Dental practice due diligence: the documents buyers ask to see

Financial

• Federal tax returns and profit and loss statements for the last several years, so you see trend, not one good year.
• Production and collections reports, by provider and by procedure category.
• Accounts receivable aging, to see what is collectible.
• Monthly bank deposits compared with reported collections.
• A written schedule of any add-backs the seller uses to describe earnings, with support.

Patients and insurance

• Active patient count and how the practice defines active.
• New patients per month over time, and the main referral sources.
• Payer mix and a list of insurance contracts, with fee schedules, and whether they transfer to a buyer.
• Recall and hygiene schedule capacity.

Facility and equipment

• The lease: term, renewal options, rent, assignment clause and landlord consent.
• Equipment list with age and condition, and any leases or liens.
• Software, imaging systems and backups.

People

• Staff roster with roles, tenure and pay (names are often withheld until later in the process).
• Any associates, their agreements and their share of production.
• Employment agreements and benefits.

Legal and compliance

• Licenses, DEA and radiation permits where they apply.
• Malpractice history and insurance.
• Privacy, safety and infection-control compliance records.
• Any pending disputes.

Common questions