The Attorney's Role in Dental Practice Acquisition: A Comprehensive Guide

The Attorney's Role in Dental Practice Acquisition: A Comprehensive Guide

Buying a dental practice represents one of the most significant financial and professional decisions in a dentist's career. This comprehensive guide examines the critical role attorneys play in dental practice acquisitions and provides essential guidance for navigating the complex legal aspects of these transactions.

 

What You'll Learn:

• Legal Team Assembly: Key professionals needed for a successful practice acquisition
• Due Diligence Components: Critical legal areas requiring attorney oversight
• Transaction Structure: How legal guidance affects practice valuation and tax implications
• Contract Negotiations: Essential elements attorneys should review in purchase agreements

 

Key Segments:

• Professional Team Requirements: A successful dental practice acquisition requires assembling a qualified transition team beyond just a practice broker. This team should include a transition consultant to help analyze the practice and determine offering prices, a healthcare-specialized accountant to evaluate financial aspects and tax considerations, and an attorney to review all sale documents and protect the buyer's interests.
• Legal Document Review: While a Practice Sale Agreement may not be inherently complex, having it properly reviewed by an attorney is essential to avoid unexpected issues. According to Henry Schein, attorney fees for reviewing these agreements typically should not exceed $1,000. Concurrent with the purchase agreement, buyers must also arrange and review office leases, which may include purchase options.
• Practice Transition Models: Dental practice transitions can take various forms based on ownership structure and timeframe. Options include buy-ins (where practitioners purchase a percentage of an existing practice), complete buy-outs (with short transition periods of 3-6 months), and practice mergers (combining two practices with equal ownership). Each model carries different legal implications requiring proper documentation.
• Tax Implications Management: The tax implications of dental practice transition (or acquisition) require careful legal and financial guidance as they significantly impact both buyer and seller. Asset allocation during the purchase affects depreciation schedules, with practice goodwill being amortized over 15 years. Strategic negotiations about how the purchase price is allocated across different assets must be properly documented in the final purchase contract.

 

Conclusion:

An experienced attorney serves as a crucial advisor during dental practice acquisition, helping navigate complex legal considerations while protecting the buyer's interests. By ensuring proper contract review, tax planning, and transition structure, legal counsel helps dentists avoid costly pitfalls and establish a solid foundation for practice ownership. The investment in proper legal guidance represents a small fraction of the overall transaction cost but provides significant protection for what is often a dentist's largest professional investment.