September 17, 2019
The essential dental practice transition checklist that saves you time, money and stress
Whether you’re 10 days out from closing on your dental practice or less than two weeks away from finalizing the transition process, now is not the time to panic. We’ve put together brief but comprehensive checklist to help guide you along the way.
Financial Documentation You’ll Need
Getting your financial paperwork organized ahead of time is essential preparation that will streamline the entire transition plan and prevent last-minute scrambling that could delay your closing.
- Tax returns for the past three years – Buyers and lenders need to verify your historical income patterns
- Current profit and loss statements – Ideally prepared by your accountant to meet professional standards
- Balance sheets – Provide a snapshot of your practice’s assets and liabilities
- Bank statements for all business accounts – Last 12 months for all practice-related accounts
- Accounts receivable aging report – Helps determine the true value of outstanding patient payments
- Accounts payable summary – Shows what you currently owe to suppliers and vendors
- Equipment appraisals and depreciation schedules – Documentation for your practice’s physical assets
- Lease agreements – For office space, equipment, and contracted services
- Malpractice insurance policies – Current policies with documentation of any claims history
- Employee payroll records – Including W-2s, 1099s, and other legal documentation for independent contractors
- Loan documentation – All related paperwork including current balances and payment histories
Having these documents organized in advance saves valuable time during the due diligence process and demonstrates your professionalism as a seller to potential buyers.
Consider working with consulting services that specialize in practice transitions to ensure all financial documentation meets buyer expectations and industry standards.
Pre-closing dental practice transition checklist
- Prepare a settlement statement for accounts receivable and prorated expenses being paid for.
- Sign loan documents.
- Settle insurance credentialing, especially when considering Medicaid.
- Generate a list of suppliers and vendors.
- Set up accounts with all vendors.
- Draft a letter to patients notifying them of the transitioning process.
- Coordinate with practice patients to ensure continuity of care during the transition period.
Due Diligence Items to Verify
The due diligence phase is your opportunity to confirm that everything checks out before moving forward with your practice transition.
- Insurance contract transferability – Verify all provider agreements can transfer to the new owner
- Patient records compliance – Ensure records are complete, HIPAA compliant, and properly organized
- Digital and paper record systems – Confirm backup procedures and transfer readiness
- Current licenses and certifications – Dental license, DEA registration, state permits, and specialty certifications
- Business permits – Health department permits, business licenses, and zoning compliance
- Vendor contracts and supplier agreements – Review terms, transferability, and change-of-ownership clauses
- Staff employment agreements – Verify key employees and any associate dentists will stay and review non-compete clauses
- Personnel file completeness – Ensure all employee documentation is current and compliant
- Equipment condition verification – Recent service reports and warranty documentation
- Equipment lease agreements – Review transfer procedures and remaining obligations
- Practice management software – Confirm smooth transfer capability and data migration procedures
- Patient communication systems – Verify transfer requirements and backup systems
- Commercial real estate considerations – Review lease terms, property valuations, and any real estate components of the sale
Taking time to verify these items thoroughly protects both you and the buyer from unexpected complications that could derail the dental practice transition.
Post-closing practice transition checklist
- Finalize the settlement statement.
- Send out patient notification letters.
- Set up supplier and vendor accounts.
- Notify insurance companies.
- Hire all employees back to new corporations using proper paperwork (I-9s and W-4s).
- Confirm wire funds transfer.
- Host an open house at the office.
- Access line of credit or operating capital.
What’s next?
Contact the experts at Professional Transition Strategies to help guide you through the selling process every step of the way
Dr. Dan Holsteen is a 1977 graduate of Louisiana State University and a 1982 graduate of the University of Missouri-Kansas City School of Dentistry. Following his dental training in Kansas City, he completed a hospital residency program with the Veteran’s Administration in Topeka, Kansas, before moving to Colorado Springs to set up a private practice. After more than 34 years, Dr. Holsteen sold his practice in March 2018. Now that he’s not in the dental office every day, Dr. Holsteen is spending more of his time traveling, fishing, riding his motorcycle and perfecting his grandpa skills.
