Due diligence

Due diligence is the investigation a buyer conducts after a letter of intent is signed and before closing, verifying that everything the seller represented about the practice (its collections, its patient base, its team, its lease, its equipment condition) actually holds up under scrutiny. It is the stage where a valuation's assumptions either get confirmed or fall apart, and it is where most of the expensive surprises in a bad acquisition were actually visible all along, just unexamined.

A serious diligence process pulls real numbers rather than accepting a seller's summary: three years of tax returns and P&Ls, production and collections reports by provider, the active patient count and its recent trend, the lease terms and remaining length, staff tenure and compensation, and a clinical chart review on a sample of patients if there's any concern about diagnosis or documentation quality. Each of these can quietly contradict the story a seller or broker tells verbally.

Budget real time and a real team for this (a dental CPA and a dental-experienced attorney, not generalists) since the cost of thorough diligence is small compared with the cost of discovering a problem after the practice is already owned.