Purchaser checklist

Resources for buying a dental practice

LHPS – resources for dental professionals

1. Assemble your team to assist in the purchase

Interview and select accountant

  • Determine level of services needed
  • Have contract of purchase and sale reviewed
  • Discuss tax allocations of purchase price

Interview and select attorney

  • Determine level of services needed
  • Have sale documents reviewed
  • Have loan documents reviewed
  • Establish business form/documentation

Choose form of practice operation

  • Sole proprietorship
  • Professional limited liability company (PLLC)
  • "C" corporation
  • Professional association (PA)
  • Determine if you want to elect a subchapter S status

Apply for tax ID # (Employer identification number)

  • Internet application http://www.irs.gov

2. Securing the practice acquisition loan

Gather the necessary documentation required by a bank

Purchaser information:

  • Prepare cover letter describing opportunity
  • Include summary of loan request
  • Purchase price & working capital
  • Additional equipment/technology needs
  • Personal financial statement & living expense budget
  • Tax returns of purchaser (3 years)
  • Last paystub for current year

Seller information

  • Tax returns of seller (3 years)
  • Current year profit and loss statement
  • Practice appraisal
  • Letter of intent

Obtain insurance coverage for loan securement

  • Life insurance in the amount of the loan
  • Use existing policy or obtain new policy
  • Will require collateral assignment form to bank
  • Personal disability policy- monthly benefit to equal loan payment
  • Verify ability to substitute business overhead policy
  • Obtain contents insurance for purchased assets
  • Obtain workmen's compensation policy (Optional)

Make application with 3rd party payors

  • Change address of former employer if already credentialed
  • PPO providers (Delta, met-life, etc.)
  • Capitation & medicaid providers (approval may take 45-60 days)

3. Resolve practice purchase contingencies

Meet with landlord to secure new lease or lease assignment

  • Have personal financial statement available

Meet with seller's staff to introduce yourself

  • Conduct both team and individual meetings
  • Emphasize your intention for "business as usual"
  • Emphasize your intent to retain all employees at current pay
  • Obtain ideas from staff for practice growth
  • Secure verbal commitments from team members to stay

4. Prepare for assumption

Interview and select bank for business accounts

  • Set up accounts
  • Order checks, deposit slips and bank deposit stamp
  • Assess check capture option and related fees

Set up merchant services (credit card) account

Determine need for outside payroll company

Set up internal bookkeeping software (Quickbooks or similar)

Obtain DEA number or change address

  • Order prescription pads

Establish electronic tax filing account (EFTPS)

Design and create website and marketing materials

  • Interview and select professionals for:
  • Website design
  • Marketing materials and social media presence
  • Creation of brand, logo and practice trade name
  • Printing
  • Business card, letterhead & envelopes
  • Brochures
  • Announcements to colleagues, friends, family

Notify malpractice carrier of change of address

5. Seller and purchaser conference(s)

  • Discuss employee's salaries, benefits, bonus
  • Discuss sick day and vacation policies
  • Provide/obtain employees' salary histories and work records
  • Review fee schedule
  • Discuss seller's policies for warranty work
  • Discuss seller's policies for pro bono or discounted work
  • Obtain/revise/write office policy manual
  • Review new patient procedures
  • Review case presentation procedures
  • Review minimum of 10 patient charts for diagnosis consistency
  • Discuss current suppliers and labs
  • Discuss specialists used
  • Discuss office staff meeting policies/ frequencies
  • Review seller's list of patient charts to be kept (family, friends)
  • Review seller's ongoing treatments of special need patients

6. Prior to closing

Prepare letter of introduction/transfer to practice patients

  • Seller normally composes
  • Purchaser revises and approves
  • Send out immediately after closing

Prepare letter to referral sources

Prepare letter to other professionals- specialists

Send announcements to your friends/family and potential referral sources

Prepare personal biography to leave in reception area

Apply for transfer of software license(s)

  • Dental software
  • Imaging software
  • Business software
  • Patient education
  • Other technology

Contact sign company for name addition/change

Contact property manager for name addition/change

Obtain copies of seller's x-ray inspection reports and installation reports

Contact the city in which the practice is located to obtain a certificate of occupancy permit

7. Concurrent & immediately after closing

Notify professional societies of address change

  • Local, state and national level
  • Other professional societies

Transfer maintenance agreements, if assumed

  • Computer hardware and software
  • Postage meter
  • Copy machine

Notify service providers for new accounts

  • Oxygen and nitrous tanks
  • Security system
  • Waste disposal
  • Dental supply companies
  • Office supplies
  • Laboratories
  • Direct vendors/suppliers
  • Display advertising vendors

Transfer practice utilities

  • Gas company
  • Electric company
  • City services- water and waste
  • Telephone

Complete a transfer of practice website and domain

Notify county appraisal district of change of ownership for BPP taxes

Meet with dental team to discuss:

  • Phone greeting changes
  • Scripting language to patients
  • Scheduling treatment appointments for seller
  • Handling of accounts receivables/credit balances

Set up texas workforce commission account

  • This must be done after your first payroll is made
  • On-line at www.twc.state.tx.us/customers/bemp/bempsub3.html

Convert dental software to new business

  • Establish new provider numbers in dental software