Practice Management

Dental Practice Acquisition Due Diligence Checklist for 2026

Signal Team

Signal Team

— 5 min read
Dental Practice Acquisition Due Diligence Checklist for 2026

Buying a dental practice is probably the largest check you'll ever write. Most deals in 2026 are closing between $500K and $1.2M for a solo GP office, and the difference between a good buy and a five-year headache usually comes down to what you verify in the 60 days before closing.

Here's the checklist we'd run, section by section. Nothing here requires an MBA. It requires discipline and a refusal to take the seller's word for anything you can verify yourself.

1. Financial due diligence

Start with three years of data, not one. A single good year tells you nothing.

  • Collections, not production. Ask for collections reports for the trailing 36 months, pulled directly from the PMS (Dentrix, Eaglesoft, Open Dental) with you or your CPA watching. Sellers quote production because it's the bigger number. You're buying collections.
  • Collections ratio. Collections should run 96 to 98% of net production. Below 94%, the front desk isn't collecting, the payer mix is ugly, or the numbers are inflated.
  • AR aging. Pull the accounts receivable aging report. If more than 15 to 20% of AR is past 90 days, that receivable is mostly fiction. Price it near zero in your offer.
  • Overhead. A healthy GP practice runs 55 to 65% overhead. If the seller claims 48%, look for what's missing: their spouse working the desk unpaid, rent below market because they own the building, or lab fees run through a side entity.
  • Tax returns vs. PMS reports. The practice tax returns, the P&L, and the PMS collections report should tell the same story. Gaps between them are the single most common place deals hide problems.
  • Discretionary spending. Add back the seller's car lease, family cell phones, and country club dues to get true EBITDA. Then check the multiple: most 2026 GP deals price at 60 to 80% of annual collections, or 4 to 6x adjusted EBITDA if a DSO is bidding against you.

2. Chart and clinical audit

The charts are the asset. Everything else is furniture.

  • Active patient count. Define "active" as seen within 18 months, and count it yourself from the PMS. Sellers love the 24 or 36 month definition because it inflates the number by 30% or more. A solo GP practice needs roughly 1,200 to 1,800 true active patients to support the price.
  • New patients per month. 20 to 25 new patients a month is sustainable for a solo office. Under 15, the practice is shrinking and you should price it that way.
  • Hygiene reactivation. What percentage of active patients have a hygiene appointment on the books? Above 40% is solid. Below 25% means recall systems are broken, which is fixable, but it's your working capital that fixes it.
  • Open treatment. Pull the unscheduled treatment report. A big backlog can be upside for you, or it can mean patients don't trust the diagnosis. Read 20 random charts and decide which.
  • Clinical philosophy. If the seller watches and waits and you diagnose aggressively (or the reverse), expect attrition. Patients notice the change inside two visits.

3. Staff and payroll

  • Compensation vs. market. Get every employee's wage, tenure, and benefits. If the seller's been underpaying a 15-year hygienist, you'll be handing out raises in month one. Budget for it now.
  • Key person risk. If one office manager holds every vendor relationship, every insurance login, and the whole recall system in her head, your deal depends on her staying. Meet her before you close if the seller allows it.
  • Employment agreements. Most practice staff are at-will with nothing in writing. That's normal, but confirm there are no surprise contracts, accrued PTO liabilities, or handshake bonus promises you're inheriting.

4. Facility and equipment

  • Equipment age and condition. Walk the ops with your equipment tech, not the seller's. Chairs, compressor, vacuum, sensors, pano: get an age and a replacement estimate on each. A practice with 20-year-old chairs and a failing compressor is carrying $80K to $150K of deferred capital spending that belongs in your price negotiation.
  • The lease. This one kills deals. You need at least 7 to 10 years of lease term (including options) to match your loan term, an assignment clause that lets the seller transfer the lease to you, and no demolition clause. If the seller owns the building, get the proposed rent in writing and check it against market. Above-market rent to the seller-landlord is a second purchase price.
  • IT and PMS. Confirm the software licenses transfer, find out if the server is a 2015 tower in a closet, and ask when anyone last tested a backup restore.

5. Payer mix and PPO contracts

  • Payer mix breakdown. What percentage of collections is fee-for-service, PPO, and Medicaid? A 70% PPO practice with heavy write-offs is a different business than a 60% FFS practice with the same collections.
  • Write-off percentage. Total insurance adjustments over gross production tells you the real discount the practice gives away. Above 30 to 35%, you're working hard for shrinking dollars.
  • Credentialing timeline. Start credentialing with the major payers 90 to 120 days before closing. Buyers who skip this discover they can't bill as in-network for their first three months. That's a cash-flow hole a startup loan doesn't cover.
  • Fee schedule assignability. Some legacy PPO fee schedules are grandfathered to the seller and die at closing. Ask each payer directly whether the current schedule transfers.
  • Corporate and lien search. Your attorney runs a UCC lien search on the practice assets. Old equipment loans that were never released show up here constantly.
  • Board and DEA history. Check the seller's license status and any board actions. A practice built on a dentist under investigation loses patients fast.
  • OSHA and HIPAA. Ask for the written compliance programs, training logs, and any incident history. Missing programs won't kill the deal, but the fix lands on you.
  • Restrictive covenant. The seller's non-compete should cover 5 to 15 miles (market dependent) for 2 to 5 years, and it needs to be enforceable in your state. A seller who reopens 3 miles away takes 20 to 30% of the patients with them.

7. The transition plan

  • Seller stay-on. 30 to 90 days of the seller introducing you to patients protects retention. Longer than 6 months and patients never transfer loyalty.
  • The announcement letter. Draft it together before closing. The single message that works: "Dr. Smith personally chose Dr. You."
  • Retention math. Plan for 5 to 10% patient attrition in a well-run transition. If your loan only pencils at 100% retention, the deal doesn't pencil.

Red flags that should stop you

  • Seller won't give PMS access, only PDF summaries.
  • Collections declining three years straight with no explanation you can verify.
  • One insurance plan is more than 40% of collections.
  • The practice's numbers depend on a departing associate's production.
  • Month-to-month lease in a building the landlord wants to redevelop.

None of these is automatically fatal. All of them are automatically a price conversation.

Who to hire, and what it costs

Run the deal with a dental-specific CPA ($3K to $6K for full financial due diligence), a healthcare attorney ($5K to $10K for the purchase agreement and lease work), and your own equipment tech for the walkthrough. Call it $10K to $18K all-in. On a $750K purchase, that's about 2% of the price to avoid the mistakes that cost 20%.

The sellers with clean books will hand you everything on this list in a week. The ones who stall on PMS access or "can't find" the AR aging report are telling you something. Listen to them.

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