Dental Practice Transition Due Diligence Checklist

dentist working on patient

Once the seller and buyer agree to the terms, the due diligence process begins, which can take anywhere from 30 to 45 days. In the case of a successful dental practice merger and even affiliation, careful due diligence is imperative. But no matter the type of transition, practicing due diligence will leave little room for error in the long run among your team of advisors. While the documents required may vary depending on the specifics of your transaction and lending requirements, here’s a checklist to help get everything in place.

Seller’s side

Practice corporation: Is there a legal corporation to which sales proceeds should be paid, including family trust, corporation, personal funds and 1031 exchange?

Will the buyer get a Doing Business As (DBA)?

Does the existing entity need to be closed?

In the case of a merger or buy-in, what is the Tax ID (EIN) for the practice?

Is there a license needed for the business?

For the selling doctor, what is the existing and new work schedule, and what is the compensation?

If the value of accounts receivable will be determined on the day of closing, what will the standard schedule for accounts receivable valuation look like in terms of percentages? This includes real estate, insurance and licensing.

Buyer’s side

What documents are required for the bank? This includes a loan application with preapproval letter, the bank’s personal financial statement, tax returns for the previous three years, a credit report, verification of funds, bank statements, final loan offer from the bank, closing instructions from the bank and articles of incorporation with IRS documents.

What’s next?

Contact the experts at Professional Transition Strategies for a complete due diligence checklist and to get the dental transition process started.