Buying a dental practice can be rewarding as long as you have an experienced dental practice attorney at the outset to guide you through the process. At Mahan Dental Law, we work with new and experienced dentists to secure growth opportunities in the dental industry.

From choosing a location and identifying a target practice to determining its value and closing the deal, we will guide you through every aspect of buying a dental practice. Lead attorney Anthony Mahan has extensive experience representing medical professionals and helping them achieve their objectives.

We regularly collaborate with a nationwide network of dental attorneys and advisers with extensive knowledge of the regional markets around the country who are committed to helping our clients achieve their objectives. When you partner with us, you will be equipped to buy a dental practice with confidence.

Above all, we will leverage our knowledge and skills to help you engage in a seamless and successful dental practice acquisition. Contact our office today to set up an appointment.

The Informed Choice in Buying A Dental Practice

Whether you are buying your first practice or expanding an existing one, we are committed to your success. When you become our client, we will work closely with you to:

Identify an established, profitable practice
Negotiate deal terms
Structure the transaction
Conduct due diligence
Determine the value of the practice

In addition, we can prepare the necessary legal documents, including the purchase and sales agreement and confidentiality, noncompete, and nonsolicitation agreements. Let our legal team guide you through all phases of buying a dental practice and work to achieve a timely closing.

What You Need to Know About Buying a Dental Practice

A dental practice acquisition requires the parties to enter into a nonbinding letter of intent which gives you the right to conduct due diligence for a specified time period while the seller agrees not to consider other offers. Our dental business lawyers will:

Conduct a comprehensive due diligence analysis
Review the target practice’s patient and financial records
Assess potential legal liabilities
Arrive at a fair purchase price

The Deal Structure

While from a taxation perspective, it is in the seller’s best interest to structure the deal as a stock sale, doing so can expose you to potential legal liabilities. For this reason, we work to structure dental practice transitions as asset sales in which you acquire the equipment, systems, and other assets while avoiding liabilities and debts previously incurred by the seller.

The Purchase Price

Ultimately, the purchase price is based on the value of the target practice’s tangible assets (e.g. equipment, inventory, furniture, premises, land) and intangible assets (e.g. goodwill, brand identity, intellectual property). Goodwill includes the practice’s client base, employees, and reputation. Another key consideration in determining the purchase price is whether you are only buying the practice or the real estate as well. At Mahan Dental Law, our team of legal, financial, and accounting professionals will work to determine a workable price point that suits your budget.

The Payment Terms

In addition to pricing, our dental practice attorneys will clarify the payment terms, which may involve a combination of:

Cash payment
Promissory note held by the seller
Earnouts (deferred payments based on the dental practice’s post-closing revenues)

Trust Mahan Dental Law to help negotiate favorable payment terms and make the best deal.

Financing

Buying a dental practice may be the largest investment of your professional career, which makes it crucial to have access to lenders and funders with expertise in the dental industry. While the purchase price is a key factor in determining the loan terms, lenders also consider the cash flow of the practice and collateral (a percentage of tangible assets).

Hiring Staff

Buying a dental practice typically involves hiring and training key employees. We can help to establish policies and procedures, design employee handbooks, and prepare employment agreements to clarify the terms of the employment relationship and mitigate the potential for employment-related disputes.

Dental Real Estate Transactions Overview

When it comes to dental practice real estate transactions, it’s crucial to make informed decisions. Here’s what you need to know:

Location Matters: The right location can make or break your dental practice. Consider demographics, visibility, and accessibility when choosing a property.
Lease Negotiations: Skillful negotiation can lead to favorable lease terms, helping you save on overhead costs.
Market Research: Conduct thorough market research to understand the demand for dental services in your chosen area.
Legal Expertise: Consult with legal experts who specialize in real estate to ensure a smooth and secure transaction.
Property Inspection: Don’t overlook property inspections; they can reveal hidden issues that may impact your practice.
Financial Planning: Plan your budget carefully, factoring in property costs, renovations, and equipment.

At Mahan Dental Law, we specialize in dental practice real estate, offering expert guidance through every step of the transaction. Whether you’re a new dentist or an established practitioner, we can help you find the perfect space to build a thriving practice. Make your move into the dental industry with confidence.

Key Considerations for Buying a Dental Practice

When you identify a dental practice to buy, you should evaluate various considerations to determine whether the purchase can best serve your financial and professional goals. Top factors to consider when buying a dental practice include:

The Practice’s Reputation, Patient Base, and Financial Performance: Deciding whether to buy a practice will largely depend on its current success. A deal has a better chance of working when a practice has a positive reputation, devoted patient base, and strong finances.
The Practice’s Location and Competition in the Market: Another factor to consider when evaluating a potential purchase is the practice’s geographic location, which can also affect the amount of competition it has from other dental practices.
Staff Structure and Employment Agreements: Does the practice employ its dentists and other licensed professionals, or do they work in the practice as independent contractors? You should also review employment and independent contractor agreements to understand the practice’s staff structure.
Growth Potential: Finally, you should consider a practice’s growth potential, as a practice that has no room for further growth may seem like a less attractive purchase than a practice that can expand locations or bring in new patients.

Due Diligence in Dental Practice Purchases

Due diligence is the longest step in purchasing a dental practice. During due diligence, you should examine various records of the dental practice to assess the suitability of a purchase. Due diligence can help you understand a practice’s financial details to determine its cash flow or growth potential, or discover if a practice has financial problems. Due diligence may also help you identify legal red flags, such as licensing issues or potential malpractice lawsuits.

Examples of records that you should review in due diligence include:

Profit and loss statements
Accounts receivable and payable
Commercial loan agreements
Commercial leases or mortgages
Tax returns
Licenses
Employment and contractor agreements

Structuring the Deal: Asset Purchase vs. Stock Purchase

In most cases, a buyer of a dental practice will purchase the business through an asset purchase or stock purchase agreement. With an asset purchase agreement, a buyer acquires a dental practice by purchasing its assets, including real estate, lease interests, equipment, supplies, accounts receivable, trademarks, patient lists, and goodwill. Asset purchase agreements offer several advantages, including facilitating a smoother transition of the business from one owner to another and mitigating liabilities such as commercial debt or malpractice claims.

With a stock purchase agreement, a buyer acquires the equity of the legal structure operating the dental practice, such as a corporation or LLC. Thus, the buyer succeeds the previous owner of the practice. However, that also means that the buyer assumes the business’s liabilities unless the seller agrees to indemnify the buyer.

The structure of a purchase agreement can have other implications for a deal, including affecting the parties’ tax liabilities. As a result, buyers should have experienced legal counsel to help them negotiate a deal structure that best serves their needs, concerns, and goals.

Legal Agreements Involved in Buying a Dental Practice

A purchase of a dental practice may involve various legal documents to effect the transaction. Examples of written agreements that make up a purchase transaction for a dental practice include:

Purchase Agreements: The purchase agreement governs the transaction by detailing the assets or interests sold, representations and warranties, and payment terms.
Restrictive Covenant Agreements: In some cases, a buyer may ask the seller to enter a restrictive covenant agreement, which may include non-compete or non-solicitation provisions that preclude the seller from immediately opening a competing practice or soliciting current patients.
Employment or Independent Contractor Agreements: A deal may include the seller’s agreement to stay with the practice for a specific period after closing, usually to help maintain goodwill with patients. The seller can agree to continue working for the practice through an employment or independent contractor agreement.
Lease Assignments: When a practice leases its space, an ownership transfer may involve an assignment of the lease, which may require the landlord’s approval.
Real Estate Purchase and Sale Agreements: When the practice owns its facilities, the transaction may require real estate purchase and sale agreements when the buyer plans to continue operating the practice’s current locations. Alternatively, when a seller retains ownership of the real estate, they may lease the property to the buyer to continue operating the practice there.
Transition Agreements: Parties may need other transition agreements to facilitate the delivery of patient files or transfer the practice’s goodwill or vendor contracts to the buyer.

Regulatory and Licensing Issues

Buying a practice will require a purchaser to resolve various regulatory or licensing matters. For example, a buyer may need to transfer over licensing from the state dental board or business licenses from the state government or local municipal government. Buyers also may need to transfer other permits, such as certificates of occupancy, to operate practice locations. Buyers will also have to ensure proper credentialing with malpractice, property, and general liability insurers.

Transferring ownership and control of a dental practice can also raise regulatory issues, such as registering with Medicaid or following HIPAA requirements when transferring patient records.

The Role of a Dental Practice Attorney

The complexities of purchasing a dental practice make it critical for buyers to seek experienced advice and support from a dental attorney. An attorney can protect buyers from unforeseen risks, including by reviewing due diligence documents to identify legal risks and red flags. An attorney can help a buyer determine what type of deal structure to use and can negotiate specific terms for the deal on behalf of the buyer to protect their interests.

A dental attorney can also assist buyers with regulatory compliance requirements, such as transferring licenses, securing insurance coverage, or enrolling in Medicaid. Attorneys can help with various aspects of transferring dental practice ownership, including post-closing matters, such as calculating payment price adjustments, handling earnout payments, and filing indemnity claims with sellers.

Why Choose Mahan Dental Law For Buying A Dental Practice?

Buying a dental practice is a gateway to practice ownership, but you need to plan ahead and be prepared. Our dental practice lawyers have an impeccable reputation for adhering to the highest ethical standards and working strategically to help our clients achieve their objectives. We offer cost-effective service on a flat-fee basis and also provide ongoing counsel on:

Regulatory/compliance
Legal and human resource issues
Civil litigation/administrative proceedings

Above all, we will always work in your best interests, provide you with a superior level of personal service, and set you on a path to success.

Contact Our Experienced Nationwide Dental Attorneys

If you are looking to buy a dental practice, turn to Mahan Dental Law. We will guide you through the process, offer you trustworthy advice and guidance, and enable you to fulfill your mission, providing quality care and dependable service to your patients. Contact us today to get started.