A dentist signing a dental contract

Legal Steps in Selling a Dental Practice: Due Diligence and Transfer of Ownership

Selling any type of business can be a lucrative but complicated process. This is especially true if you are selling a dental practice.

A significant portion of the value of a dental practice is in intangible factors that can be difficult to explain to a future owner. If the potential buyer doesn’t understand how these intangible factors affect the value of the practice, they might be upset after making a purchase.

Understanding the legal steps in selling your business will help you avoid as many complications as possible during and after the sale of your dental practice.

Due Diligence

Due diligence is the legal obligation to investigate and understand every aspect of a legal process. In this case, the legal process that requires your diligence is the sale of your practice. There are several ways that you can engage in due diligence.

Determine the Value of Your Practice

Before placing your dental practice on the market, determine how much it is worth and why it is worth that much. You never want to sell anything that you don’t know the value of.

Since most sales don’t happen immediately, understanding what creates the value of your practice will help you maintain that value until the sale occurs. For example, if the majority of the value comes from your client list, you probably shouldn’t let your clients know you are considering retirement. That would likely cause them to look for other dentists.

Investigate Any Potential New Owners

Once you have started to entertain offers for your practice, investigate potential owners and the financing of their offers. Some of the things you might want to look at are:

  • Whether they already own a practice
  • How long they have been a dentist
  • How they have financed the deal and how much they will have to take from loans
  • Their intentions in regards to your current employees

If you will be getting paid everything up front, some of this won’t matter. But if you will be paid in installments or are keeping some stake in the practice, then the future success of the business matters. You won’t get the money you expect if the buyer’s new business goes bankrupt in less than a year.

Transfer of Ownership

Once you have done your due diligence and chosen a potential buyer, you must transfer ownership to them. There are two main parts to this step.


Will you be paid all at once or in installments? Does the new owner expect you to continue working at the practice for some time before leaving? These are terms that need to be negotiated before the sale can be completed.

Typically, the best way to negotiate a sale is to determine what your main goals are in advance and tell your lawyer. Then, your lawyer will negotiate for you, following those instructions.


During the closing, you officially pass ownership to the new owner. This is a rather mundane legal process that likely includes a lot of bureaucratic arrangements. For example, you will have to formally pass control of payroll services to the new owner. 

Once again, consult with a lawyer during this process to ensure you don’t make any mistakes.

Consult With a Lawyer During Every Step of a Dental Practice Sale

Selling a dental practice isn’t like selling your bike. There are a lot of legal hoops that you will need to jump through, and the sale will significantly impact your financial future. To best avoid legal or financial problems after the sale, consult with a dental business law attorney from Mahan Dental Law who handles practice sales nationwide.