By Ezrah 
A good deal should give you a healthy income, stable patient flow, strong systems, and room for growth. This means looking at more than just revenue. You need to review the full picture—production, collections, overhead, clinical systems, and staff structure. A practice with solid financials, steady numbers, and clear processes has long-term potential. One with weak numbers or unstable systems can limit your success from day one.
Why Due Diligence Matters
Skimming the surface of the numbers is risky. Without digging deeper, it’s easy to miss financial inconsistencies, coding issues, or outdated equipment. A proper due diligence process helps you confirm whether the practice is operating well or if the seller is masking underlying problems.
Financial Signs the Practice Is a Good Deal
Strong Production and Collections
Solid production and healthy collection rates show the practice is financially stable. A strong collection percentage—usually 95% or above—indicates patients are paying and the billing system is running well. If collections are low, the practice may struggle with coding errors, untrained staff, or insurance issues.
Consistent Revenue Over 3–5 Years
A practice with steady or growing revenue is more attractive. When you see year-over-year growth, it means patients trust the practice, the doctor has a solid base, and the systems are working.
Healthy Profit Margins
Profit margins matter more than gross revenue. If overhead is managed well, the practice earns more even without extremely high production. A practice with solid net income is usually a safer investment.
Balanced Procedure Mix
A strong procedure mix—restorative, preventive, cosmetic, implant-related, and hygiene—shows financial stability. Over-reliance on one type of treatment, such as endodontics or extractions, can create risk if that provider leaves or patient needs shift.
Financial Red Flags That Point to a Possible Trap
Declining Production Trends
If revenue is dropping each year, you need to know why. Red flags include:
- Loss of key staff
- Declining hygiene recall
- Poor scheduling habits
- High insurance write-offs
- Low new patient numbers
A downward trend may point to larger problems behind the scenes.
High Overhead and Low Profit
High overhead kills profit. If overhead exceeds normal ranges, you may struggle to earn what the seller earns—even with the same production. Weak profit margins can turn a promising practice into a financial burden.
Inaccurate or Dirty Financial Reports
If reports feel unclear, sloppy, or outdated, this is a major warning. Missing data, confusing categories, or inconsistent figures can hide deeper issues in billing, coding, or collections.
Heavy Insurance Dependence
Relying too much on low-fee PPOs reduces revenue. A practice that participates with too many plans creates financial pressure on the new owner.
Patient-Related Signs the Practice Is a Good Deal
Strong Active Patient Count
Active patient numbers tell you how many people truly use the practice—not just how many are stored in the system. A strong active base means reliable income and healthy recall patterns.
Healthy New Patient Flow
A steady stream of new patients shows the practice is growing and its reputation is strong. Good marketing, word-of-mouth referrals, and strong online reviews usually support this.
High Hygiene Reappointment Rate
A strong hygiene program is the backbone of long-term revenue. A high percentage of patients pre-booking their next cleaning means consistent future production.
Patient Red Flags That Suggest a Risky Practice
Poor Hygiene Systems
Weak hygiene recall means fewer retained patients, less restorative work, and low long-term value.
Large Numbers of Inactive Patients
If the practice claims 4,000 patients but only 800 visit each year, the data is misleading. Inflated numbers make the practice appear healthier than it is.
Negative Online Reputation
Bad reviews or no online presence can make it harder for the new owner to attract new patients.
Staff and Team Factors That Indicate a Good Deal
Stable, Long-Term Team Members
Buying a dental practice process with well-trained, loyal staff creates smooth operations. Stability shows strong leadership and positive culture.
Clear Roles and Systems
A team that understands workflows—from scheduling to billing—keeps production steady and patients happy.
Strong Office Manager
A skilled manager who handles finances, scheduling, and staff issues adds major value.
Staff Red Flags That Can Become Expensive Surprises
High Turnover or Unhappy Staff
If multiple team members have left recently, it can signal leadership problems or low morale. Replacing a team is expensive and disrupts patient care.
No Clear Systems or Training
A lack of structure means you’ll spend weeks—or months—fixing workflows.
Staff Paid Far Above Market Rates
If pay is not aligned with local averages, your overhead may spike after purchase.
Clinical Systems That Show a Practice Is a Good Deal
Updated Technology
Modern tools such as digital X-rays, intraoral scanners, CBCT, and updated software make the office more efficient and more attractive to patients.
Clean Treatment Planning
If clinical notes and coding are consistent, the practice likely has strong systems.
Organized Operatories
Clean, modern operatories show professionalism and care.
Clinical Red Flags That Signal Risk
Outdated or Broken Equipment
Fixing old units, chairs, or imaging equipment can cost thousands and lower your short-term profit.
Poorly Documented Clinical Notes
Missing or vague notes raise liability concerns and create confusion.
Heavy Dependence on Owner-Specific Skills
If the owner performs procedures like complex implants or advanced endo that you don’t intend to provide, revenue may drop after the transition.
Legal and Contract Factors That Indicate a Good Deal
Clear, Fair Purchase Agreement
A solid agreement protects both sides. Terms should be clear, simple, and realistic.
Smooth Lease Terms
Long-term leases with renewal options make the transition easier and more secure.
Seller Willing to Support Transition
A seller who’s open to staying temporarily can help maintain patient trust and staff stability.
Legal Red Flags to Watch For
Unusual Contract Clauses
Hidden restrictions or vague terms can create future conflict.
Short or Expensive Lease
High rent or weak lease terms can lower profit and reduce long-term growth.
Seller Rushing the Process
If the seller pushes you to move fast, they may be hiding issues.
Calculating Whether the Practice Is Truly a Good Deal
Compare Value to Cash Flow
A good deal should give you enough income to pay loans, costs, and still earn profit.
Review True Earnings (EBITDA or SDE)
These numbers reveal what you’ll realistically earn as the new owner.
Look at Future Potential
Ask yourself:
- Can you add new services?
- Is there room for expansion?
- Can marketing bring in more patients?
A practice with room to grow is often worth more than one that’s maxed out.
Confirm You Are Comfortable With the Workload
A practice producing numbers far above your current comfort level may not be a good fit—even if the price is fair.
Red Flags That Indicate a Potential Financial Trap
A Price That Seems Too Good to Be True
Sometimes low price equals low value.
Seller Refuses Full Financial Transparency
If the seller won’t share reports, walk away.
Revenue Drop With No Clear Explanation
You need to know what caused the decline.
Weak Staff, Weak Systems, Weak New Patient Flow
These issues are expensive and slow to fix.
High Debt on Equipment or Building
Debt attached to the practice can become your problem.
Conclusion
Buying a dental practice is a major decision, and knowing whether it’s a good deal or a financial trap takes careful review. The key is to look beyond surface-level numbers and dig into the financials, patient data, staff culture, and systems. A healthy practice will show stable revenue, strong profit, loyal patients, and trained staff. A risky practice will reveal declining numbers, weak systems, poor hygiene recall, or outdated equipment.
By understanding these signs—and taking the time to investigate each part of the business—you can protect yourself from mistakes and choose a practice that supports long-term success. With the right due diligence, you’ll know whether you’re buying a valuable asset or stepping into a costly challenge.