Conducting Due Diligence When Buying a Dental Practice

As soon as you’ve got discovered a observe to purchase you will have to conduct your due diligence after which after you’ve gotten entered a letter of intent or the acquisition agreements then conduct a affected person chart audit. That is your alternative to seek out out extra in regards to the observe and to confirm any representations made in regards to the observe. When conducting your due diligence and audit, you must have unobstructed entry to, or ought to be capable of achieve data in regards to the following:


  • At the least three years historic tax returns and monetary statements, together with the latest interim working earnings assertion.
  • A whole stock of all furnishings and tools being bought with the observe, together with their depreciation schedule.
  • Employees particulars, together with salaries, advantages and size of service with the observe.
  • Full entry to all affected person data.
  • Entry to all insurance coverage the observe is concerned with.
  • The explanation why the observe is being bought.
  • To have a replica of the draft letter of introduction and suggestion from the vendor that shall be despatched to all present sufferers after the dental observe transition.
  • AR/Growing old Abstract
  • Manufacturing by process and class stories
  • Workplace Lease and Addendums
  • Lists of Contracts of the observe
  • Charge Schedule


As well as you must be capable of stroll via the observe; assessment and audit the affected person data and the appointment e book simply earlier than the sale is accomplished. It is important that you’re effectively ready for this audit and know precisely which questions have to be requested and answered. It could actually typically show awkward to attempt to verify on particulars which have been missed out at a later stage. It is best to strategy an audit methodically and step-by-step.

1. Trying on the practices monetary stories. These ought to be full up till three months earlier than you started reviewing the dental observe (interim P&L). They need to embody an interim earnings vog, in addition to the final three years tax returns and P&L’s. It is typically greatest to get this specialised data analyzed by an acquisition advisor or accountant to make sure you do not miss any related info.

2. Inspecting affected person data. It is essential to know the variety of lively affected person recordsdata a observe has, however many dentists are unaware of the precise numbers. A observe advisor may also help compile this data for you by setting cautious parameters when inspecting a pattern of the recordsdata. They might additionally be capable of safe an settlement enabling damages to be claimed if the vendor considerably misrepresents data within the abstract report. The appointment system may also be checked to confirm the practices exercise degree and to gauge the proportion of latest sufferers monthly.

3. Inspecting employees data. This may present you ways lengthy any member of employees has been with the observe and whether or not anybody is said to the vendor. Gross wages ought to account for between 22% and 28% of complete gross manufacturing. You will additionally be capable of see advantages presently supplied and might want to determine which advantages you’ll present sooner or later. It is a good suggestion to interview every employees member as this offers you a brand new perspective on the observe, and it is an incredible alternative to evaluate particular person strengths and weaknesses. You will then have time to determine whether or not an worker is ready which is greatest suited to them, or whether or not it is going to be essential to realign duties upon getting bought the observe.

4. Evaluating the situation of the observe. Does the observe want any repairs or cleansing, or is it in good situation? Typically it might be essential to switch furnishings and carpets, or to repaint an space shortly after the acquisition is accomplished. If that is so then calculate the sum of money wanted to finish the work, so it will probably both be considered when discussing the value to be paid for the observe, or added to the observe acquisition financing request.

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