Buying a dental practice involves much more than agreeing on a purchase price. The terms of the transaction determine what you are actually acquiring, what risks you are assuming, and how smoothly ownership will transfer. Understanding these provisions before signing can help you make informed decisions and avoid costly surprises after closing.

What Terms Matter Most When Buying a Dental Practice?

While every transaction is different, buyers should pay close attention to several core provisions that affect the value of the practice and their future financial obligations.

These commonly include:

• Purchase price and payment structure
• The terms of the purchase agreement
• Assets included in the sale
• Existing liabilities and accounts payable
• Accounts receivable (A/R)
• Equipment and supply valuation

Each of these terms influences both the value of the practice and your financial risk after the acquisition.

Purchase Price Is Only One Part of the Deal

The purchase price deserves careful attention, but it is only one part of the transaction. Payment terms can influence both the negotiated price and a seller’s willingness to accept an offer.

A seller may accept a lower price in exchange for payment in full at closing rather than installments. Conversely, seller financing can make a purchase possible while creating additional obligations that should be addressed in the purchase agreement.

Evaluating the total financial package, rather than focusing only on the headline price, often provides a more accurate picture of the transaction.

What Should a Dental Practice Purchase Agreement Include?

The purchase agreement defines the rights and responsibilities of both buyer and seller. It identifies the assets being transferred, allocates risk, and outlines obligations before and after closing.

A well-drafted purchase agreement commonly addresses:

• The assets included in the sale
• Purchase price and payment terms
• Treatment of accounts receivable and accounts payable
• Representations and warranties about the condition of the practice
• Responsibility for existing liabilities
• Closing requirements and post-closing obligations
• Non-compete and transition provisions, when applicable

Review Existing Liabilities Before Closing

A practice’s value depends on more than revenue. Outstanding debts, unpaid taxes, lease obligations, pending disputes, and other liabilities can affect its financial condition.

Review financial records carefully during due diligence. Significant liabilities may justify renegotiating the purchase price or restructuring the transaction.

Should You Buy the Practice’s Accounts Receivable?

Accounts receivable (A/R) consists of money owed to the practice for services already provided. Whether A/R transfers to the buyer is often a negotiated term.

If A/R is included, buyers typically purchase it at a discount because not every balance will be collected. For example, if $200,000 in receivables is valued at 90% of face value, the purchase price would be $180,000. The appropriate percentage depends on factors such as the age of the receivables, collection history, and payer mix.

Option	How It Works	Considerations
Seller keeps A/R	Seller collects outstanding patient balances after closing.	Simpler transaction, but post-closing collection procedures should be clearly defined.
Buyer purchases A/R	Buyer acquires the receivables, often at a negotiated discount.	Requires evaluating collection history, aging reports, and the likelihood of payment.

Before agreeing to purchase A/R, review:

• Aging reports showing how long balances have been outstanding
• Historical collection rates
• Insurance reimbursement patterns
• Collection policies currently used by the practice

These records help determine whether the agreed purchase price accurately reflects the value of the receivables.

Confirm Which Equipment and Supplies Are Included

The purchase agreement should clearly identify which equipment, furniture, technology, and supplies transfer with the practice.

It is also worth confirming how these assets were valued. Supplies are often transferred at customary operating levels, while equipment may require inspection to verify its condition and remaining useful life. Understanding exactly what is included helps you avoid unexpected replacement costs after taking ownership.

Build Your Purchase on a Strong Foundation

Buying a dental practice is a significant investment, and the terms of the transaction can affect your finances long after the closing date. Careful review of the purchase agreement, accounts receivable, financial obligations, and included assets can help you understand the transaction before you commit.

At Mahan Dental Law, we work with dentists throughout the purchase process, reviewing contracts, identifying potential issues, and helping structure transactions that support your long-term goals. If you are considering purchasing a dental practice, contact us to discuss your transaction before you sign the agreement.