Where the production actually comes from
The first thing we do is break the production down by provider and by procedure, because the headline number hides the thing you most need to know.
If the selling dentist places implants, does molar endo, or has built a reputation for a specific procedure, we need to know what share of the revenue that represents and whether you intend to do the same work. If you do not, that revenue is not yours. It is a line on a report that stops appearing about four months after closing.
The same applies to referral relationships. A practice fed by one specialist who golfs with the seller is carrying a risk that no financial statement will show you.
The hygiene department, which is where the truth usually is
Hygiene is the clearest signal of whether a practice is healthy or has been coasting. It is recurring, it is predictable, and it is very hard to fake.
We look at how many hygiene days the practice runs against the size of its active patient base, what the recare system actually does rather than what the software could do, how much periodontal therapy is being diagnosed and treated, and what proportion of patients leave with their next appointment booked.
A practice with a weak hygiene department and a strong doctor is usually a practice living on borrowed time. It can also be the best opportunity on the market, because that is fixable and the price rarely reflects it.
- Hygiene days available against the active patient base
- Whether recare is a system or a person remembering
- Periodontal diagnosis and acceptance rates
- Pre-appointment rate at the end of a hygiene visit
The patient base, counted honestly
Practices are routinely marketed on a patient count that has never been cleaned. Anyone who has ever been entered into the software is still in there, including people who moved away in 2014.
An active patient is someone seen in the last eighteen months. We count that number ourselves rather than accept it, then look at how many new patients arrive each month, where they come from, and what the attrition looks like. A practice losing patients faster than it replaces them is shrinking, however good this year looked.
The team you are inheriting
You are not only buying a patient list. You are buying the people who hold it together, and they have opinions about the sale that nobody has asked them.
We look at how long the team has been there, what they are paid against the local market, whether roles are actually defined or whether one long-serving person is quietly running everything, and how exposed the practice would be if that person left. In a small practice, the office manager leaving three months after closing can be more damaging than losing a piece of equipment.
Systems, software and the state of the building
Most practices use a fraction of the software they pay for, and that gap is both a risk and an opportunity. If the scheduling, recare and financial modules have never been set up properly, the reports you are being shown may not mean what you think they mean.
On the physical side we look at the age and condition of the operatories, the compressor and vacuum, the imaging equipment, and the lease. A favourable purchase price attached to an unfavourable lease is not a favourable deal.
- How much of the practice management software is genuinely in use
- Whether the reports being shown reconcile to the ledger
- Equipment age, condition and replacement timing
- Lease terms, remaining years and any assignment clauses
- Compliance, records and anything that becomes yours on closing
What you get at the end
You get a plain written picture of the practice: what is genuinely strong, what is weaker than it appears, what will need money or attention in the first year, and where the recoverable upside is.
That last part matters more than buyers expect. Most practices we look at have obvious, unglamorous improvements available in scheduling, collections or hygiene that were never made because the owner was winding down. Knowing about those before you buy changes both what you should pay and what your first year looks like.
Questions we get asked
What does due diligence involve when buying a dental practice?
Financial due diligence reviews the tax returns, profit and loss statements and production reports. Operational due diligence examines how the practice runs: where production comes from and whether it depends on the seller, how the hygiene and recare systems perform, the true size of the active patient base, the team, the software, the equipment and the lease.
How long does dental practice due diligence take?
The operational review typically takes two to four weeks from receiving the records, depending on how quickly the seller provides data and how complete their reporting is. It runs alongside the work your CPA and attorney are doing rather than after it.
What are the biggest red flags when buying a dental practice?
Production concentrated in procedures the seller performs and the buyer does not, an active patient count that turns out to be far smaller than advertised, a hygiene department running well below the capacity the patient base would support, a single long-serving employee who holds all the operational knowledge, and a lease with unfavourable terms or little time remaining.