Unfortunately, a crash course on what you should know when buying your practice as a new dentist is not on the syllabus for most dental schools. Dentists graduate with a vast knowledge of the mechanics of the human mouth, but find that when it comes to taking that first step into practice ownership, they have very little on which to base their life-changing choices.
A successful practice starts with a successful foundation that involves brokers, other dentists, lawyers, certified public accountants, banks, insurance agents, dental supply reps, and many other partners.
How are you to know where to start without reinventing the wheel? Past experience is a great teacher, but with no past experience, a new buyer is reliant on their advisors for help. Although the following is by no means an exhaustive list of the "dos" and "don'ts" in a practice purchase, it will at least give first-time practice owners a guide to the legal considerations in a practice purchase.
Let's assume that you have located a practice you are interested in and are starting the purchase process. Where do you go from there?
Practice Due Diligence
Due diligence is the act of reviewing and verifying the practice information. It should be an interactive process between you and your advisors.
DO: Request a list from your advisors of all the information that you will need to make an informed decision about the practice. You will be required to sign a confidentiality agreement, so expect to see one.
DON'T: Rely on the seller or the seller's advisors' information packet solely to make a decision.
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Part 2 of this series will cover contract negotiations, closing on the practice, and running with ownership.