Written by Bryan Martin, CPA, Managing Partner and Founder of Taxstra. Last updated September 1, 2026.
Build the diligence file before building the forecast
Ask for financial statements, tax returns, production and collections reports, adjustments, accounts-receivable aging, provider detail, payroll, lease documents, equipment schedules and debt. Differences between systems are not automatically fatal, but they must be explainable.
- Tie collections to bank deposits and the general ledger
- Separate owner production from transferable production
- Review aged receivables and credit balances
- Identify deferred equipment and facility spending
Model the buyer’s economics, not the seller’s lifestyle
Replace the seller’s financing, compensation and discretionary decisions with the buyer’s expected debt service, staffing, insurance, tax and working-capital needs. Test downside cases for slower collection transfer, patient attrition and higher payroll.
- Debt service and lender covenants
- Buyer clinical compensation
- Working capital and initial payroll
- Base, downside and integration cases
Resolve structure and allocation before closing
Entity choice, asset versus equity structure, purchase-price allocation and employment or restrictive-covenant terms can affect both sides. The accounting, legal and tax teams should use the same final documents and allocation rather than reconstructing the deal after closing.
- Entity and asset ownership
- Form 8594 allocation consistency when applicable
- Lease assignment and deposits
- Transaction fees and financing costs
Design the first 90 days of accounting
The opening balance sheet, payroll cutoff, bank feeds, merchant deposits, accounts receivable, loan amortization and fixed-asset records should be ready for the first close. Waiting until tax season makes the integration harder and reduces decision visibility.
- Opening balance sheet and chart of accounts
- Daily-deposit and collection reconciliation
- Payroll and benefit setup
- Monthly close calendar with named owners
Questions owners ask
What financial records should I review before buying a dental practice?
At minimum, review financial statements, tax returns, production and collections, accounts receivable, payroll, lease terms, equipment, debt and provider-level activity.
Why does purchase-price allocation matter?
Different asset categories can have different tax treatment. Buyer and seller reporting should align with the final agreement and applicable filing requirements.
When should accounting setup begin?
Before closing. Bank, payroll, merchant, debt, fixed-asset and opening-balance procedures should be designed early enough to complete a reliable first monthly close.