer’s representative, a CPA, a lawyer, a banker, and of course a practice broker.
Often, a dentist will begin working with a practice broker only to find out that the brokers ultimately are hired by the seller who wants to make the most they can on the sale. Your interests (as a buyer) might not be fully aligned although they do want the deal to go through and be referred down the road for other sales. It’s also wise to consider that practice brokers many times are managing multiple deals at once. They do not have a lot of time to hold the buyers hand through the process. If you aren’t serious about buying they probably aren’t going to advise you.
That being said, work with a reputable buyer's representative to advise you and get the support you need. The brokers do not have time or the privileges to help you with all these important factors leading up to the sale. A buyer’s representative will help negotiate the LOI if needed, they will at least know what looks kosher and what looks off. The buyer’s rep will also be able to handle the valuation and walk you through the analysis of the practice for sale. They can point out red flags, and also determine how profitable this practice can be for you personally. They will also advise you on any demographics studies that you purchase as well.
A buyers representative can handle a lot of the heavy lifting that might require many other professionals individually. For example you could hire a dental specific CPA to help with the valuation and you could also hire an attorney to do the LOI review. But all these things need done before you can talk to the banker about getting a loan to buy a dental practice. Because the banks want to look at the practice’s financial history and production as well. Once you are sure you want to move forward you submit the LOI. Now you can perform what’s called a due diligence process, where you get to look inside the financials more closely as well as the practices production and treatment schedules inside the actual physical practice itself.
Hiring a Buyer’s Representative
What is a buyer's representative? By hiring one you can save you quite a lot of time and money when buying a dental practice. A good one will be very familiar with entire process of purchasing a dental practice. They will have worked through this process many times and experience seeing all kinds of deals.
Not only does a buyer's representatives help consult you getting the right practice valuation, but they can often help review and negotiate terms on the LOI as well. Buyers representatives are your own personal guide and coach in the complex process of a buying a dental practice. They have experience from working on hundreds of dental practice acquisitions. They can help you avoid common pitfalls and challenges that you may not be privy until after the purchase, which is too late. They give expert advice that you can use to make the best business decisions possible. They are your outside source of reason and guidance without any emotional attachment to the location, situation, or the transaction. They are simply looking out for your best interest as a practice owner.