Congratulations on your decision to purchase an existing dental practice. After years of dedicated training to become a dental specialist, you’re now ready to establish your own practice, apply your expertise, and enter the rewarding world of dental services. Recognizing the advantages of acquiring an existing practice over building one from scratch is a smart move, allowing you to potentially achieve profitability from day one.

You’re likely eager to finalize the deal and get started. However, the seller will first present you with the dental practice purchase agreement. Upon reviewing it, you might find it complex and difficult to understand. This guide aims to provide some clarity.

What is this Purchase Agreement?

Simply put, it’s a legally binding document that outlines all the crucial details of the dental practice acquisition. How important is it? It’s extremely critical. The seller requires you to sign it to protect their interests. More importantly, it also safeguards your interests as the buyer.

Unlike standard purchase agreements, a template is often insufficient here. The dental industry has its unique complexities, which will be reflected in the purchase agreement.

This agreement eliminates room for miscommunication because everything is clearly documented. Once signed by both parties, it becomes an enforceable contract, offering significant protection to both the buyer and the seller.

What are the Things Included in the Purchase Agreement?

The specifics will vary depending on the individual sale and purchase. However, a comprehensive dental practice purchase agreement should typically include the following elements:

• Accounts Receivable: Don’t be surprised to find that the dental practice you’re considering has outstanding accounts receivable (money owed by patients). The agreement will detail how these will be handled and who will be responsible for collection. Generally, the buyer assumes the responsibility of collecting these outstanding payments.
• Conditions to Enforce the Sale/Purchase: It’s wise to include specific conditions that must be met for the sale to be legally enforced. If these conditions aren’t satisfied, neither party is obligated to proceed with the purchase or sale.
• Customer Records: Ideally, as the buyer, you should have access to all patient records, including both active and inactive patient lists. It’s crucial to consider the Health Insurance Portability and Accountability Act (HIPAA), a federal law that protects patient confidentiality, and ensure the transfer and handling of these records comply with this legislation.