Due Diligence on a Dental Practice: The Checklist Before You Wire a Dime

The seller’s tax return says one thing. The chairside reality says another. The gap between them is where dentists get destroyed.

Every week, a growth-minded dentist wires a deposit on a practice they’ve spent maybe eight hours actually studying. They fell in love with the top-line number — “it does $1.4 million!” — and skipped the only work that matters: proving whether that number is real, repeatable, and transferable to you. Buying a dental practice is one of the largest asymmetric bets you will ever make. Do the due diligence right, and you buy an engine on the floor with limited downside. Skip it, and you inherit somebody else’s problem at a premium.

This is the checklist we wish every buyer ran before they signed. It’s built from hundreds of conversations on the Bulletproof Dental Practice podcast with owners, brokers, and dealmakers who’ve seen the wreckage up close.

Why do most dentists do due diligence completely backwards?

Because they anchor on the wrong number. As Craig Spodak puts it bluntly: dentists don’t know what EBITDA is, so they value everything as a percentage of collections. “It’s a pandemic in dentistry to just chase collection numbers and big numbers.” A practice gets priced at “70% to 85% of top-line revenue” — as Craig asks, “without any regard to profitability, EBITDA, anything?”

Here’s the tactical truth from Pete Boulden’s seat: collections tell you what the practice bills. EBITDA — revenue minus overhead minus a fair market wage for the dentistry you’d personally produce — tells you what the practice earns. Those are two different businesses. A $2 million practice can have $200,000–$250,000 of real EBITDA, or it can have $600,000. Same top line. Wildly different asset. Your due diligence exists to find out which one you’re actually buying.

What financial documents should you demand before anything else?

Do not accept a broker’s one-page teaser and a smile. Demand and reconcile:

• Three years of tax returns AND three years of P&Ls — then normalize them. Sellers run cars, meals, laundry, family payroll, and “insurance” through the practice. Every add-back inflates the earnings picture. Back it all out and rebuild a clean, normalized P&L so your EBITDA number is honest.
• Production vs. collections reports — a practice producing big but collecting poorly has a broken back office you’ll inherit.
• The overhead breakdown by category — staff, supplies, lab, facility, marketing. Overhead, as one broker warned on the show, “doesn’t go down over time, it only goes up.” Know exactly what you’re stepping into.
• A/R aging and any outstanding liabilities — what’s collectible, what’s a fantasy.

The number that matters most: after you pay yourself a real 25–30% of collections as a doctor’s wage, what’s genuinely left over? That leftover — not the gross — is what you’re buying.

How do you audit the patient base you’re actually paying for?

When you buy a practice, you’re buying charts, patients, and goodwill — and, as Craig warns, “you’re more than likely gonna have some attrition on that as well.” Goodwill walks out the door with the retiring dentist unless you prove the base is sticky. Audit:

• Active patient count — defined as seen in the last 18 months, not the software’s inflated “total patients.”
• New patients per month and where they come from. A practice fed entirely by the selling doctor’s 30-year reputation is a melting ice cube.
• Payer mix — what percentage is PPO, FFS, or a single dominant insurance plan? One plan dropping you post-close can gut the model.
• Recall and unscheduled treatment — a healthy pipeline of overdue hygiene and undone treatment is upside you can activate on day one.

Why is the hygiene department the make-or-break line item?

Because on the Bulletproof shows, Pete and Craig say it over and over: hygiene is the lifeblood. “Same-day dentistry when you have an active hygiene practice is amazing.” A practice with a strong, well-incentivized hygiene department — Bulletproof has coached hygienists to $300,000–$500,000 a year in collections — is a growth engine. A practice stuck in “three-hygienist no-man’s-land” with no open capacity has capped itself.

In diligence, look hard at hygiene reappointment rate, open capacity, and the doctor-to-hygiene ratio. One doctor to one hygienist is anemic. If the practice is choking its own recall, that’s not a red flag — that’s your value-creation plan on a silver platter.

What are the operational red flags a spreadsheet won’t show you?

The numbers can look clean while the practice quietly rots. Before you close, verify the things that live off the P&L:

• The lease. A short remaining term, a landlord who won’t assign, or a below-market rent about to reset can blow up your economics. Get the lease reviewed before you fall in love.
• Staff and their tenure. Who’s staying, who’s tied to the selling doctor, and what does payroll actually cost at market wages — not the seller’s sweetheart arrangements?
• Equipment age and the deferred-maintenance bill. Old ops and a dead CBCT are a six-figure surprise.
• Seller transition and non-compete. How long does the selling doctor stay to hand off goodwill, and how tight is the non-compete radius?

When is walking away the smartest money you never spent?

Here’s the mindset shift. The reason due diligence turns practice ownership into what one guest called “asymmetric risk” is that thorough research lets you buy “on the floor” — with the downside already mitigated. But that only works if you’re genuinely willing to walk. If the normalized EBITDA doesn’t support the price, if the patient base is a personality cult around the retiring owner, if the lease is a trap — walk. There is always another practice. There is not always another $400,000 of your capital.

Pete’s tactical rule: due diligence isn’t a formality you rush to close the deal you already emotionally bought. It’s the tool that tells you whether to run toward the deal or away from it. Craig’s heart-level truth: the practice you buy becomes the vehicle for the life you’re trying to build. Don’t hand your one life to a set of books you never verified.

You don’t have to figure this out alone

The dentists who buy well aren’t smarter — they’re better surrounded. They have peers who’ve closed deals, brokers who represent them, and a room full of owners who’ll tell them the truth about the number before they wire it. That room exists.

Come learn the acquisition playbook live at the Bulletproof Summit, and if you’re serious about buying — and keeping — great practices without selling your soul to a DSO, the Bulletproof Mastermind is where owners pressure-test every deal before they sign. Dentistry doesn’t have to be a lonely, blind gamble. Not here.

The 1% of dentists, who want 100% from life.