Dental Transition FAQs
Prestige Law Office helps dentists nationwide navigate the legal complexities of buying and selling dental practices. Below are answers to some of the most common questions we receive about dental practice transitions.
1. What's the difference between an asset sale and a stock sale when buying a dental practice?
In an asset sale, the buyer purchases specific assets—such as equipment, goodwill, and patient records—and typically forms a new entity (e.g., LLC, PLLC, or PC). This structure allows the buyer to avoid assuming most of the seller's liabilities.
In a stock sale, the buyer acquires ownership of the seller's existing entity (usually a professional corporation or S-corporation), assuming both assets and liabilities.
Most dental transitions are structured as asset sales due to liability protection and tax advantages. However, many—but not all—partnership buy-ins are structured as stock sales.
2. How long does a typical dental transition take?
From initial offer to closing, most transitions take 45 to 120 days. Timing depends on factors such as due diligence, financing, real estate considerations, and state licensing or credentialing requirements. We help streamline the process by managing legal milestones efficiently.
3. What does a dental transition attorney do for me?
A dental transition attorney protects your legal and financial interests throughout the purchase or sale process. In addition to drafting and reviewing all transition documents, we:
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Form your business entity
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Negotiate deal terms
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Ensure lender compliance
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Identify hidden risks
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Coordinate with your CPA, broker, consultant, lender, insurer, and closing officer
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Ensure compliance with state laws, HIPAA, and other regulations
Our goal is to keep your transaction on track through closing.
4. Do I need a letter of intent (LOI), and is it binding?
Yes—you need an LOI. We strongly recommend starting with an LOI to outline key business terms such as the purchase price, deal structure, and timeline. Most LOIs are nonbinding; however, certain provisions—such as exclusivity or confidentiality—may be legally enforceable. Legal review is critical.
5. How are staff matters handled when a dental practice is sold?
Unless otherwise agreed, employees do not automatically transfer to the buyer. The buyer decides whether to offer continued employment or new agreements.
Typically, the seller remains responsible for all employee wages, benefits, and liabilities through closing. If the buyer retains staff, responsibility generally shifts to the buyer after closing. We help address staff retention and communication strategies to minimize disruption.
6. Should I buy or lease the dental office building?
This depends on your long-term goals. Buying offers equity and control, while leasing provides flexibility. If leasing, we negotiate terms that protect you post-closing. If purchasing, we ensure title, zoning, and due diligence issues are properly addressed and coordinate with real estate professionals as needed.
7. Are restrictive covenants enforceable against a seller?
Yes. In most states, noncompete and nonsolicitation agreements are enforceable in connection with the sale of a dental practice, particularly because the seller is compensated for goodwill. These provisions prevent the seller from competing or soliciting patients or staff post-sale. They must be reasonable in time and geographic scope, and we draft them to comply with state-specific laws.
8. Do I still need a lawyer if I already have a broker?
Absolutely. Brokers assist with valuation and locating buyers or sellers, but only a lawyer can draft enforceable contracts, protect your legal interests, and minimize post-closing liability. Brokers and attorneys serve complementary—but distinct—roles.
9. Can I offer seller financing as part of the deal?
Yes. Seller financing—where the seller carries a portion of the purchase price through a promissory note—is common and can help close deals or bridge financing gaps. However, it increases risk for the seller, so terms such as interest rate, repayment schedule, default remedies, and collateral must be carefully structured.
10. How do I protect myself from liability after selling my practice?
We include strong indemnification and release provisions to protect you from post-closing claims related to patients, staff, or operations. Sellers should also ensure appropriate malpractice tail coverage for services provided before the sale.
11. How do I handle patient records during a dental practice transition?
Patient records must be transferred in compliance with HIPAA and state privacy laws. Typically, the seller provides records to the buyer for continuity of care, but patients should be notified of the transition. We help draft agreements that clearly outline who owns and maintains records, how they will be transferred, and the procedures for patient notification to ensure compliance and protect both parties.
12. What should I know about tax implications when buying or selling a dental practice?
Dental practice transitions can have significant tax consequences for both buyers and sellers. Asset sales and stock sales are treated differently for income and capital gains tax purposes. Additionally, considerations like depreciation recapture, seller financing, and retirement plan transfers can impact your tax liability. We work with your CPA to structure the deal to maximize tax efficiency while staying compliant with IRS rules.
13. Can I structure a transition gradually instead of all at once?
Yes. Some transitions are structured as gradual buy-ins or phased ownership transfers, allowing the buyer to take over portions of the practice over time. This approach can help with financing, patient retention, and staff integration. We draft agreements that clearly define timelines, responsibilities, and financial arrangements to avoid misunderstandings and protect both parties.
14. How do I handle malpractice insurance during a transition?
Both buyers and sellers need to carefully review malpractice insurance coverage. Sellers should ensure they have “tail coverage” to protect against claims arising from services performed before the sale. Buyers must obtain appropriate coverage for ongoing operations. We coordinate with your insurance provider to confirm coverage is in place and reflected in the transition documents.
15. What happens if a deal falls through after signing an agreement?
If a dental transition deal falls through, the outcome depends on the terms outlined in the purchase agreement or letter of intent. Typically, deposit or earnest money provisions, contingencies, and termination clauses determine each party's rights and obligations. We ensure your contracts clearly define these scenarios to minimize financial risk and protect your interests if the transaction does not close.
Work With an Experienced Dental Transition Attorney
Whether you are buying, selling, or planning a future dental transition, experienced legal guidance is essential. Prestige Law Office, LLC focuses exclusively on dental and healthcare practice transitions, helping dentists navigate complex transactions with confidence, clarity, and compliance.
To learn more or schedule a consultation, call 414-688-9636.