5 key questions to ask before selling your dental practice

Selling a dental practice is a significant milestone, and maximizing its value requires careful planning. Many dentists make decisions in the years leading up to a sale that can impact their transition options—sometimes positively, sometimes negatively. Here are five critical questions to consider before selling your practice.

No. 1: Should I buy new equipment or renovate before selling?

It’s tempting to think that purchasing new equipment or remodeling will instantly increase your practice’s value, but the reality is more nuanced.

Your practice value does not increase by $50,000 just because you purchased $50,000 worth of new equipment two months ago. Invest in equipment if it will increase your annual profit or enhance your clinical satisfaction, not solely in hopes of boosting practice value. If new equipment leads to increased production and profitability, then—and only then—will it contribute to a higher valuation.

If something breaks, you must fix it. It’s frustrating to upgrade computers and servers the same year you plan to sell, but maintaining HIPAA compliance and business operations is nonnegotiable.

Major renovations or expansions require seven to 10 years to justify the cost and hassle unless they lead to explosive growth. A good rule of thumb: if you plan to sell within five years of a major renovation, the annual profit increase should be at least 25% of the project cost to make financial sense.

Keep in mind that your practice is sold debt free, meaning any outstanding loans must be paid off at closing.

No. 2: Should my associate dentist(s) have contracts?

Yes! Even if you believe a noncompete clause is unenforceable, having a formal employment contract provides peace of mind to both buyers and lenders. These agreements should also be assignable to the buyer. A well-structured contract minimizes uncertainty and makes your practice more attractive in a sale.

No. 3: Should I drop insurance plans to increase my practice value?

Dropping insurance can be a strategic move, but timing and execution matter.

If you plan to sell within three years, don’t drop insurance. The only guaranteed outcome of dropping plans is patient attrition. Patient retention follows a bell curve, as many affected patients will try an in-network practice before deciding whether to return and pay out-of-network costs. This process often takes a full year.

The goodwill transfer in a fee-for-service (FFS) practice is more delicate than in an insurance-based practice. Patients in FFS offices often stay because of their relationship with the doctor and staff, making the transition to a new owner more fragile. As a seller, expect to stay involved longer postsale to support goodwill retention.

If you’re four-plus years from retirement, transitioning away from insurance participation may be a viable strategy. However, this decision should be data-driven, not emotional. Many dentists drop insurance out of frustration, but a measured approach—starting with strategic plan eliminations rather than going 100% FFS—is often the better path.

No. 4: Do I need to “clean up my books” before selling?

It depends on how “messy” they are. Cleaning up your books doesn’t mean you can’t take aggressive deductions; it simply means everything should be well documented and clearly categorized.

A practice’s value is driven by essential operating expenses, including compensating all clinicians at market rates. If discretionary owner expenses are difficult to separate from essential business expenses, it becomes harder to present a clear picture of profitability to buyers.

Lenders and buyers rely on black-and-white financials, not verbal explanations. Telling a buyer “I probably take another $50,000 in cash but don’t report it” does nothing to inspire confidence in your numbers. If you’re willing to misrepresent income to the IRS, why should a buyer or lender trust your financials?

If you own multiple locations,
separate financial statements for each office are essential. Clarity and transparency in financial reporting make your practice more marketable.

No. 5: Do I have to sell to a corporate buyer?

No. Despite common misconceptions, young dentists can afford to buy practices, and many do want to be owners.

85% of our annual transactions involve one dentist selling to another first-time practice owner.

It’s a misconception that new dentists can’t afford to buy due to student loan debt. However, associates today have more career options—many can earn $300,000–$500,000 working for corporate groups or multipractice owners. This makes them more selective buyers, but they are still buying.

Different buyers have different priorities and expectations for sellers. Some will require you to stay on postsale for several years, while others may want full ownership transition within months. Corporate buyers could be the perfect fit for your sale—but that should be your choice, not your only option.

Every practice owner should take a proactive approach to control their transition and target the right type of buyer. Do you want to sell and retire in 30 days, or sell and continue working for 15 more years? Both options are possible if you plan ahead and understand your local market dynamics. 

Editor's note: This article appeared in the September 2025 print edition of Dental Economics magazine. Dentists in North America are eligible for a complimentary print subscription. Sign up here.