What Should a DSO Review Before Acquiring a Dental Practice?
Dental acquisition due diligence should test financial quality, provider stability, patient durability, legal risk, payer exposure, facility condition and the assumptions supporting the purchase price.
Financial
Three years of tax returns, monthly P&Ls, balance sheets, bank deposits, production and collections, AR aging, payroll, normalized EBITDA and add-back support.
Provider
Production by provider, collections by provider, owner dependency, associate agreements, tenure, compensation, restrictive covenants and recruiting risk.
Patient and clinical
Active patients, new patients, hygiene, recall, case mix, referral patterns, procedure mix and chart audit findings where appropriate. Avoid unnecessary patient-identifiable information outside appropriate legal and privacy frameworks.
Payer
Payer mix, reimbursement schedules, concentration, credentialing and termination provisions.
Employees
Census, compensation, tenure, benefits, open positions and key-person risk.
Facility and equipment
Lease, options, rent, CAM, landlord consent, equipment age, technology and deferred capex.
Legal and compliance
Qualified counsel should review entity structure, contracts, licenses, litigation, compliance, regulatory issues and transaction structure.
Final question
Diligence should answer one question: is the business we are buying economically and operationally the business represented in the LOI?
Receive standardized packages that front-load most of this checklist.
Register as a buyerMarket ranges on this page are illustrative planning ranges, not offers. Involve qualified legal and tax advisers on any transaction.